It’s been a spectacular year for the Ethereum cryptocurrency having posted an increase in value of over 400% in 2021. The crypto began the year trading at around $700 against the dollar, but ends 2021 hovering at the $3,700 mark. Plus with the rollouts to Ethereum 2.0 expected to be completed in summer 2022, it’s clear that things are looking good for the world’s second largest cryptocurrency.
As of the end of 2021, Ethereum’s total market capitalization sits just under $450 billion compared to nearly $1 trillion for Bitcoin. However, there are many crypto advocates who are suggesting that Ethereum could be on course for a massive year in 2022 and could hit the $1 trillion market cap before the year is out.
This is because Ethereum is a cryptocurrency with a lot of momentum behind it, and it’s even been seen as being less volatile than the likes of Bitcoin. So while Elon Musk may say that he doesn’t ‘get’ Ethereum, it seems that this crypto is set for even bigger things.
The rapid rise of Ethereum
Ethereum was released in 2015, and while the Ether tokens can be used as a regular cryptocurrency, it’s the fact that the Ethereum blockchain can be used to run smart contracts and build applications that puts this technology ahead of its rivals. There are already $155 billion locked in smart contracts as well as 2,900 decentralized applications on the Ethereum blockchain.
Plus 2021 saw the non-fungible tokens (NFTs) enter the mainstream for a variety of purposes ranging from art to gaming. The fact that the majority of NFTs use the Ethereum network shows how this crypto has way more technological benefits rather than just being a store of value.
It’s also been suggested that Ethereum is a much more effective hedge against inflation than Bitcoin. This is due to the fact that Ethereum has a lower net issuance rate when compared to the likes of Bitcoin. Some have even gone as far to say that Ethereum may actually be the world’s first deflationary currency.
What can we expect from Ethereum 2.0?
It’s the fact that Ethereum is currently midway through an upgrade to 2.0 that’s really exciting crypto fans. The rollout began in 2020 and it’s expected to be complete this summer.
Benefits of Ethereum 2.0 include a potential reduction in gas fees, a reduced network congestion, and hopefully it will address the scalability issues that have dogged Ethereum from the start. The limited scalability has meant that Ethereum has only been able to handle 30 transactions every second compared to the 24,000 transactions per second that are commonly handled by Visa.
The upgrade will also include a more eco-friendly proof of stake consensus that should make the crypto more sustainable compared to the likes of Bitcoin. All of which should help there be an increased demand for the Ether tokens which should push up the price of Ethereum even more in 2022.