What is Ethereum is and why business giants are moving around it.
Will PayPal’s announcement – which neither confirmed nor denied that it intends to provide cryptocurrency buying and storage services – will be the catalyst that will push Bitcoin’s price up?
It is possible. But, How are we going to hear about it before the news comes out? Where we need to keep an eye out this time is not Bitcoin. It is Ethereum (ETH).
But before we mention the reason to focus there, let us say a few words about Ethereum, which was not created to be another digital currency, but to the possibility of building decentralized applications on its network.
Ethereum is an open-source platform, with its own programming language, which includes the Ether cryptocurrency. It can be used to create decentralized applications and allows users to make use of so-called smart contracts.
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These prospects excite developers. But investors find something else exciting: the expectations for profits.
Anyone who had put $800 in January 2016 on Ethereum, when it was trading close to a dollar, two years later his investment would be worth 1 million. Each arrived to sell for $1,300 at the peak of the bubble, to land a year later at $100.
And, No, you didn’t read it wrong. You put in 800 humble bucks and in two years you became a millionaire.
The question, of course, is whether this crazy course can be repeated. If there are the conditions for rumors that will spark expectations.
That’s what we’re going to explore today, with the beginning of the story starting several years back in 2002. It was then that PayPal was acquired for $1.5 billion. An amount that made a special impression at the time and highlighted the business plight of Elon Musk, one of the company’s founding members, as its CEO.
But our issue here is not who sold but who was the buyer: The buyer was eBay.
The famous e-commerce company, currently valued at $35 billion. We take that for granted and go to the next one, in nearby 2018.
Who decided to join the Ethereum Enterprise Ethereum Alliance? eBay!
A coincidence? Perhaps. Let’s dig a little deeper.
A year later, in 2019, PayPal financed $4.2 million the previously world-famous TRM. A blockchain-oriented digital value company, which aims to help banking institutions fight money laundering, expose fraud incidents, and generally comply with laws and regulations.
TRM has created the first platform designed specifically for this purpose. It automatically detects suspicious activities, such as money laundering and market manipulation.
More than 20,000 people have verified their Ethereum addresses on the TRM platform. One of the tools TRM uses is TrueUSD, a stablecoin with a dollar coverage and a capitalization of 145 million. What other features does TrueUSD have? It is “built” on Ethereum.
Speaking of stablecoin, the largest of all, with a capitalization of 9.2 billion, Tether posted a tweet the other day in which says he is leaving Tron for ethereum!’
Ethereum is upgraded by boosting expectations
Like a lot didn’t come together for Ethereum? Let’s take a closer look.
Taking a look at the latest news, we find that the number of transactions on Ethereum’s network has skyrocketed. It turns out that average transaction charges have cost more for the second time in the last three months than bitcoin!
Apparently, it’s partly due to increased interaction with stablecoins on its network, as well as popular dapps such as Uniswap and Kyber Network.
DeFi is HOT Right Now
Decentralized finance (DeFi) is the hottest part of the industry, already having countless applications. But what’s so nice about DeFi anyway?
Well, most DeFis are based on Ethereum.
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Their success will lead to an increase in demand, even an excessive increase in demand. We’ve seen it before with ICOs in 2017, where most of them were built on ethereum’s platform.
Ethereum may not have a ceiling on the production of currencies such as bitcoin, but its limited supply will drive the price upwards if demand increases.
A key point in its path is its upcoming upgrade to Ethereum 2.0 (also called Eth2 or ‘Serenity’), which is expected to take place this summer and promises to solve current issues.
It will reduce costs and speed up network transactions. However, it will take more than a year to complete the transition as a number of practical and technical problems need to be solved. And of course we don’t know if it will succeed eventually.
With Ethereum 2.0 structural changes are made, with the ability to receive passive income for the ordinary user to receive passive income to validate transactions.
It will be converted to Proof-of-stake (PoS), as opposed to proof-of-work (PoW), the consent model used by bitcoin.
The advantage of PoS is that it enhances decentralization as it does not need much computing power. So less investment and less energy waste.
The staking in Ethereum 2.0 will be quite simple. There will be a minimum of 32 ETH required for participation. You don’t need a specialized machine, as it can also be run on a simple laptop. However, validators are required to be connected to the Internet, resulting in minor penalties.
Ethereum’s POS Disadvantages
Beyond the obvious advantage of passive income, there is a disadvantage. Users reserve their cryptocurrencies for a specified period. If a sudden price retreat occurs, they will not be able to sell directly in order to mitigate the losses.
In addition, the reward is made in the currency itself. If you receive, for example, 6% a year and its price fall 7% or more, then you have lost. You haven’t won.