Image by Pixabay.

There’s no denying I’m a huge fan Ethereum. I see the ether, and the technology behind it, as a company removing the handcuffs from the blockchain which were placed by Bitcoin. That’s not to say that I dislike Bitcoin at all, because I don’t, but when I must choose between the two cryptocurrency powerhouses, my choice is Ethereum ten times out of ten. Bitcoin uses their version of the blockchain for the sole purpose of creating a very successful digital currency, and while this has worked very well for them, Ethereum has done that very successfully as well, while creating seemingly infinite opportunities for developers to use their blockchain and create a new platform for many different technologies.

The value in Ethereum is clearly being realized by investors in the market. In 2017, the coin rose over 8,500 percent, from $8 to almost $800, but now, just two days into 2018, it is up to over $800 and has reached as much as $900. Ethereum is climbing, and has been climbing, but it is necessary to know why it is climbing to understand why it will be successful this year and in the future. I already covered some in depth reasoning for why I believe Ethereum will find success in my prior post: Ethereum is the Coin to Own in 2018, but now I will provide a quick and general outline as to why the coin, and most importantly the technology, will find success in 2018.

Here are my top six reasons Ethereum will continue claiming the market in 2018:

Ethereum Provides the most Support to Developers and Will Produce Many Heavily Used Applications.

Because Ethereum’s blockchain allows developers to find many different uses for the technology within their own developments, many new apps were created in 2017 and many more news apps will be created and released in 2018. I already wrote on some of the apps I find most intriguing in my post: Five New Cryptocurrency Startups You Should Know for 2018, but there are many others that are in development which pop up every day, and as the knowledge of cryptocurrency and the blockchain continues to grow, many more will be created. We are constantly moving towards a more digital world, and the need to digitize and get online is affecting everyone from large corporations to individual people. Ethereum is the optimal tool for this drive online, and provides an avenue towards the future.

It is important to note that while many new applications will go online this year, the reason they bring value to Ethereum is that their contracts operate on the Ethereum blockchain, meaning the use the Ethereum token to conduct their transactions. Ethereum will be used more as there are more opportunities for it to be used, and it will gain value in the increase of its use in society.

Ethereum Futures are not so Far Away

When Bitcoin futures were released, a gap was bridged between the world of digital commodities and cryptocurrency. To me, it felt like digital currency was finally given the validation it deserved from the financial market. Bitcoin futures have balanced out after jumping to almost $20,000, but they remain strong at well over $10,000 and have been proven to be more trustworthy than previously thought. When Ethereum gets its opportunity in the futures market, which could happen by the end of 2018, it will perform in much the same way, solidifying it as a valuable commodity within the market. While initially it could bring massive price fluctuations, just like Bitcoin, it will find equilibrium and establish trust, eventually creating even higher value.

A Hard Capacity on Shares might be Coming

In a statement made by Ethereum co-founder Vitalik Buterin, he explained that he does not see Ethereum having much more than 100 million tokens available at any time. He said,

“Currently, because of the PoW ice age, the block time is scheduled to start increasing in mid-2017, and past around 2019 the increase is going to grow exponentially. The mining reward does NOT increase proportionately. Hence, there is already an exponential slowdown in the growth of the ETH supply built into the protocol… Hence, in the foreseeable future, the supply will not go far above 100 million”.

By placing a capacity on Ethereum, instead of new coins being given value, the value would be increased across the network of coins as a whole, much like how Bitcoin has increased in value not because of adding more coins for people to own, but because the demand for the coins created has increased. A market cap creates an increase in price for a desired commodity because as the demand continues to increase, the supply remains the same. This causes the price to go up, which could be dramatic in the case of Ethereum.

Some Ether Could be Destroyed Upon Contract Completion

Along the same lines of a hard cap, the Ethereum team has discussed the possibility of Ethereum destruction upon completion of a contract. This method would be implemented to control the supply of Ethereum, since new Ether is added every year. While this might not impact the value as drastically as a hard capacity would, it would increase the value of shares as there would be less available, assuming demand for Ethereum does not drop.

Scaling Solutions to Provide Value

This year Ethereum is expected to address the one major problem all cryptocurrency based startups are facing: Scaling. Currently, several applications on the Ethereum blockchain are being worked on which could provide the answer to this issue. As of right now, there are no solutions, but when one is developed, it will render almost all the barriers currently faced by Ethereum obsolete.

Ethereum will switch from proof of work to proof of stake

Icarus Mining Rig. Image by Wikipedia.

Currently, blockchain miners for Ethereum perform proof of work mining, which is when they compete to be the first to solve a complicated mathematical problem which will move the cryptocurrency from one side of a transaction to another. In this case, the miner who completes the job is the only one who receives any sort of compensation, and an incredible amount of power is expended. This process is very expensive for the companies like Bitcoin and Ethereum. By switching from proof of work to proof of stake mining, Ethereum will stop awarding blocks based on computing power only, but rather on the value of the user’s coins, as well as the current complexity of the network. This would all lead to a safer network against hackers, leading to more trust in the market and higher value overall.

What do you think? Let me know in the comments below!