Bitcoin might get all the attention as the world’s most popular cryptocurrency, but Ethereum sits comfortably in the number two position and has been a better investment over the past five years.
Indeed, the price of Ethereum (ETH) has skyrocketed at an annual clip of 277.44% since October 2015 when it traded at just 50 cents per coin. Compare that to the price of Bitcoin (BTC), which has grown at a still impressive annual rate of 112.63% over the same time period and you’ll see that Ethereum has more than doubled the annual rate of return of the more popular Bitcoin.
What does that mean for the price of Ethereum in the future? Will it continue to outperform Bitcoin as an investment over the next five years and beyond? To answer this, let’s look at the difference between Bitcoin and Ethereum, and explore what each of these cryptocurrencies has in store for the future.
What Is Ethereum?
Ethereum is more than just a cryptocurrency. It’s an entire platform built on a blockchain with a complete programming language that allows developers to write their own smart contracts and decentralized applications (DApps). Ether is the internal ‘crypto-fuel’ of Ethereum and is used to pay transaction fees.
Ethereum can essentially be broken down into three main uses: currency, building apps, and record keeping. In fact, companies are already using Ethereum to manage property, shares, and contracts – and even to play games such as CryptoKitties, where gamers breed and trade digital cats.
The Ethereum concept was first introduced in 2013 in a white paper written by Russian/Canadian programmer Vitalik Buterin. It launched an ICO (initial coin offering) in 2014.
Unlike Bitcoin, there are no limits to how much Ether can be produced. Today, Ethereum has a market cap of $43 billion and its trade volume is roughly $9 billion per day. In comparison, Bitcoin has a market cap today of $217 billion and a trade volume of $17 billion per day.
Because Ethereum offers potential beyond just a decentralized currency, Ethereum is widely thought to be a better investment than other cryptocurrencies such as Bitcoin.
Another key reason to be optimistic about the price of Ethereum is the long-awaited upgrade to its network – Ethereum 2.0 (Eth2). With a planned launch of its first stage (Phase 0) later in 2020, Eth2 aims to reduce energy consumption, allow the network to process more transactions, and increase its security. The big change is a focus on “staking” new coins instead of mining them.
Mining involves a tremendous amount of computer power to solve complex algorithms. Successful “miners” are rewarded with cryptocurrency. Staking, or Proof of Stake, is not dependent on computer power. Instead, it depends on the age of and amount of coins you hold. Instead of mining, Proof of Stake relies on “foraging” by a network of trusted and loyal ‘Validators.’
Ethereum Price Prediction 2020
The launch of Ethereum 2.0 has generated significant buzz in the crypto community and the price of Ethereum has increased by 193% so far in 2020, to reach $382 (USD). That’s still significantly off of its high in January 2018 when ETH hit $1,405 (USD).
There are some wild predictions for the price of Ethereum, with some estimating a year-end price of $1,000 while some less enthusiastic predictions have Ethereum price falling to $100.
LongForecast.com called for a $300 ETH price by February 2021. Crypto Research Report predicted a $331 ETH price in 2020 and a $3,500 ETH price in 2025. Finally, Skew Analytics predicted an Ethereum price of $480 in 2020.
Forecasts from cryptocurrency news sites should be taken with a huge grain of salt, as there’s clearly an interest and bias towards seeing cryptocurrencies like Ethereum and Bitcoin rise in value.
That said, there’s no denying the growing popularity of cryptocurrency as an investment, a digital currency, and in the case of Ethereum, as a platform for smart contracts and decentralized applications.
Our Ethereum price prediction? Expect continued growth and volatility for Ethereum for the remainder of 2020 and into the near future. This story is still being written, but if history is our guide, we know that the price of Ethereum has been as high as $1,273 (USD) per coin, and as low as 50 cents (USD) per coin. There’s a wide range in between.
Bitcoin might get all the headlines in the cryptocurrency space but Ethereum has been the better investment for the past five years and has potentially the stronger future. Its multi-faceted platform that supports digital currency, smart contracts, and decentralized applications has only scratched the surface of their use.
Ethereum certainly appears to have more upside as an investment. But know that any investment in cryptocurrency is highly speculative and you should only invest amounts that you can afford to lose. This technology is still in its infancy, so expect continued volatility as it evolves over time.
When in doubt, you could always split your investment 50/50 between Bitcoin and Ethereum using the new Wealthsimple Crypto trading platform. That’s what I did when I wanted to test it out for myself. You can trade Bitcoin and Ethereum 24/7 with as little as $1 – and you won’t pay any commissions or fees.
Intrigued by Bitcoin cryptocurrency? You can also check out How to Start Bitcoin Trading.