Ethereum is one of the most popular and influential cryptocurrencies in the world, second only to Bitcoin. Ethereum's price has increased significantly over time, reaching a peak of over $4,000 in May 2021, before dropping to around $2,000 in November 2023. What are some of the factors that have driven Ethereum's growth and made it a leader in the crypto space?
One of the main factors is Ethereum's innovation and versatility as a platform for decentralized applications (dApps). Unlike Bitcoin, which is mainly used as a store of value and a medium of exchange, Ethereum is designed to enable smart contracts, which are self-executing agreements that run on the blockchain. This capability opened up a vast array of use cases in various industries, such as finance, arts, gaming, and technology³. Ethereum's network hosts thousands of dApps that offer users various services and benefits, such as lending, borrowing, trading, gaming, collecting, and creating digital assets.
Another factor is Ethereum's role in the development and expansion of the decentralized finance (DeFi) industry. DeFi is a movement that aims to create an open, transparent, and accessible financial system that operates without intermediaries or central authorities. DeFi leverages the power of blockchain and smart contracts to offer users various financial products and services, such as lending, borrowing, trading, investing, saving, and insurance. Ethereum is the dominant platform for DeFi, as it supports most of the DeFi protocols and applications that exist today. According to DeFi Pulse, the total value locked (TVL) in DeFi on Ethereum reached over $100 billion in May 2021, before dropping to around $60 billion in November 2023².
A third factor is Ethereum's involvement in the non-fungible token (NFT) boom. NFTs are unique and indivisible digital tokens that represent ownership of a specific digital asset, such as an artwork, a collectible, a game item, or a domain name. NFTs are created and traded on various platforms that use Ethereum's blockchain and smart contracts. NFTs have gained popularity and attention in 2021, as they have enabled artists, creators, and collectors to monetize and showcase their digital works. Some of the most notable NFT sales include Beeple's Everydays: The First 5000 Days, which sold for over $69 million in March 2021, and CryptoPunks, which are pixelated characters that have sold for millions of dollars each⁵.
In conclusion, Ethereum's growth can be attributed to its innovation, versatility, and leadership in the fields of dApps, DeFi, and NFTs. Ethereum has proven to be a powerful and adaptable platform that can support various applications and use cases that benefit users and developers. Ethereum's future developments, such as the Ethereum Merge and the Ethereum 2.0 upgrade, are expected to further enhance its performance, scalability, security, and sustainability. Ethereum is likely to remain one of the most influential and valuable cryptocurrencies in the world for years to come.
