For most of the year, ether, the most significant cryptocurrency outside of bitcoin, has been on an extraordinary high. The cryptocurrency, which started the year at an average of $8 in January, is currently trading at an average of $210, representing a whopping 2,500% increase in value over the first half of 2017.
And that’s just the tip of the iceberg. For a brief period in June, ether was trading above $400, which meant that this cryptocurrency had increased in value by 5,000% up to that point since the beginning of the year. Market fears about the future of bitcoin and a flash crash later in the month saw the value of ether fall to the current sub-$300 levels.
Ether is the fuel behind the revolutionary ethereum platform. Like bitcoin, ethereum is based on the blockchain and offers users the ability to perform secure and decentralized transactions from any part of the world. However, ethereum has been billed as the more technologically advanced platform, thanks to smart contracts that enable more real-world applications of the blockchain.
As such, ether and the ethereum blockchain are poised to make an even bigger impact in the crypto investment scene. Here are a few things that we can take away from ether’s eventful year so far.
Opens the Door for Trading Options
Earlier this week, the U.S Commodity Futures Trading Commission (CFTC) gave the green light to LedgerX, a currency-trading company, to clear derivatives on its digital currency-trading platform. The company, which is poised to introduce bitcoin and ethereum options for trading later in the year, becomes the first federally-regulated platform for cryptocurrency trading.
The decentralized and multipurpose nature of ethereum and its growing popularity makes the world of digital trading a safer and more stable environment, especially with unscrupulous forex brokers and other dishonest operators always looking to take advantage of investors.
The Distance between the Blockchain and E-Commerce is Slowly Dissipating
Back in 2014, TigerDirect.com and Overstock.com became among the first e-commerce stores to accept bitcoin as a form of payment. Since then, more stores have followed suit, either directly or indirectly via third party processors such as eGifter.
Blockchain technologies like ethereum have a huge role to play in the multi-billion dollar e-commerce industry. Decentralized systems such as the ethereum blockchain can help reduce the mistrust and monopolistic tendencies that characterize the current e-commerce landscape.
Antony Tepp, co-founder of Biker Ring Shop, a specialist e-commerce store, faults major third-party payments processors like PayPal for helping create the current centralized payment systems. PayPal’s policies in big economies like Nigeria and Turkey, Tepp says, continues to cause losses for e-commerce stores, which is a good case for adoption of decentralized systems like the ethereum blockchain.
No, Bitcoin Won’t Die
Perhaps the biggest fear for cryptocurrency investors with interests in bitcoin is the notion that the rise of ethereum means the death of bitcoin. In mid-July, ethereum prices crashed briefly to $130 – a 22% plunge within a day – due to a combination of factors, including a potential bitcoin split and uncertainty about the future of the cryptocurrency.
Still, even though bitcoin and ethereum have the same basic working protocols, they have different blockchain technologies, with ethereum’s being the best. This doesn’t mean bitcoin will fall off the face of the earth; it has its own first-mover advantages that will enable it to stay relevant into the near future.
The Corporate World is Buying In
In March, right about the time that ethereum was experiencing its market high, a number of Fortune 500 companies, startups, and several research groups formed the Enterprise Ethereum Alliance (EEA) in one of the biggest shows of faith in cryptocurrency and the blockchain. The EAA, with bigwigs such Deloitte, J.P. Morgan (NYSE: JPM), and Microsoft MSFT as notable members, seeks to standardize ethereum as a fintech solution within the corporate world.
Corporate backing for the ethereum blockchain is one of the main reasons why this cryptocurrency has shot up recently, even with the uncertainty that surrounds other cryptocurrencies.
Don't be fooled, though. There's still some turbulence ahead for ethereum investors, with the Securities and Exchange Commission (SEC) promising more scrutiny of ethereum-based ICOs - Initial Coin Offerings - which, among other things, promises to destabilize the unearthly growth rate of ether.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.