IS ETHEREUM THE NEW BITCOIN?

During the last month, Ether, or the digital asset that fuels the whole Ethereum blockchain, has grown more than 300%, reaching its all time high of about $60 a few days ago.
At present time, Ether has a value of $50.59 with a market capitalization of $4,469,204,016, the second most important cap right after Bitcoin ($16,278,519,837). But why this sudden rise? Why the younger brother of bitcoin rose so much during the last few days? As often happens in the financial markets, the answer is not only one, but a combination of many factors that more or less affect the trading. Let’s see the most crucial facts.

Bitcoin potential fork

In period of political and economic uncertainty, people often decide to invest in non traditional assets.

For example, when Donald Trump was elected president, investors started to buy bitcoins and the stronger demand drove the digital currency price.

The same thing happens when bitcoin faces a period of crisis, so that altcoins (or how all the other digital currencies besides bitcoin are defined) start to become the new alternative.

In fact, during those days Bitcoin is facing a great issue: the block size debate.

Just for those who don’t know, the block size debate is an open discussion about the possibility to increase the size of the blocks which the bitcoin blockchain is composed by, in order to have faster transactions and maybe lower fees.

In order to solve this issue, the bitcoin community and developers are deciding how to proceed and how to implement a soft or hard fork.

In the latest case, this would lead to a disruptive event that would also open the door for a new digital currency to steal part of the Bitcoin-related interest.

Of course, this issue is causing a growing insecurity among investors that are opting for safer and more stable (right now, at least) digital assets such as Ethereum.

As you can see, in fact, bitcoin price is falling down and the Ethereum one is rising. This cannot be considered only a coincidence.

SEC rejected Bitcoin ETF

Another important news that drove the Ethereum price is the one occurred on March 10th, when the U.S. Securities and Exchange Commission (SEC) rejected a rule change that would have allowed the creation of the first Bitcoin ETF to begin trading on the Bats BZX Exchange.

The initial hope about the approval of Winklevoss’ proposed ETF pushed bitcoin as high as $1,327, hitting its all-time high. But the denial caused a collapse – momentary, at least – of the bitcoin price with a drop of $300, so investors began to favor Ethereum.

We have to say, in fact that the greatest part of Ether trading volume comes always from Bitcoin/Ether trades.

Ethereum Enterprise Alliance

Another main factor that is influencing the Ether rally is that its underlying technology – the Ethereum blockchain – is reaching much interest among big companies.

In fact, a new working group called the Enterprise Ethereum Alliance was recently created in order to connect large enterprises to technology vendors with the main goal of working on new projects with the use of the distributed ledger.

Major companies that are involved in the Enterprise launch include JPMorgan, IBM, Microsoft and Intel among the others.

Of course, this move added more legitimacy to the ether digital asset.

Also, we need to tell that this new Enterprise Ethereum Alliance requires ether to be transferred and stored in order to get full access to the applications that use Ethereum.

In fact, we should remember that any application or contract need an ether transaction to be correctly executed and stored in the Ethereum blockchain.

More Ethereum tokens and ICOs

Clarified briefly how the so-called dapps can work on the Ethereum blockchain and having this in mind, we also need to say that recently there are more and more projects, tokens and ICOs launched on the network.

The Ethereum digital assets, in fact, recently hitted a market capitalization of about $260 million ($262,877,525 USD according to March 24th data) with projects like Golem, DAO and Augur and more coming soon.

For example, Brave Browser is going to launch a new ICO later this year for its project of a new web and mobile browser that reward users that decide to switch on ads.

Also, Storj decided to move its tokens from Counterparty to Ethereum because of its active development, speed in executing transactions and negligible fees.

This means that more projects are exploiting the Ethereum blockchain with the immediate consequence of an increasing of the ether price and amount of transactions executed within the ledger.