What is Ether? Your simple guide to the cryptocurrency
What is Ether? Read our simple guide to the world’s second-biggest cryptocurrency – including its price history and 2020 predictions
Every main character needs a rival – and in Bitcoin’s case it’s Ethereum (ETH). The cryptocurrency may be a distant second in terms of market capitalisation but many believe it offers far more utility and infinitely more use cases. But what is Ether exactly? Here, we’re going to cut through the noise to give you a straightforward guide.
Any guide worth its salt starts with a definition – but when it comes to the Ether currency, the dictionary talks about clear skies or anaesthesia… neither of which have anything to do with this coin.
What does Ether mean in the crypto world? Well, it’s a form of digital money that is primarily used on the Ethereum platform. The Ethereum coin, as it is sometimes referred to, can be transferred to people you know over the internet immediately – and usually for a far lower fee than more established mainstream rivals.
You could compare Ether to cash. When Emma gives Jack a $5 note, no third party needs to verify that the transaction has taken place. The same would happen if she sent him 1 ETH (except for the fact that Jack would be much happier as it is worth more than $200).
Ether’s main purpose arguably extends beyond offering a form of digital money, it helps keep the Ethereum blockchain running. This is because the Ethereum network is actually home to an array of decentralised apps. Known as DApps for short, these open-source applications are beginning to deliver more efficient, blockchain-based alternatives to tools we use every day. Whenever transactions are made and operations are completed, it costs a tiny fraction of Ether – also known as gas.
Who created Ethereum? Well, it was the brainchild of a teenage programmer called Vitalik Buterin. He became aware of cryptocurrencies and blockchains about two years after Bitcoin was launched – and was convinced that Bitcoin was simply too limited in scope. Buterin enlisted several others as co-founders – and a crowdsale for ETH tokens was held in the summer of 2014. About $18m was raised as a result.
ETH price history
Let’s take a look at how the Ethereum coin has appreciated since its network went live in July 2015 – about a year after the crowdsale happened. After the excitement surrounding ETH began to cool slightly, the coin mostly traded under a dollar for the rest of the year.
Things started to get interesting for early ETH adopters in 2016. Prices ballooned from about $0.95 on January 1 to $20.59 on June 16 – growth of about 2,060 per cent. Once again, ETH calmed down and traded at about $7 or $8 until the year’s end – but little did investors know that a crypto boom was just around the corner.
From a humble starting point of $8.33 as 2017 began, the Ether currency surged. At one point on December 20, a single ETH would have set you back $868 – that’s a 10,320 per cent premium on where prices were at the start of the year. The surge was far from over. After retracing to $675 on December 22, ETH rallied again in early 2018 – more than doubling in value to a whopping $1,432.88 on January 13. This remains its all-time high.
The heat quickly left the market after this. Come December 2018, ETH was trading below $100. However, there have been signs that the Ether currency is beginning to twitch to life once again. ETH has repeatedly broken $200 over the past 18 months – even briefly trading above $320 in June 2019. This has largely been fuelled by excitement that some major companies are building their projects on Ethereum’s network – Microsoft, Amazon and JPMorgan among them.
Some analysts believe that Ether has the scope to return above $1,000 this year – although the uncertainty caused by the coronavirus could dampen these hopes. Others believe that, in time, Ethereum has the potential to overtake Bitcoin in terms of market capitalisation. Given that BTC currently has a market dominance of 63.8 per cent – and Ethereum’s market cap stands at $25bn compared with Bitcoin’s $165bn – this prediction seems particularly outlandish.
Who accepts Ethereum coin?
You will find the Ether currency on all major exchanges given its established reputation as the world’s second-biggest cryptocurrency. Like BTC, ETH has somewhat struggled to gain widespread acceptance across mainstream retailers – but if you’re determined, it is possible to find electronics stores, pet shops and travel companies who embrace this payment method.
One particular boost for the Ethereum coin lies in how fintech companies are beginning to release cards that can be topped up with crypto and used as normal in brick-and-mortar businesses. Here’s how it works: Polly would load 10 ETH on to her card – and whenever she makes a purchase, perhaps a snazzy new laptop, 2 ETH would instantly be converted into dollars.
In the coming months, keep a watchful eye on decentralised finance, as Ethereum is an established player in this industry. We are increasingly seeing platforms pop up where users can earn interest on the ETH they save, lend it to others, and even get a loan.
What is Ether going to be worth by the end of this year? Will it be able to snatch market share away from Bitcoin? Are new use cases going to continue popping up? We may have to wait for answers to these burning questions. But given how active development is continuing on the network – with a system-wide upgrade called Ethereum 2.0 set to be completed in 2022 – some analysts are optimistic.
Enhanced infrastructure could pave the way for more imaginative projects that break into the mainstream. It is also hoped that Ethereum 2.0 will solve longstanding capacity issues, as the blockchain can only handle 15 transactions a second at present.
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