Since its launch in 2015 by Vitalik Buterin, Ethereum has become one of the largest cryptocurrencies on the market after Bitcoin. Ethereum is more than just a cryptocurrency, it provides a smart contracts platform that allows developers to build decentralized applications (dApps). While Bitcoin is primarily considered “digital gold” and is primarily used as a long-term store of value, Ethereum has multiple applications in areas such as decentralized finance (DeFi) and non-fungible tokens (NFTs).
Factors that may support the rise of Ethereum like Bitcoin:
1. Technical developments:
Transition to Proof of Stake: In 2022, the Ethereum 2.0 update was implemented, which switched the network from Proof of Work to Proof of Stake. This shift reduced energy consumption and made the network more secure and scalable. These updates could boost Ethereum’s usage and demand, which could contribute to a similar price increase to Bitcoin.
2. Increased use:
Decentralized Finance (DeFi): Ethereum is the platform for DeFi applications, a rapidly growing market where Ethereum is used for financial trading, borrowing, and lending without traditional intermediaries. The increased use of these applications increases investor demand for Ethereum, which could drive its price higher.
Non-fungible tokens (NFTs): Ethereum is also a major platform for NFTs, which have seen a boom in recent years. If demand for NFTs continues to grow, it could lead to increased demand for Ethereum.
3. Institutional accreditation:
As with Bitcoin, if more large institutions start adopting Ethereum, whether for business solutions or investment, it could push the price of Ethereum to new levels. Institutions that use Ethereum in smart contract systems could encourage its wider use.
4. Flexibility and continuous updates:
Ethereum is highly resilient thanks to a strong community of developers who are constantly improving the system. Each new update increases its efficiency and speed of processing transactions, which strengthens its position in the market.
Challenges that Ethereum may face:
1. Competition:
Ethereum faces competition from other platforms like Solana, Cardano, and Polkadot, which offer similar solutions but may be more efficient in terms of speed and transaction costs. If these platforms are able to improve their infrastructure faster, it could negatively impact Ethereum.
2. Large market fluctuations:
Like Bitcoin, Ethereum is also prone to extreme price fluctuations. Although Ethereum could see a similar rise to Bitcoin if adoption and technology continue to evolve, this rise could be accompanied by sharp declines, making investing in it risky.
Could Ethereum See a Similar Rise to Bitcoin?
Yes, Ethereum could see a similar surge to Bitcoin if it continues to evolve and expand in its various areas. As the network becomes more reliant on DeFi and NFTs, and more innovative applications emerge, its value could increase significantly. But we must take into account that Ethereum still faces significant challenges such as competition from other networks, and significant market volatility.
If Ethereum continues to address these challenges effectively and continues to grow in the areas that distinguish it, we may see strong increases in its value, but it is unlikely that this increase will be in the same way as it happened with Bitcoin, given the different driving factors for each.