The Rise of Ether
Category: Column By : Rainer Michael Preis Read : 527 Date : Thursday, May 04, 2017 - 10:37:40

While most of the media attention and blockchain debate is focused on Bitcoin (BTC), Ether (ETH) and the Ethereum blockchain is where the real price action was for investors year-to-date. On January 1, the USD/ETH exchange rate was $8, and the price rose to $60, reaching its all-time-record high in March. Although now it trades around $44, the ETH year-to-date return to investor has been 445%.

Ethereum is a decentralized platform that runs smart contracts; applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. These apps run on a custom built Ethereum blockchain, an enormously powerful shared global infrastructure that can move value around and represent property ownership. These features enable developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract), all without a middlemen or counterparty risk. If Bitcoin is often considered digital gold or gold 2.0, then Ether is often compared to silver.

While the Bitcoin blockchain runs on Proof-of-Work (PoW) algorithms, the Ethereum blockchain runs on Proof-of-Stake (PoS). The recent Bitcoin blockchain scaling debate (the “hard fork”) has led to increased interest in the PoS algorithm blockchain and hence the massive surge in the price ETH. 

Smart contracts, also known as smart property, are protocols that facilitate, verify or enforce the negotiation or performance of a contract. Smart contracts often emulate the logic of contractual clauses. Using Ethereum, a contract will hold a contributor’s money until a given date or goal is reached. Depending on the outcome, the funds will either be released to the project owners or safely returned to the contributors—all without requiring a centralized arbitrator, clearing house or having to trust anyone.

Because of all these powerful attributes, Ether has done something only Bitcoin has managed to do among cryptocurrencies—reaching over $2 billion market capitalization. Cryptocurrencies such as BTC and ETH now provide an outlet for personal wealth beyond restriction and confiscation. One other major reason for the ETH rally is traction among big global corporates for the underlying blockchain technology Ethereum. The Enterprise Ethereum Alliance was recently set up to connect large companies to tech vendors working on projects using the ETH blockchain, including, among others, JPMorgan, Microsoft and Intel.

With the recent massive surge in the ETH price , both institutional and private investors have started taking a greater interest in this cryptocurrency. Another reason for the significant price appreciation of ETH is sometimes accredited to the Trump administration, U.S. Congress and executive branch agencies calling for further development of smart contracts at the technology’s intersection with public policy. Specifically, smart contracts potential to streamline bureaucracy, empower consumers and drive growth is behind investor interest in ETH. As Ether becomes better known, early adopters and investors in ETH could be richly rewarded.    



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