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The cryptocurrency Ether, Bitcoin’s biggest competitor, has taken off again after upgrading its core Ethereum network, suggesting that the supply of the cryptocurrency will be restricted and made more scarce.
The second largest cryptocurrency by market cap hit a two-month high this week, pushing Ether’s gains for the year to around 280%, before Bitcoin rose 40% in the same period after falling from a record high of nearly $ 65,000 in April.
Ethereum’s major upgrade kicked off earlier on Thursday, which saw Ether achieve a record 20% price gain over the past week, pushing Bitcoin down to $ 40,000.
Ether’s rally around $ 3,000 took the combined market value of the cryptocurrency to nearly $ 1.7 trillion, from a recent low of $ 1.2 trillion reached in July.
As the rise of Ethereum accelerates, some in the cryptocurrency industry are predicting that it will overtake Bitcoin and take the cryptocurrency throne in value.
“Ether could overtake Bitcoin as the world’s number one cryptocurrency,” Tim Sabanoff, chief technology officer of Scotland-based bitcoin and crypto platform Zumo, said in comments to Forbes.
Blockchain improvements
The Ethereum network upgrade aims to improve blockchain technology and make the increase in transaction fees more manageable. The upgrade known as Ethereum 2.0 is part of the long-awaited Ethereum network’s abandonment of the energy-intensive business model that the Bitcoin network uses to mine, that is, create new units by solving equations. mathematics. The full upgrade is not expected until 2022.
“What Ethereum has done is take a look at something that already exists – bitcoin – and make it even better. It has a very vibrant developer community and that means the ecosystem is growing at an incredible rate.”
Ethereum bulls indicate that the network has recently outpaced Bitcoin in a number of closely watched price metrics and performance over the past year. The price of Ether has risen 600% over the past 12 months, compared to a 250% increase for Bitcoin.
“The crypto giant recently overtook Bitcoin in total number of active daily addresses, and that momentum shows no signs of slowing down as the network continues to fuel major DeFi and NFT trends,” Sabanov said.
A multi-billion dollar market
Decentralized Finance (DeFi) using crypto technology as an alternative to traditional financial products such as bankless loans and insurance, as well as non-fungible tokens (NFTs), has become a multi-billion dollar market over the past two years. years. Almost all DeFi and NFT funds currently rely on trading through blockchain technology from the Ethereum network.
An Ethereum upgrade would also see some Ether tokens destroyed or “burned”, limiting the entry of new tokens into the market and, in theory, making the tokens even rarer.
Earlier this week, Dan Morehead, founder of the $ 2.8 billion crypto-focused investment fund Pantera Capital, reportedly predicted that Ethereum would eventually turn the tide on Bitcoin, despite expectations that the price of Bitcoin would reach $ 700,000 per unit in just ten years.
“You will see a transition for people who want to store wealth, and they are doing it in Ether rather than Bitcoin,” Moorehead told the Reuters Global Markets forum on Monday.
Network founder Vitalik Buterin has confirmed that the software upgrade also shows that the Ethereum network is well positioned to make new changes that will significantly reduce its power consumption. Meanwhile, many players in the cryptocurrency space have expressed support for the Ethereum upgrade, claiming that it will be of great benefit to the cryptocurrency market.
“For many cryptocurrencies and their associated DeFi applications, this is a huge boost to improve efficiency, which is very good for the entire crypto ecosystem,” Forbes told Forbes Diogo Monica, co-founder and director of crypto bank Anchorage Digital.
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