Cryptocurrency Ethereum’s(ETH) 13% rise over the last 24 hours has lofted it onto the list of the top 100 traded assets by market cap. Today we will be answering all your questions about what is Ethereum and why is it reaching such highs in the markets.
The second-largest cryptocurrency in the world Ethereum is up a whopping 62% with price crossing the $1200 mark on Wednesday. This is the first time ETH saw such a big leap since January 2018 and it is on its way to overtake it’s all-time high that was set on January 13 that year.
— CompaniesMarketCap.com (@CompaniesMarke1) January 6, 2021
The 2021’s gain translates into a $53 billion increase in the overall market cap of Ethereum which is enough for it to overtake the overall market cap of conglomerates such as Wells Fargo, Morgan Stanley, Citigroup, etc.
In the list of top 100 assets in the world by market cap, there is only one other cryptocurrency apart from Ethereum, Bitcoin. Bitcoin too has been tearing through the list and moving up and above several known business groups like Visa, Alibaba, Berkshire Hathaway, and even Tencent. Bitcoin is currently moved to the 10th spot with a market cap of an estimated $12.9 trillion.
What is Ethereum And What’s With Its Sudden Rise?
Ethereum is a computing platform that is based on blockchain enabling developers to create and execute decentralized applications-decentralized meaning not run or overseen by a central authority.
However, the Ethereum blockchain is more advanced than the blockchain technology used with Bitcoin. That is why it is also sometimes known as Blockchain 2.0. Blockchain 2.0 can do much more than the Bitcoin chain does and it does it in mainly 2 ways:
- Smart Contracts
The Ethereum’s blockchain is designed so that transactions can only be carried out when certain prerequisite conditions are met. The rules that are laid out to decide those conditions are known as Smart Contracts.
For example, imagine a shopping website from which X wants to buy an outfit. But to buy something from that website, X needs to have enough money to pay for it. If he doesn’t have enough money then he won’t get the product of his choice. So in this case, a smart contract will look something of this sort:
IF X has $1 in his account THEN the website will ship his order.
- Decentralised Apps or dApps
dApps are simply put those applications that don’t run on a traditional server but run on a blockchain-which is used to decentralize the server. Developers can create dApps on the Ethereum network where the end-users and the decentralized application providers can interact directly. These dApps are sure to give the traditional e-commerce, banking and social media apps a run for their money in the coming years.
Ether is Ethereum’s cryptocurrency. It can be considered a sort of fuel which runs the entire Ethereum network. Ether is used to pay for all the computational resources and transaction fees for all the transactions that are carried out on the Ethereum network. Ether is just like a peer-to-peer currency like bitcoin which can be used to buy and sell things. One big way ether differs from bitcoin is the ability of ether to buy “gas”, which is used to pay for the computation of transactions made.
Why is Ether on such a rise?
Analysts have always suggested that a large portion of ETH’s recent rise is due to the price action of Bitcoin which works in tandem with ether. This recent rise can be seen as a temporary one and may not be sustainable in the long term.
Another major reason for Ether’s rise is that as bitcoin continues on its bullish rally it drives major interest in the cryptocurrency landscape overall. Thus market sentiment mixed with public frenzy is causing a major rise in the value of Ether.