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 six years.
Indeed, the price of Ethereum (ETH) has skyrocketed at an annual clip of 332% 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 142% 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.
Ethereum Price Prediction 2021
The launch of Ethereum 2.0 has generated significant buzz in the crypto community and the price of Ethereum has increased by an incredible 328% so far in 2021, smashing through the $4,000 mark to reach an all-time high of $4,182 (USD).
There are some wild predictions for the price of Ethereum, with some estimating a year-end price of $5,000 while some less enthusiastic predictions have Ethereum price falling to $100.
FXStreet called for a $3,000 ETH price by the end of 2021. Coinpedia predicts a price of $5,000 before the end of the year. Finally, Digital Coin Price has an Ethereum price of $3,700 in 2021 and $8,000 by 2025.
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 2021 and into the near future. This story is still being written, but if history is our guide, we know that the last time Ethereum reached record highs in January 2018, the price proceeded to crash from $1,300 down to $83. Needless to say, there is a wide range of possible outcomes and no one has a crystal ball.
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The Potential of 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. At the time of writing this article, Ethereum has a market cap of $377 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 $48 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 the first stage (Phase 0) launched in December 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.’
Bitcoin might get all the headlines in the cryptocurrency space but Ethereum has been the better investment for the past six 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.
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