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The Rise of Ethereum in 2021: A Detailed Analysis
During the course of 2021, Ethereum, the second-largest cryptocurrency based on market capitalization, has exhibited an impressive surge of more than 300%. Starting the year at $775 and peaking beyond $3000 by late September, this substantial rise in Ethereum’s value can be attributed to its strong correlation with Bitcoin and the latter’s price fluctuations. However, Ethereum’s resilience and growth are also underpinned by its innovative vision, advanced technology, and track record of spearheading smart contract development.
Understanding Ethereum
Vitaly Dmitriyevich ‘Vitalik’ Buterin, a visionary Russian-Canadian programmer, identified the necessity to progress beyond digital currency into a platform capable of serving multifaceted purposes beyond mere payments. Ethereum, as elucidated in the whitepaper, represents a blockchain network equipped with a comprehensive Turing-complete programming language. This framework empowers individuals to craft smart contracts and decentralized applications, thereby enabling them to establish their own distinct rules for ownership, transaction formats, and state transition functions. Ethereum operates as an open-source platform harnessing blockchain technology to facilitate secure execution of smart contracts and cryptocurrency transactions without an intermediary. Furthermore, Ethereum supports two types of accounts: externally owned accounts managed by private keys tied to human users and contract-based accounts. Consequently, Ethereum provides developers with the tools to create a diverse array of decentralized applications.
To finance its ventures, the company initiated a crowdfunding campaign in July and August 2014, during which participants were allocated Ethereum tokens known as ether, or ETH. Ether serves as the primary internal cryptocurrency of Ethereum, utilized for transaction fees. Since its inception, Ethereum has witnessed a meteoric rise in value driven predominantly by its Dapps and smart contract technologies. Michael Zagari, an investment advisor based in Montreal, aptly analogizes Ethereum to the Internet, with ether functioning as the applications built atop this digital infrastructure.
The Evolution of Ethereum
Over the span of six transformative years leading up to the mining of the genesis block, Ethereum has made significant strides. Conceived as a response to Vitalik Buterin’s dissatisfaction with the limitations of Bitcoin, Ethereum has evolved into the second most valuable cryptocurrency currently in existence. Bitcoin, created with the singular aim of providing a decentralized alternative to traditional financial systems, elucidates the genesis of blockchain technology. Vitalik Buterin envisioned a broader application of blockchain technology beyond Bitcoin and advocated for the integration of a scripting language within Bitcoin to facilitate the development of blockchain applications. However, his proposal was rebuffed. Consequently, in late 2013, he proposed the establishment of a novel platform conducive to generalized scripting and application development.
The Ethereum whitepaper outlining this groundbreaking technology was published in November 2013, setting the stage for the public commencement of Ethereum’s platform development in January 2014. The inaugural Ethereum development team comprised luminaries such as Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson. The Swiss entity Ethereum Switzerland GmbH spearheaded the initial development of the Ethereum platform, culminating in the creation of the Ethereum Foundation as a non-profit organization in June 2014 to foster the advancement of the Ethereum cryptocurrency platform. Presently, Ethereum has burgeoned into a multifaceted entity encompassing Ethereum classic, solo mining, and dual mining of Ethereum, thereby simplifying the process of purchasing Ethereum.
The Easiest Way to Acquire Ethereum
With the increasing integration of cryptocurrencies into mainstream payment platforms like PayPal, the process of acquiring Ethereum has been streamlined. Today, individuals can conveniently purchase Ethereum using a credit card, with options such as Grayscale Ethereum trust, Ethereum ETFs, and the Chicago Mercantile Exchange serving as viable alternatives to acquiring Ethereum from cryptocurrency exchanges. Prospective buyers are encouraged to familiarize themselves with essential steps and considerations prior to investing in Ethereum.
A Deep Dive into Ethereum Classic
Ethereum Classic represents a platform that enables the management of digital assets independently of third-party entities such as banks or financial institutions. By facilitating the creation, deployment, and execution of immutable smart contracts, Ethereum Classic embodies the ethos of ‘Code is Law,’ ensuring the preservation of the network’s original history. As a fork of the original Ethereum chain, Ethereum Classic upholds the foundational principles of Ethereum, distinct from the altered Ethereum blockchain known as Ethereum (code: ETH). The native Ether token of Ethereum Classic, denoted as ETC, is traded on digital currency exchanges, where it is generated as a reward for network participants engaged in the mining process.
Mining Ethereum and Ethereum Classic
Mining serves as the process through which cryptocurrencies are acquired by leveraging powerful computers to solve cryptographic equations. Mining entails validating data blocks, adding transaction records to a public ledger (blockchain), and can be accomplished through various methods such as solo mining, dual mining, and cloud mining.
- Solo mining of Ethereum classic entails independent mining devoid of pool participation, a practice popular during the nascent stages of Ethereum Classic.
- Dual mining of Ethereum and Ethereum Classic involves pooled computational resources, fostering collective mining efforts to validate new blocks.
Future Prospects of Ethereum
In early September, Ethereum achieved a peak of $3,841, surpassing the $3,500 price threshold that had posed a challenge for the cryptocurrency throughout August. Notably, Ethereum has surged by approximately 50% since early August when it traded at around $2,500, as per data from CoinDesk. Nonetheless, in the wake of China’s cryptocurrency ban announcement, a correction in Ethereum’s value seems imminent. Analysts speculate that Ethereum may experience a price decline ranging between $2602 and $2917, as outlined in the latest Ethereum Price Prediction and Forecast. Previous resistance at the $3,350 level could potentially serve as a support level, offering a price floor for Ethereum’s valuation.
Ethereum Price Forecast & Prediction
- China’s crackdown on cryptocurrencies has led to the closure of over 10,000 mining operations, impacting Ethereum’s price trend.
- The trajectory of Ethereum’s price will be influenced by upcoming ‘purchasing nets.’
- Deutsche Bank compares Ethereum to ‘digital silver,’ positioning it as a viable alternative to Bitcoin’s ‘digital gold.’
- Ethereum Classic has witnessed a surge alongside Bitcoin, Ethereum, Litecoin, and Dogecoin, prompting speculation about future trends.
- ETH Price Analysis suggests a potential bullish reversal for Ethereum amid a slowdown in the bearish trend.
- Virgil Griffith, an Ethereum developer, recently pleaded guilty in a North Korea sanctions case, underscoring legal challenges in the cryptocurrency sector.
- A notable Ethereum mining pool has suspended its operations, signaling shifts in the cryptocurrency mining landscape.
Closing Remarks
The recent volatility in the crypto market triggered by China’s real estate crisis culminated in a significant market downturn, culminating in Ethereum plummeting to $2,651. However, Ethereum rebounded swiftly on September 26, nearing the $3,000 mark. This resurgence in Ethereum’s price is largely attributed to the burgeoning interest from institutional investors. According to analyses from JP Morgan, institutional investors are demonstrating a preference for ETH over BTC. While Ethereum continues to garner interest, driving the charts of Ethereum and Bitcoin, scalability concerns persist, casting a shadow over Ethereum’s future trajectory until the launch of ETH 2.0.
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