Why is the price of Ethereum rising so much?

The cryptocurrency market ended June on a high note with Bitcoin and Bitcoin Cash enjoying a 10 percent surge in a furious 24 hour period at the end of last week. But even these were outdone by Ethereum, which continued the serene escalation that has been seen throughout the second quarter, and will keep crypto investors smiling, after the nightmare slump back in March.

Ethereum is often seen as some kind of Bitcoin II, but there is far more to it than that. There are technological differences between the two blockchain technologies that could place Ethereum in a strong position when it comes to scalability. And there are powerful names backing Vitalik Buterin’s creation and ploughing money into the platform on which it is based.

Ethereum under the spotlight

All this put the focus of analysts and investors onto Ethereum, and has even led some to start talking again about the “flippening” – this is the name given to the moment when another cryptocurrency overtakes Bitcoin in market capitalization. While that seems some way off at the moment, those trading cryptocurrency are increasingly seeing Ethereum as a horse worth backing. Let’s look a little closer at the reasons why.

Ethereum has scalable technology

Scalability has always been one of the biggest challenges in any cryptocurrency. As Bitcoin has grown in usage and popularity over the years, so too have transaction times and costs. Inevitably, this has caused concerns about its scalability if we really are to be using cryptocurrency for everyday transactions in a decade’s time.

Ethereum is seen as an option that has better long-term viability according to those in the know. Just a few weeks ago, Roger Ver shocked the cryptocurrency world by predicting that the flippening would take place before the end of 2018. This was shocking not so much because of the prediction itself but the direction from which it came – Ver has been involved in numerous Bitcoin investment projects since 2011 and has been dubbed in some quarters as the “Bitcoin Jesus.” When a man of Ver’s background stands up and makes that sort of prediction, the world takes notice.

Ethereum is in a better position to meet the scalability challenges than Bitcoin, and in part, that it is because it is far newer technology. Bitcoin was and always will be the first cryptocurrency. Nothing will ever take that accolade away from it. But look at any technological first, whether it is the motor car or the microprocessor, and you will invariably see that while the first one ever is always remembered by historians, it is often the second or third that achieved mass-market success.

Bitcoin was developed in 2009. Ethereum appeared six years later, and while it took its inspiration from Bitcoin’s blockchain technology, its platform has subtle differences, using a process called database sharding, and allowing for off-chain transactions that relieve some of the pressure from the blockchain and improve scalability.

The face behind the technology

Other differences are less technological. While the true identity of Bitcoin founder Satoshi Nakamoto is shrouded in mystery, Ethereum’s Vitalik Buterin is a charismatic young entrepreneur in the Mark Zuckerberg mold. From an investment point of view, that makes a difference, and major players in the crypto space such as Golem, Cosmos, Maker, OmiseGo, Tendermint and Raiden feel that Buterin represents the future and have chosen to develop their own decentralized platforms on the Ethereum model.

Bitcoin currently has a market capitalization of $114.1 billion compared to Ethereum’s $47.6 billion, so those on flippening watch need not expect it to happen just yet. However, the vastly greater number of trades taking place tells its own story, and Roger Ver’s prediction could yet come to fruition.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.