Ethereum’s Rally and the Spike of Vitalik’s Fortune

2021/05/08 14:51:22

In February's crypto rally, ether briefly touched the $2000 mark. However, on May 3, ether recorded an all-time record high of $3,450, gaining more than 360% from the 1st of January, this year. This is the highest any well-known cryptocurrency has jumped in 2021. Bitcoin managed a 95% jump early on.

This spike has made the Ethereum ecosystem the first choice for the developers launching decentralized finance (DeFi) applications and non-fungible token (NFT) platforms.

Ether’s Price History

The ether price had launched in 2015 at $2.14. It spiked up to $1,243.42 during the cryptocurrency rally held in January 2018. The price experienced a sudden fall back to $86.17 just 11 months later. The price rose to $729.65 from $125.63 in the year 2020, a 480% increase and again it has gained another 350% so far in 2021 reaching an all-time high of $3,450 in May. At the time of writing, ether is trading at about $3,550 per token.

Speculations have been going on about the cause of the spike in the price of the ether. James Quinn, the managing director at Hong Kong Cryptocurrency Private Wealth Management firm Q9 capital quipped that the spike can be partially attributed to a shift toward DeFi.

Effect Of the Spike on Ether

With the current rise in the price of ether, it is predictable that more investors may want to consider investing in Ethereum and this could further surge the price in the coming future. More so, with a shift toward DeFi tenable to many, Ethereum will probably not see a downturn any time soon. Even if it does, it is bound to surge up again.

Another effect is that ether holders obviously have an increase in financial valuation. A notable mention is the co-founder of the Ethereum platform, a 27-year-old programmer, Vitalik Buterin, whose worth has just been estimated to be over a billion dollars. As the price of ether surged, the valuation of his crypto assets has surpassed the $1 billion mark. This is just his main account. His second account appears to have $2.8 million in Ethereum tokens.

About Ethereum

Ethereum is an open-source, blockchain-based decentralized software platform which utilizes its distinct cryptocurrency known as ether. In other words, Ethereum is a platform which allows developers to run smart contracts on its blockchain, as well as to easily create these smart contracts using a Turing complete programming language, Solidity.

Ethereum enables Distributed Applications (DApps) and smart contracts to be built without any interference from any third party and also curtails fraud. The Ethereum’s cryptographic token is like the vehicle with which players or developers move around on the other Ethereum platform. Ether is used for mainly two purposes:

Running applications and monetizing work inside Ethereum,
Trading and investing, like other cryptocurrencies.

Ethereum stated accordingly that "it can be used to codify, decentralize, secure, and trade just about anything.”

After an actor maliciously stole over $50 million worth of funds in 2016, Ethereum was split into two different blockchains known as Ethereum (ETH) and Ethereum Classic (ETC).

The $50 million worth of funds was part of the fund raised on the Decentralized Autonomous Organization (DAO), which is a set of smart contracts originating from the Ethereum Software platform. A smart contract in simple terms is an agreement written in codes between two parties. It stipulates the conditions that have to be met by each party for the contract to be executed and once these conditions are met, the blockchain processes and executes the contract without a need for verification by a third party.

Ether vs Bitcoin

Ether is the world’s second-largest virtual currency by market capitalization today. According to market value, ether is second only to Bitcoin (BTC) which was first launched 11 years ago, on January 3, 2009. Ethereum, on the other hand, was launched on the 30th of July, 2015.

Ether does not have an absolute cap on the total number of ether tokens, unlike Bitcoin. Ether changes and constantly grows based on the demand. This makes the Ethereum blockchain notably larger than the Bitcoin blockchain and there is an expectation that this will continue to be in the foreseeable future.

Another notable difference is the amount of time it takes to build a new block. A new block in the Ethereum blockchain can be confirmed within seconds while it takes a couple of minutes for the Bitcoin to occur.

Ether was never intended to replace or an alternative to the currencies or to replace their mode of exchange, unlike Bitcoin. Rather, ether is created to facilitate and as well monetize the operation on the Ethereum platform.