Weekly Flip Thru: What's Behind Ethereum's New All-Time High?
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All eyes are on Ether as the world's second most popular cryptocurrency reached a new all-time high of $2,757 on Wednesday. Ethereum has had quite an impressive last 12 months, with an increase in value of around 1,280%.
So, what is the cause of this massive success, and what's next for Ethereum? I've got you covered on all things ETH in this week's Flip Thru.
Why is Ethereum so popular?
Like Bitcoin, Ethereum is a peer-to-peer blockchain technology that allows you to send cryptocurrency to anyone in the world quickly. Unlike Bitcoin, Ethereum allows developers to use blockchain technology for more than monetary transactions. Ethereum was launched in 2014 to create a truly decentralized internet - creating a DIY platform for decentralized applications and smart contracts.
We've recently seen the boundless potential of the Ethereum ecosystem present itself in two increasingly popular ways: NFTs and DeFi.
Interested in learning more about how Ethereum works? Check out this Cryptocurrency Explained.
Non Fungible Tokens or NFTs have exploded in popularity over the last few months as everyone from the NBA to Snoop Dogg has hopped on the bandwagon to secure their place on the blockchain. Essentially, NFTs are tokens used to prove ownership of unique items - allowing people to tokenize anything from art, collectibles, and even wedding rings.
Most NFTs are secured by the Ethereum blockchain. This means that as NFTs boomed in popularity, so did the Ethereum blockchain. To purchase Ethereum based NFTs, like those available on OpenSea.io, you must pay in ETH. This has significantly driven the price of Ether, as it is determined by market supply and demand. Unfortunately, this increased demand also increased the price of gas fees needed to process a transaction on Ethereum's blockchain.
To learn more about NFTs, check out this article from the Flip Thru archive.
DeFi or Decentralized Finance can be described as financial services that do not require an intermediary or trusted third-party to be facilitated.
As mentioned above, Ethereum allows for a DIY platform for smart contracts and decentralized apps - making it the perfect foundation for DeFi. With Ethereum, you can easily integrate different Ethereum-based applications with each other making it easy to lend on one platform and exchange interest-bearing tokens on another. Plus, Ethereum's immutable ledger makes keeping track of transactions and ownership a breeze. DeFi creates an opportunity for true financial freedom - offering a myriad of peer-to-peer financial services totally independent from government or banks.
DeFi really took off in 2020 and continues to grow in popularity in 2021. After Ethereum's Berlin upgrade on April 15 (more on that below), the fees associated with making transactions on Ethereum, known as gas, have dropped significantly leading to a surge in DeFi activity. The DeFi industry is only just getting started - as more people catch on to the benefits of DeFi, the demand for ETH will continue to skyrocket.
Berlin + London Upgrades
On April 15, the Ethereum network successfully launched the "Berlin'' upgrade, also referred to as the Berlin Hard Fork (a hard fork is a significant change that reorganizes a blockchain). This upgrade implemented four Ethereum Improvement Proposals (EIP) that ultimately optimized the usage of gas fees, improved the security of the network, and allowed for certain new transaction types.
After the Berlin hard fork, Ether prices rallied as gas prices declined - leading us to the new ATH of $2,757 on Wednesday.
Ethereum is slated to receive another major upgrade in July known as the "London'' hard fork. This upgrade is set to be much bigger and will execute the controversial EIP-1559. If everything goes according to plan, the London upgrade will usher Ether into a new deflationary system. With EIP-1559, a certain amount of ETH will be burned for each on-chain transaction and fewer new ETH will be produced - resulting in increased scarcity which could further drive the price upwards.
Both the Berlin and London upgrades are part of the Ethereum 2.0 transition from a "proof-of-work" consensus mechanism to a "proof-of-stake" protocol to make Ethereum more scalable, secure, and sustainable.
Ethereum is hot and the future is looking even hotter. Head to your closest CoinFlip ATM to add some ether to your wallet before the price increases again!
Find your closest CoinFlip ATM to get your hands on some ETH!
CoinFlip in the News:
Mark Cuban told Ellen DeGeneres she should accept dogecoin as payment for her show's merchandise - and it's better than a lottery ticket - Business Insider
Bitcoin Drops Below $50K as $200 Billion Is ‘Erased’ from Crypto Markets – But Some See It as a Chance to Buy In - GO Banking Rates
What to Make of the Dogecoin Mania - Nasdaq
