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Ethereum is a computing platform that allows developers to create and deploy decentralized applications (Dapps). Its coin ETH is now one of the most rapidly growing cryptocurrencies. Though people think of it as only a medium of exchange or a store of value, in actuality, it is much more than that. It is a decentralized computing network based on blockchain technology, similar to Bitcoin while being more secure, advanced, and efficient.
The long-term bull argument for Ethereum is that it is highly resilient and has significant optionality while striving to provide a win-win ecosystem. The shared platform’s token and scale-economic dynamics tend to achieve zero-sum ecosystems.
Ethereum saw its rise in 2017 and in early 2018 when the price of ETH grew exponentially. The main reason behind that was that a lot of projects were started on the Ethereum Network. The projects had their own coins through Initial Coin Offering (ICO). As an investor, you just have to participate in these projects by sending the money and based on the clauses; you could receive the new ETH token. It was highly simplified and user-friendly.
Its popularity stems from its high quality. It promotes a digital economy focused on DeFi (Decentralized Finance). It is a technology that allows you to send cryptocurrency to anyone for a little cost known as gas fees. It also runs applications that anyone can use with ease.
Let’s understand the long-term bull case in detail and the basics on which the platform is fuelled.
What makes Ethereum different from other platforms?
In simpler terms, it is a marketplace of financial services eliminating the need for third parties, gamers, and apps that can’t steal or censor your data. The following characteristics point towards a long-term bullish outlook for the community and the adoption of this cryptocurrency.
Ether (ETH)
It is the native cryptocurrency to the platform and is the fuel that powers the entire network. Ether is a cryptocurrency that works on a peer-to-peer basis.
Smart Contracts
This is Ethereum’s game-changing feature. In general, it is basic computer software that allows two parties to swap assets. You can trade stocks, money, or any digital item. Users can easily create and execute these contracts, which cannot be changed.
The contracts are handled in a transparent and trustworthy manner, and the identities of the two parties are protected on the Ethereum network. The contract is updated on the platform once it is completed.
Ethereum Virtual Machine (EVM)
It is also one of Ethereum’s distinctive features. It’s designed to be used as a runtime environment for compiling and deploying Ethereum-based smart contracts. It functions as a diagnostic engine for smart contract language. It’s just like the sandbox where we used to play. Furthermore, this will protect and secure your assets.
You can see how Ethereum runs the smart contract from the image above. It operates as a global processor that gives developers its computing power. Developers use this resource to create smart contract dApps.
What makes Ethereum a long-term Bull case?
Ethereum facilitates better transactions and hosts many dApps and a type of fundraiser known as an ICO (Initial Coin Offerings), allowing developers to sell their product’s concept to pay for its development.
The bull claim for Ethereum is that, with Ethereum as a protocol, the world will be more advanced, transparent, and safe. People will require decentralized alternatives which are cheaper, safer and eliminate firms’ rent searching behaviour. It will continue to evolve and create a parallel financial system.
The chart above shows that it, like any other cryptocurrency, is volatile. It is, nevertheless, picking increasing speed. Although it has a steep learning curve, it has performed well in recent quarters. In February of 2021, the Ethereum transaction fee reached a new high of $23 per transaction, which was a piece of wonderful news for miners.
Let’s have a look at some of the significant happenings that occurred in 2021 that show that Ethereum is projected to have long-term positive characteristics:
Launch of Ethereum 2.0
Since its first release in 2015, it has seen just minor modifications throughout the last five years. It has changed and improved throughout time. Ethereum 2.0 offers new features and improved efficiency. Due to the fact that the network will take several years to be deployed completely, ETH 2.0 is not yet visible on the rating metrics.
The launch of ETH 2.0 will be all you want it to be in the future. According to a Coin Price Forecast survey, the value of Ethereum will climb in the first half of 2022, reaching about $9000. By the end of 2023, the average value of this cryptocurrency is expected to be $11,850.
The support for the Phase “0,” also known as “The Beacon Chain,” debut came directly from the developing Ethereum community, which includes people from all walks of life, including crypto-anarchists, artists, companies, and the general public.
DeFi
The concept pushes decentralized networks to convert existing financial commodities into trustless and transparent protocols that function without the assistance of a third party. It is a global open-source financial system focused on the internet era. DeFi is a service provider that provides Ethereum-based loans. Let’s look at an example to help you grasp it better:
If you have 200 ETH, you can sell it as a loan on a DeFi marketplace. It is simple. Someone agrees to it, the terms are written down in a smart contract, and the borrower supplies collateral. Now, you will end up receiving a high-interest rate on your ETH borrowing.
DeFi is likely to strengthen Ethereum’s long-term bull argument. Several DeFi projects, like MakerDAO, Uniswap, NUO network, Compound, employ ETH as collateral for their financial applications. As the number of DeFi initiatives increases, the companies grow. It will eventually permeate the market, industries, and institutions. The graphic below depicts some of the Ethereum-based projects.
Remarkable Execution
Ethereum’s head start and quick execution make it a better option for institutions to invest in than any other DeFi/Smart Contract cryptocurrency. It has increased institutional investors’ market capitalization. With its growing popularity, it is expected to be the most popular blockchain network for innovative and exciting Dapps in the future.
Most of us feel that clean energy, artificial intelligence, and user-friendly technology will be the next generation megatrends. We can claim that Ethereum is a protocol that will meet the needs of the next generation. The Ethereum Protocol, the next major blockchain protocol, will create an entirely new industry.
We can all agree that Ethereum is the most powerful application network. Ethereum is the way of the future, and it is growing widely in the banking system as well. It is highly underappreciated. In the future, it will greatly expand in the gaming network, tokenized asset ownership network, and insurance network as well. In short, this concept has the potential to fit into the pre-existing internet monopolies, which can simply use the technology to their advantage.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
