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Is 2020 the Year for Ethereum?

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by Julia Sakovich · 3 min read
Is 2020 the Year for Ethereum?
Photo: Shutterstock

At the beginning of 2019 around $1.92 million of ETH was locked into DeFi, by the end of the year, this had risen to almost $3 million in Ethereum.

Launched in 2015, the cryptocurrency Ethereum (ETH) is the go-to digital currency for smart contracts. While cryptocurrencies such as Bitcoin are used to transfer currency from one person to another, Ethereum can be described as highly programmable digital transactions that take place when certain conditions are met.

It has a current circulating value of around $30 billion US dollars, however, this is around just one-sixth of the value of its biggest competitor Bitcoin. Bitcoin accounted for 87% of the value of the cryptocurrency market during its boom in 2017 and has remained the market leader ever since. Ether was not initially created to be a rival of Bitcoin, it was designed to complement the currency. However, its surging popularity has since placed it as a competitor in the eyes of currency traders.

While its market value is significantly smaller, the speed at which Ethereum’s blockchain validates blocks is much faster than Bitcoin’s. Bitcoin’s average block time is around 8 minutes, whereas Ethereum’s hovers at around 25 seconds. Both are still slow in comparison to banking networks like Visa, who can process thousands of transactions within the same time frame.

Despite being the market-leading cryptocurrency, Bitcoin price has decreased by as much as 70 percent since it’s all-time high a couple of years ago. If Bitcoin was to see further decline at any point this year, it could open up the opportunity for Ethereum to gain more of its market share.

At the start of 2020, Bitcoin’s market value did rise by almost 48 percent, however, this is not as impressive when compared with Ethereum’s 92 percent gains during the same period. Furthermore, Bitcoin is seen as a highly volatile cryptocurrency for a number of reasons, including news coverage that brings into question the intrinsic value of the digital currency as a store of value. Ethereum is protected from this slightly due to its additional functionality as a conduit for smart contracts.

What does the Future Hold for Ethereum?

Ethereum is at the center of the emerging demand for decentralized finance, also known as DeFi. DeFi is seen as a highly disruptive trend in the world of financial trading, with users being able to utilize Ethereum to administer, record and distribute transactions without any involvement from traditional banks.

The growth of Ethereum is being fuelled by growing interest and investment in decentralized finance. At the beginning of 2019 around $1.92 million ETH was locked into DeFi, by the end of the year, this had risen to almost $3 million ethers. This suggests that as decentralized finance becomes more commonplace, more and more investors will seek out Ethereum for processing smart contracts.

It has been predicted that cryptocurrency could reach one billion users by the end of this decade, with higher adoption rates in emerging economic markets and amongst startup companies with technological products. Government and financial institutions are also expected to invest in this arm of FinTech, and will at least hold some of their assets in the form of cryptocurrency.

As interest in decentralized finance and cryptocurrency, in general, continues to grow this year, we can anticipate that 2020 will be an exciting time for those using and investing in Ethereum.

Altcoin News, Bitcoin News, Blockchain News, Cryptocurrency News, Ethereum News
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