It goes without saying that the cryptocurrency market has grown exponentially over the last few years, along with the maturing public’s knowledge of the industry and increasing accessibility. Ever since Bitcoin, the digital coin that started everything, hit the market, cryptocurrency’s popularity has risen immensely, collectively trading today at around $1.25 trillion. Bitcoin and Ethereum account for more than half of the number of cryptocurrencies owned and sold, being widely regarded as the poster boys in this sector. Yet, despite Bitcoin’s overwhelming dominance, Ethereum is the asset on which diverse investors place large bets.
Needless to say, Ethereum has grown impressively over the last few years, seeing its price these days reach a 12-month high. Despite the many downfalls in the financial market that took their toll on cryptocurrency’s prices and trading volumes, it secured its position as one of the most promising digital assets, with many investors believing that it may massively outperform Bitcoin one day, making it a matter of “when” and not “if.”
The fact that the current market capitalization of Ethereum has reached $233.11 billion and is on an ascending path shows that this cryptocurrency has no intentions of slowing down. Not only are more diverse investors turning to Ethereum, but it is also gaining a more dominant position in their financial portfolios, alongside other asset classes, such as stocks and bonds, aimed at reducing the risks associated with investments. So, what makes Ethereum a go-to for the low-risk investor, and why does it hold more promise than other altcoins?
The network is constantly evolving
One of the most pressing curiosities for someone who is yet to familiarize with cryptocurrency is what makes Ethereum stand out and what advantages it brings to the table compared to other cryptocurrencies. One of the factors that catalyze its massive popularity lies in its large practical application and the ongoing work conducted to enhance its network. Upgrades and improvements in the asset’s network kept making the headlines, and now the world is patiently waiting for the Dencun update, which is expected to be the next milestone in the token’s history. The upgrade will complete a series of improvements and focus on enhancing the consensus and execution layers, namely Cancun and Deneb – the combined terms that give birth to the “Dencun” name. What lies ahead for the token is unpredictable, and speculations can’t disclose anything more than a mere idea of investor sentiment. The only certainty that the world has is that Ethereum will undergo several key developments that are expected to be impactful for its future.
The advances expected from Ethereum at the end of the year
Pundits expect the Dencun launch around the end of December, even though a specific date isn’t set in stone. Let’s have a glimpse into what Ethereum is on the brink of achieving as it approaches the year-end:
- Enhanced security. Security is a key concept in cryptocurrency, hotly debated ever since Bitcoin made its spectacular entrance. Every blockchain platform makes this feature a top priority as users and participants in the ecosystem give this aspect the greatest importance, with Ethereum taking the lead in this regard. Vitalik Buterin, the co-founder of Ethereum who innovated on Blockchain technology to create a multiple-use platform, emphasized this matter better than any other high-profile individual in cryptocurrency. According to him, Ethereum ought to achieve privacy, scalability and wallet security at the end of its transition to a well-developed tech stack that can provide a seamless user experience. The programmer draws attention to three different accomplishments that must be realized: layer-2 scaling, wallet security, and privacy transition.
- Layer-2 scaling solutions. As mentioned, plenty of consideration must be directed toward achieving a layer-2 scaling transition. As the number of Ethereum users increases, the likelihood of blockchain to meet a specific capacity limitation grows considerably. This imminent constraint naturally leads to increased network operations fees and the incapacity to boost the number of allowable transactions, thus calling for solutions to overcome these barriers. This is where the need to achieve scalability comes in. Once this goal is accomplished, it’s expected that more transactions will be capable of being conducted in a second and at a higher speed.
- Traditional finance integration. As Ethereum gains mainstream adoption and blockchain solutions spread worldwide, there’s growing interest in creating products with elements of cryptocurrency and traditional finance. Ethereum is a pioneer in this regard, launching several plans to adopt traditional finance. An example can be the stablecoin DAI built on top of Ethereum, whose value is pegged to the US dollar. Moreover, central banks are exploring the potential of the Ethereum platform to create their own currencies, called CBDCs, potentially transforming the way the world regards money.
Ethereum remains the clear leader of DeFi
Decentralized finance, also known as DeFi, enables the most significant opportunities for Ethereum to expand. It allows the creation of decentralized applications on shared ledgers that don’t need an internet connection to be accessed and are available to any interested person. More specifically, only through DeFi can participants use financial services like trading, borrowing, and lending, with Ethereum being at the vanguard of this trend with the plethora of apps enabled by the platform. As Ethereum keeps making strides, more interesting developments are expected to appear.
Ethereum delivers several advantages through its DeFi ecosystem, with accessibility, decentralization, and efficiency at the top of the list. Thanks to the platform’s user-friendliness and capability to permit anyone to build DeFi protocols, it makes room for experimentation and innovation in the financial sector.
Ethereum relies on an alternate medium
As it’s already known, fiat money works through a central medium where banks have the first-mover advantage and control over almost every financial area, given their major position. While learning how the primary monetary framework works may not be the easiest undertaking, when it comes to cryptocurrencies like Ethereum, one of the most appealing factors drawing investor interest is their capacity to operate without relying on any third party that exercises authority over funds. Instead, the monetary standards are self-managed through cryptography and blockchain, the backbone of Ethereum and other existing cryptocurrencies.
In the ever-evolving cryptocurrency world, Ethereum remains a standout. Diverse investors are having a go at the second-best digital coin, which many believe may overtake Bitcoin sometime in the future.