This year has really been tumultuous for the crypto market. Indeed, Ethereum (ETH) it has gone from all-time highs at the beginning of the year to about a 83% crash in price currently in the 3rd quarter. Additionally, since the the initial price cratering in Q1, growth has been inconsistent.
The price of ETH has suffered woes since the beginning of this year. Furthermore, the cryptocurrency market has recorded massive losses here and there with Bitcoin (BTC) and ETH being the main culprits on several occacsion. With the current market turning bearish one second and bullish the next, investors and traders are inquisitive to know why ETH’s success is dragging.
Factors Responsible
Ethereum is distinct from Bitcoin in the sense that it is an open source decentralized application (DApp) rather than the straight store of value. The price of Ether, which is usually generated by the Ethereum website, rises and falls with demand and supply like other crypto coins.
Developers of cryptocurrencies were using Ethereum to control their tokens and projects during the cryptocurrency boom last year. As a result, the price of Ether rose to an all-time high of $1,420. But, since then, the demand and price for ETH are on a downward trend.
Ethereum is still the platform of choice for many cryptocurrency projects. But, more and more fast and efficient platforms are coming on board these days. Cardano, NEO, and others offer faster transaction speed and strong blockchain verification technology than the current Ethereum network.
Also, the Ethereum network has scalability issues with its current network. This means that it cannot provide very high-speed transaction rates on the current blockchain and runs slowly under a heavy load.
The Perfect Example
CryptoKitties – The first blockchain game, causes Ethereum to run into performance issues because the trade of many digital moggies messes it up. This game allows it’s players to buy, sell, and even train virtual cats on the Ethereum network via ETH. To make matters worse, more games and applications are coming out on the Ethereum network making it a victim of its own success.
Is there Any Hope for ETH?
The fact remains that Ethereum has scalability/performance problems. Though, plans are underway to solve these woes.
1. Sharding
This is the technology that will separate data across many servers to divide its digital ledger. This will help to reduce transaction times because only useful shard will be distributing data, not the whole blockchain network.
2. Plasma
Ethereum, like other cryptocurrencies works on smart contracts. So, adding another layer of the smart contract will help to reduce the load on the entire network. This is a scaling solution that will replace server farms with peer-to-peer networks running decentralized applications. Another name for this is Plasma.
3. Casper Update
The Casper Update will introduce a “proof of stake” platform to reduce dependence on crypto mining or “proof of work” which consumes much time and energy.
4. Raiden
The idea of the Raiden Network is to take transaction payments “off-chain.” This means that transactions do not need processing or confirmation by the whole blockchain. Rather, only the two parties that take part in the transaction need to reach an agreement.
So, anybody can open a new channel on top of the Ethereum platform provided they enter into an agreement. Consequently, only those who are involved in the transaction can use this option.
Users can go back “on-chain” only when they want to spend their coins outside of the Raiden network. Although Vitalik Buterin, the creator of Ethereum has spoken against Raiden, the network itself has raised more than $33 million during their ICO exercise.
These proposed solutions or updates will happen in the next few months and years. They will help to restore speed to Ethereum.
History of Ethereum (ETH) Price Recovery
ETH has no good track record of price recovery after a fall in the last year. But, there is an improvement this year. Take a look!
The price of ETH declined from $872 to $649 in February this year. This translated to a 25% decline within a period of 3 days. But, ether took a bullish trajectory in the following days, recording a massive 30% growth, which amounts to $951.
From that high, it began to sink steadily to a very low $370 in April. This translated to a 60% loss of its value in less than 2 months. Fortunately, the price of Ether did not remain there for long, rather it started increasing gradually.
By May, Ether gained an impressive 54% of what it lost, rising to $816 from its $370. The interpretation is that ETH has the potential to recover after recording great losses.
Even during the current upside, ETH has risen over $50 USD from mid September to the beginning of October 2018.
Why Ethereum and not Bitcoin?
Ethereum and Bitcoin are both cryptocurrencies. While Bitcoin allows people to trade for cash without involving third parties such as banks, the impact of Ethereum is enormous. The Ethereum code makes it possible and simple for transactions of any complexity to receive automatic authorization.
Apart from this key feature, the applications of Ethereum seem to be endless. Let’s examine some of the advantages of Ethereum in the crypto world.
- Users of ETH can develop and issue their own tokens which can be applicable to describing virtual assets or shares.
- Ethereum uses Ethash, a “proof of work” algorithm to pay its miners. Thus, it makes sure that every miner receives payment for their work, usually with 5 ether for every block mined.
- Ether uses GHOST protocol to fasten the confirmation of blocks, which takes place in less than 12 seconds.
- This cryptocurrency uses blockchain technology and in the same manner, gives its users the opportunity to create their own personal operations.
- Ethereum uses a platform or a novelty blockchain technology that allows applications to run the way programmers configure them without any downtime, fraud, and interference of any kind.
- Ethereum developed an infrastructure that is more wonderful, excellent, and reliable than the number one cryptocurrency.
What is the Future of ETH Price?
The success of ETH in the days ahead lies in the ability of its developers to solve the scalability and performance issues. If these proposed strategies are adequately brought to fruition, the Ethereum network may outperform Bitcoin as the most successful cryptocurrency in the world.
Although the growth of ETH is questionable on a daily basis, it has the potential to recover from its lost glory. Until then, ETH’s future is still bright and it may rise above Bitcoin.
RISK DISCLOSURE
This article should not be taken as, and is not intended to provide, investment advice. Users are ultimately responsible for the investment decisions he/she/it makes based on this information. It is your responsibility to review, analyze and verify any content/information before relying on them. Trading is a highly risky activity. Do consult your financial adviser before making any decision. Please conduct your thorough research before investing in any cryptocurrency and read our full disclaimer.
