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Ethereum was created in 2013 by Vitalik Buterin as an ambitious project that seeks to apply blockchain technology to more than just money. Through the use of smart contracts, developers can create and run elaborate systems on the Ethereum network that do much more than move currency from 1 wallet to another. In fact, entire applications have been built on the Ethereum network.
Ethereum’s native currency, Ether (ETH), is the 2nd-largest cryptocurrency by market capitalization. Investors clearly recognize the potential of the network, with ETH up more than 450% since the start of 2021. Most notably, the Ethereum network is not yet even in its final form — more features and improvements still in the works are giving this cryptocurrency lots of potential. Will ETH continue its remarkable climb?
What Is Ethereum?
The Ethereum network is a decentralized computing network built on the blockchain. Blockchains are public ledgers in which various network users verify all transactions, meaning that transactions cannot be altered or hidden. Ethereum seeks to apply this extreme degree of verification to larger uses than just transferring money.
The Ethereum network features smart contracts, which are immutable because of the blockchain validating them. These contracts execute as designed every time, free from interference from any 3rd parties or governments. This process has allowed developers to create decentralized applications (dApps) that run on the network. In the same way a computer can run software, Ethereum can run dApps.
To incentivize users to contribute computing power to validate the transactions on the blockchain, Ethereum rewards miners with Ether. ETH is given to miners for successfully validating new blocks on the blockchain, keeping the ledger intact. ETH is also used to pay the gas fees that are charged for using the network to send currency or run applications.
Ethereum Price Action 2021
ETH has had a strong year, maintaining its spot as the second-largest cryptocurrency. ETH has outpaced Bitcoin (BTC) in its growth this year but remains a slightly more speculative investment then Bitcoin, which has garnered widespread institutional backing. Regardless, the price of Ether has mostly mirrored the larger market, with more aggressive growth than Bitcoin, but less aggressive growth than some altcoins.
Market Capitalization of ETH
As of Dec. 1, ETH has a market capitalization of over $500 billion, making it the 2nd-largest cryptocurrency. Market capitalization represents the price of the token multiplied by the number of tokens in circulation. When looking at the potential for price growth, it is important to look at the market capitalization relative to other currencies to determine the true growth potential of a project.
Particularly for ETH, it is important to use market capitalization to compare the currency to BTC. BTC dominance is currently at a low level, meaning that BTC makes up only around 40% of the total value of all cryptocurrencies on the market. ETH and the many tokens built upon the Ethereum network are currently outpacing the growth rate of BTC, a bullish sign that indicates investors may see the Ethereum network as more important to the future of cryptocurrency than Bitcoin.
Can ETH Hit $10,000 Per Coin?
A $10,000 ETH is possible within the next few years. ETH continues to process a high volume of transactions, it remains the leader in the dApp and decentralized finance (DeFi) space and seems poised to improve its scalability.
Ethereum remains the dominant platform for blockchain applications, but the technology is rather new. As more and more developers learn to use the Ethereum network over the coming years, more dApps will exist on Ethereum, and more users will be drawn to the network.
Additionally, major institutions are beginning to use Ethereum. Traditionally, governments and institutions tend to be slow to adopt new blockchain technology, but the rate of adoption has ramped up over the past year. As more companies realize the potential of Ethereum, the price will be driven up.
A $10,000 ETH is likely to require a further reduction of Bitcoin dominance. However, Bitcoin remains the best indicator for the health of the cryptocurrency market overall. In essence, ETH needs BTC and the market to climb overall but also needs to eat into BTC’s market share.
Finally, Ethereum 2.0 is a major set of upgrades that is set to roll out within the coming year. As Ethereum transitions from proof of work to proof of stake, several major changes will occur that can drive up the price of ETH.
In August, Ethereum Improvement Proposal (EIP) 1559 passed, meaning that some of the transaction fees on the Ethereum network will be burned. The more the network is used, the more ETH is burned, and the scarcer ETH becomes. If you believe that ETH will be used more in the coming years, this deflationary measure should mean the price of ETH will increase.
The current proof-of-work system hugely increases selling pressure on ETH. Miners have expenses to pay, and they do this by selling the ETH they mine. As ETH moves to proof of stake and miners are cut out, this huge dumping of ETH will stop. Additionally, staking rewards users for holding ETH will cut the sell pressure even further.
The transition to Ethereum 2.0 should also cut fees dramatically, further increasing network use and increasing the amount of ETH that is burned. The rollout of these scalability upgrades looks to be set for 2022.
Several projects currently exist that seek to compete with Ethereum, notably Solana, Algorand, Polkadot and Cardano. These platforms, while promising and currently more scalable than Ethereum, still are not close to developing the dApp ecosystem present on Ethereum.
Where To Buy ETH
ETH is a top cryptocurrency and is listed on most major exchanges, such as Coinbase Global Inc. (NASDAQ: COIN) and eToro. Coinbase has an ongoing program called Coinbase Learn that rewards you with select tokens for participating and answering questions correctly. eToro offers features that allow you to mirror the trades of notable investors and celebrities.
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Can Ethereum Hit $10,000 in 2021?
The Omicron variant of the coronavirus has caused the market to tumble toward the tail end of 2021, with fear that the mutations in the virus could cause it to evade existing vaccines. This news stifled the growth of the market, but the market recovered swiftly after COVID-19 initially caused shutdowns in March 2020 and will likely recover quickly again. With just a month left in 2021, it's unlikely that ETH hits $10,000, but it will likely continue to climb in price. A $10,000 ETH is unlikely but still possible in 2021 if the bull market continues or Ethereum 2.0 improvements are rolled out within a reasonable timeline.
In the 2017-2018 bull run, ETH experienced a strong runup in price as the holiday season began, and that certainly could happen again this year.
Analyst Predictions for ETH
British-based banking giant Standard Chartered plc set a price target of $26,000 to $35,000 for ETH. Its team of financial analysts believes that ETH is more similar to a financial market with more use cases than BTC, which they view as solely a currency. However, they note that for ETH to reach $35,000 and overtake BTC as the largest cryptocurrency, BTC would need to trade near $175,000. They add that ETH is a higher-risk investment than BTC but could yield a higher reward. This would likely take at least a year and requires more widespread adoption and awareness of cryptocurrency as a whole.
How To Store ETH Safely
For added security, ETH can be stored in a wallet rather than leaving it on an exchange.
Best Hardware Wallet: Ledger
Hardware wallets store cryptocurrencies offline. The user’s private keys, which are used to authorize transactions, are stored on the Ledger device. This process keeps the keys offline and away from hackers who could access the keys from an online location. You can even earn interest on your digital assets or make trades directly from your Ledger wallet, so you don't need to sacrifice usability for security.
Best Software Wallet: ZenGo
ZenGo is a mobile application that offers a noncustodial wallet to store private keys. In addition to being a wallet, ZenGo allows users to buy cryptocurrencies in the application for low fees.
Ethereum NFTs and DeFi
Non-fungible tokens (NFTs) are digital assets that contain special identifying information. These digital assets are retained in an immutable smart contract. This setup makes each NFT unique, hence the term non-fungible. NFTs allow artists and collectors to prove ownership of a digital artwork. The immutability of the blockchain proves that an NFT artwork is authentic and identifies the owner. Art seems to be the NFT use case that has already developed a strong ecosystem around it and has gained mainstream traction.
OpenSea, the premier NFT trading platform, uses the Ethereum network for its NFTs. OpenSea has seen a transaction volume of over $10 billion in 2021, making it by far the largest NFT exchange. This is a huge perk for the price of ETH because NFTs are getting large numbers of new users into the cryptocurrency space.
Is a $100,000 ETH Possible in the Future
A $100,000 ETH is possible in the future, but it would require true mainstream adoption. Ethereum would need to become a far larger player in the global financial system through its DeFi applications. Digital art through NFTs would also need to continue to explode in popularity. To achieve this adoption, Ethereum 2.0 needs to be rolled out and successfully solve the network's scalability problems. If a $100,000 ETH is to become reality, it needs to get through the Ethereum 2.0 transition quickly to beat competitors that offer more efficient systems with lower fees.
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