Ether, ethereum’s associated cryptocurrency, has recently hit an all-time high of $480, an increase of 5,200% this year and 63% this month. While some believe this is a result of the cryptocurrency finally getting the attention it deserves, others are declaring the entire cryptocurrency space a bubble.
Why It’s Important
When an asset’s price rises well above its fundamental value, the asset is in a bubble. Ether’s 5,200% increase brings into question whether its price reflects the value proposition of the underlying technology. Sceptics argue that ether’s price rise is fuelled by speculation, using the outlandish increases to support their view.
Those who believe in Ethereum argue the company uses blockchain technology to solve real problems; as people realise its potential, ether’s price rises. Ethereum provides a generalised blockchain, allowing developers to build decentralised applications on the company’s network. Ethereum’s applications include insurance, managing personal information and micro-finance. Using blockchain technology, new computing solutions can be found to old problems.
What Else to Watch Out For
Earlier last week, ex-Fortress Investment Group Fund Manager Mike Novogratz told Bloomberg he expected ether to hit $500 by the end of the year. The investor is starting a $500m cryptocurrency hedge fund. Interest in cryptocurrencies is at an all-time high as Coinbase, the most popular US cryptocurrency exchange received 10,000 new users on Thanksgiving. Bitcoin, the most popular cryptocurrency, is rapidly nearing $10,000. Its price has increased by 1,200% this year, and 66% this month.
Have your say. Sign up now to become an Author!
More on Cryptocurrencies
Is EOS Really the Ethereum-Killer?
EOS has been described by its promoters as “Ethereum with a new motor” – the tacit implication being that Ethereum,...
Tim Draper and Alex Ohanian Weigh in on Bitcoin and Ethereum
The cryptosphere went crazy this week after Reddit co-founder Alex Ohanian said that Ethereum would reach $15,000 by year’s end. He...
The Rise of Non-Fungible Token Assets: The Case of CryptoKitties
By now everyone will most likely have heard of CryptoKitties. CryptoKitties is an Ethereum-based game and mini economy where users...