What will 2020 hold for Ethereum and its cryptocurrency Ether?
Price predictions look promising. We take a closer look
It’s almost the end of a decade which has witnessed the birth of cryptocurrencies. The digital coins have certainly taken the world by storm with their stomach-churning volatility, leaving some investors sitting on riches as they enter the new decade, while others languish in losses.
But what does 2020 have in store for virtual currencies and in particular Ethereum, the world’s second largest crypto by market cap? Is Ethereum a good investment? And more importantly, should I invest in Ethereum?
Ethereum (ETH) has come a long way since its inception by Vitalik Buterin back in 2014.
The Canadian-Russian developer wanted to use blockchain technology for more than just financial transactions, as had already been ably demonstrated by Bitcoin and its ilk.
Buterin wanted to create something different. He wanted to see blockchain technology used to create a world of self-executing agreements or “smart contracts” that could simply and transparently allow the transfer of money, property, shares or anything of value between parties.
As smart contracts would require a number of parameters to be fulfilled before being triggered and transactions would be recorded on a public blockchain, code would run exactly as written without risk of fraud or interference. What’s more, as this would negate the need for lawyers or other intermediaries, any costs incurred would be very low. And so Ethereum was born.
Nowadays developers can use one of Ethereum’s programming languages to write their own smart contracts and decentralised apps (dApps) and run them Ethereum’s open software platform.
As for usage, Ethereum’s security and simplicity makes its smart contract technology appealing to hundreds of industries. While already used for Initial Coin Offerings (ICOs), smart contracts’ potential to revolutionise industries ranging from tracking factory supply chains, music industry royalties, clothing and food provenance and even running electronic voting systems are all being currently investigated.
Ethereum Price History
Ethereum has its own cryptocurrency “Ether” (ETH) that is used as a digital coin that can be spent and transferred like Bitcoin. Ether is also used to pay for “gas”, the fee payable for running your smart contract or dApp on the Ethereum network.
When first launched in 2015, one ETH was worth just $0.31 (£0.24).
January 2017, saw ETH worth around $10 a coin and the start of the crypto bull run, fuelled by a surge in the number of ICOs using the Ethereum platform as well as public interest in cryptocurrencies.
The bull run saw Ethereum rocket up by over 14,000 per cent to its all-time high of $1,417.38 in January 2018, making it one of the best performing cryptocurrencies by ROI.
However, the Ethereum price history then hit a more sombre note, losing 73 per cent as the price crashed back down to $384 by April 2018.
Ethereum value and market cap
Despite another rise in May 2018, and then again in June 2019, Ethereum, like many other cryptocurrencies has been on a bit of a downward trend. The Ethereum price today is $148.03 (£113.89) with a market cap of $16,07bn (£12.36bn). Its market share is around 10 per cent.
Ethereum price forecast
So, what would be the Ethereum prediction for the future? Well, some believe that Ethereum is somewhat a victim of its own success.
While it has become enormously popular amongst developers wishing to run ICOs, smart contracts and dApps on the platform, this has left the network struggling to cope. Intrinsic problems have been exposed that reveal the platform is ill-equipped for the speed and scalability required of it.
For example, when a dApp game called Cryptokitties soared in popularity in 2017, its transactions took up so much available space on the Ethereum platform that it threatened to bring the network down.
What’s more, Ethereum transaction costs are considered by many to be too high.
Fortunately, help is on hand in the form of the imminent launch of Ethereum 2.0, which promises some major changes.
By introducing a proof-of-stake chain to run in parallel to Ethereum’s proof-of-work chain and partitioning the database into “shards”, Ethereum 2.0 transactions will run significantly faster. It will also overcome the current scaling issues. The launch of Ethereum 2.0 is due any day now, while “sharding” will be introduced in 2020.
Ethereum price prediction 2020
Opinions remain largely positive regarding the Ethereum price prediction for 2020.
For a start, Ethereum is currently considered undervalued at just $148.03, despite numerous factors in its favour, including a talented developer pool and an active community of miners and followers. Ethereum has a good reputation and brand recognition and importantly, was the first to offer a blockchain technology platform for developers to use for writing their own smart contracts and dApps.
The blockchain platform also boasts a steady revenue stream from facilitating a near-constant supply of ICOs.
What’s more, corporate support for the Enterprise Ethereum Alliance (EEA) – a consortium of companies seeking to use blockchain technology to run smart contracts that includes Microsoft, Intel, JP Morgan Chase Bank and ING Bank – is growing, with more companies looking to utilise the technology.
So, what is the Ethereum forecast for 2020?
Many analysts look to Bitcoin’s performance when predicting Ethereum’s price forecast. While Ethereum hasn’t had an impressive 2019, Bitcoin has been considered to be in a bull market since April 2019, which could indicate better times to come for Ethereum.
What’s more, geopolitical tensions between the US and China could also work in its favour.
Patrick Armstrong, CIO of Plurimi Investment Managers told CNBC today that he believes the trade war between the countries is “unresolvable” after the US President Trump told reporters in London that it might be better to wait until after the US’ 2020 election to strike a deal with China. As Bitcoin has historically performed well at times of heightened geopolitical tension, this could also prove bullish for Ethereum.
Wallet Investor’s price prediction tool believes Ethereum could be a very good one-year investment, forecasting the price to reach $200.48 by the end of 2020, with a long-term earning potential of 34 per cent in one year.
When looking further ahead, it predicts a long-term increase to $392.21 by the end of 2024, an increase of 163 per cent.
Blockchain analyst, Bobby Ullery, reckons 5 per cent of the world’s GDP (a total market cap of $4.55tn) could be stored and exchanged using blockchain technology by the end of 2020.
His reasons for his views include: the massive investment that world banks in the EEA are making into blockchain technology, the “interest in digitizing the currencies of countries like Russia, China and others” and because it’s “cheap, faster and more secure than current financial technologies”.
Ullery reckons Bitcoin and Ethereum could each occupy 25 per cent of the crypto market in the future, with the rest distributed amongst the other digital coins, meaning that one ETH could be worth an impressive $11,375.
But not everyone believes in the cryptocurrency’s future. Crypto journalist Matthew De Silva, for example, has deemed Ethereum to be “intrinsically worthless” in the past, earning himself the ire of Buterin.
It seems that many have high hopes for the blockchain platform. However, one point that does concern investors is that unlike most other cryptocurrencies, Ethereum has no cap on the total number of coins that can exist. Investors fear that with no scarcity in supply to worry about, the demand will not push up the price.
But undoubtedly, the biggest hope for the future of the number two cryptocurrency lies with the Ethereum 2.0 upgrade. If, as promised, it can address the operational and scalability issues that plague Ethereum and make its transaction fees more competitive, we will no doubt see the blockchain platform move from strength to strength.
Ethereum can be easily bought from exchanges or traded for Bitcoin at companies like currency.com. But whatever your opinion on where Ethereum’s price will head in 2020 and beyond, it will be interesting to see what the future holds for the blockchain platform.
FURTHER READING: What is Ethereum?
FURTHER READING: Can you make money from Ethereum 2.0?