The world of cryptocurrencies can be a confusing one as it’s still relatively new and their concept is still quite alien to the layperson. What most people do understand is that you can stand to gain a lot of money by investing properly in these decentralized currencies like Ether and Bitcoin. But how does one predict the changes in price of these coins? What is it that influences a spike or drop in value?
We wanted to take a look at Ethereum, a platform that uses blockchain with the aim of taking power away from third parties on the internet who keep our data such as financial information, to see what actually influences the price of their cryptocurrency Ether or Eth.
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What Dictates Ethereum’s Value?
Ultimately, and fairly obviously, the price of this cryptocurrency is simply based on its popularity on the market. The more people that are ordering Eth, the higher the value will go, and vice versa. The great thing about Eth compared to other cryptocurrencies though is that they have much more versatility and can be used for many different things.
For a start, these coins can be used on the Ethereum blockchain to make transactions on specific decentralized apps or dApps, like Foundation or PoolTogether. Simply put, when more people make transactions via these dApps, the demand for the currency increases and therefore so does the price of it on the market.
What Is Ethereum?
You might think that Ethereum is a new concept, but it was actually realized in 2013 by 18-year-old Vitalik Buterin. While blockchain and cryptocurrencies had been a concept for much longer, Ethereum had a card up its sleeve to help it stand out from the rest. But what is Ethereum? Ethereum uses a system known as smart contracts, which can be used for larger, more complex transactions such as loans and property insurance which is not possible with Bitcoin for example. Ethereum itself is the network for the blockchain which gives life to their cryptocurrency Ether or Eth, although many people still use the name Ethereum when referring to the currency.
What Can Influence The Ethereum’s Price?
Many things can help to change the price of stocks and currencies, even things you wouldn’t necessarily expect. When it comes to Ethereum, there are a few different things to consider.
First, the factors that are specifically related to Ethereum such as new systems implemented into the Ethereum platform like their new Eth 2.0 staking system in which people can stake their ETH for interest, as well as their new types of tokens, have both reduced and increased the demand respectively.
Outside of their own system, the value of this cryptocurrency can be influenced by other cryptocurrencies too, but the price of Bitcoin holds the largest sway. When the value of this popular coin rises, it brings the value of the others up with it as they’re generally seen as more affordable alternatives and are a great way for smaller investors to get involved in cryptocurrency trading.
Another thing that influences the value of cryptocurrency is actually the media, who play a huge part in the success of these currencies by reporting on them.
Alex is fascinated with “understanding” people. It’s actually what drives everything he does. He believes in a thoughtful exploration of how you shape your thoughts, experience of the world.