Ether Surpasses $4,000 for the First Time
Investors Seek More Crypto Returns
Ether, the digital coin linked to the Ethereum blockchain, hit a new all-time high yesterday as investors look beyond Bitcoin for returns.
The price of Ether surpassed $4,000 on Monday, extending a rally which boosted its market value to around $483.4 billion. Ether has long been in Bitcoin’s shadow, but it has rallied significantly in recent weeks. Bitcoin’s price fell more than 2% in April, but Ether increased more than 40% in the same time frame.
Investors have been flocking to cryptocurrency as a hedge against the potential for rising inflation. Wall Street banks including Goldman Sachs (GS) and Morgan Stanley (MS) are giving their wealthy clients access to cryptocurrencies, which is also driving the prices upward.
App Building Keeps them Apart
Bitcoin and Ether are the two leading cryptocurrencies. Both are built on a blockchain, but that is where their similarities end. Bitcoin is mainly used for investing. It has been thought of as a “digital gold” which could act as a store of value or a hedge against inflation.
On the other hand, Ethereum hosts what are known as “smart contracts”: collections of code that carry out a set of instructions and run on the blockchain. Ethereum developers can use this technology to create decentralized apps, or “dapps.” This means that the Ethereum network can be used for a wide variety of applications.
Activity on the Ethereum network has been increasing thanks to the rise of non-fungible tokens, or NFTs. These digital collector items can take a variety of forms from digital trading cards to digital pieces of art. Many high-profile NFTs are on the Ethereum blockchain.
Ethereum Gears up for an Upgrade
Critics of Ethereum worry it will become congested as more developers build apps, and that this will slow down transactions. They also point out that both Ethereum and Bitcoin require a massive amount of energy consumption to mine for coins. To address this issue, Ethereum is undergoing an upgrade that relies on “stakers,” or those that hold Ether, to process the new transactions. That will reduce the energy consumption and may push Ether’s value higher. Regardless, investors ranging from private clients at institutional banks to individuals now have this cryptocurrency on their radar.
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