Ethereum(ETH) Price Forecast: Introduction
People in the crypto landscape for the last 10 years might have held either of two banners, for Ethereum or For Bitcoin. The differences between both sides have grown so glaringly that its become difficult for both to co-exist peacefully on Twitter. In this Ethereum price (ETH) forecast evaluating the future prospects of Ethereum, we will ascertain whether Ether is indeed the true Bitcoin killer.
Ethereum’s Potential To Surpass Bitcoin As The Leading Cryptocurrency
A study by CryptoVantage found 47% of investors believe Ethereum will surpass Bitcoin to become the cryptocurrency of choice. However, Bitcoin proponents do not want to hear any of that and believe all other cryptocurrencies will fall and leave Bitcoin as the crypto of choice.
An article from Goldman Sachs forecasted the value of Ethereum will finally overtake Bitcoin due to the former’s potential use cases. Technology and use-case are the two most important determinants of a cryptocurrency’s future success. Ethereum runs on a programmable blockchain, which has thereby made it the infrastructure of choice for deploying decentralized applications and financial smart contracts. It is this programmable blockchain concept that Ethereum introduced in 2015 that’s giving the blockchain more versatility over Bitcoin.
Nevertheless, it is important to note the majority of people prefer Bitcoin as a store of value, similar to Gold or Silver. While Ethereum’s scalability issues and high network fees have denied proponents the luxury of ETHER as a store of value and mode of payment. However, people purchasing NFTs, interacting with DEFI or developers building DApps will pick Ethereum over Bitcoin.
Meanwhile, many other altcoins are competing with Ethereum on this front, which means Buterin’s team must up their game to beat the likes of Solana, Cardano, Tezos and Avalanche. Therefore it might also be a case of Ethereum’s journey to become the largest altcoin, a position that won’t come easy in the next 5-10 years. See below for a comparison chart between Bitcoin Vs Ethereum when it comes to market dominance:
- Ethereum(ETH) price forecast. Chart by CryptoAdventure
Controversies Surrounding Ethereum’s Scalability Challenges And High Gas Fees
Ethereum’s largest pain is scalability issues and high transaction fees. This has discouraged most developers and potential users, who have opted for other low-cost or Layer 2 blockchains.
The Ethereum blockchain used to be super-fast and low-cost when it came out. However, the increasing popularity of decentralized applications attracted large numbers of users. The network became congested and transaction processing times became slower. Therefore, users had to pay more gas fees to have their transactions go through in time and bypass the line.
At this point, Ethereum was using the proof-of-work consensus mechanism where miners validate transactions using high computing power. As such, the network would undergo occasional bottlenecks when faced with high congestion. Thereby resulting in slow transaction times and high transaction fees. This prompted Ethereum to engineer a new solution for addressing the challenge. Therefore, the team introduced Ethereum 2.0, an upgrade that saw the network shift from a proof-of-work to a proof-of-stake consensus mechanism. Unlike previously where computing power was vital in validating transactions, proof-of-stake would allow transaction validation based on the amount of coins one had staked.
In addition, the network has been exploring layer 2 scaling solutions to offload activity on the mainnet and increase transaction processing time on the Ethereum mainnet.
Ethereum Price (ETH) Forecast: The Impact Of The Ethereum 2.0 Upgrade On Price And Market Position
Ethereum 2.0 did bring slight improvements to the Ethereum network. However, there was little to no impact on the price and market positions. Perhaps due to the timing -_ Ethereum 2.0 came at a time when the crypto market was not in good shape. FTX had collapsed and the meltdown was felt all across the industry.
On the downside, the upgrade failed to address the network’s issue of high gas fees. This is a big red flag for smart contract developers building on the blockchain, and digital currencies users looking for assets to invest in or use as a mode of payment. The blockchain relies heavily on the potential use case, scalability, cost and community. Ethereum must leverage all of these to avoid falling behind the top ten cryptocurrencies by market capitalization.
- Top 10 cryptocurrencies by market cap: Coinmarketcap
Evaluating The Risks And Benefits Of Ethereum’s Transition From Proof-Of-Work To Proof-Of-Stake
Transitioning from proof-of-work (PoW) to proof-of-stake (PoS) in Ethereum, also known as Ethereum 2.0 or Eth2 was a significant milestone for the blockchain, which therefore addresses the limitations of Bitcoin’s PoW. In this section, we are going to evaluate the benefits and limitations of Ethereum 2.0.
Scalability
Proof-of-stake has significantly improved the network’s scalability. Transaction speeds have also increased. Thereby making the network more efficient, reliable and user-friendly.
Security
proof-of-stake is also an excellent security guarantee. The consensus mechanism ensures only people interested in the network can validate transactions. Therefore, validators need to stake 32 ETH to qualify and participate in block verification.
Energy Efficiency
Unlike proof-of-work which requires immense energy power and computing resources, proof-of-stake eliminates energy-intensive mining, saves immense energy and reduces carbon footprint on the environment.
Low Barrier To Entry As A Validator
Miners on Bitcoin require expensive machinery and usually pay high electricity bills. However, one only needs relatively cheap equipment and software to become an Ethereum validator. Remember the road to decentralization is paved with affordability, low entry barriers and easy accessibility.
Limitations Of Ethereum 2.0
- Consensus finality is based on probabilistic variables: This is a situation where the block can be reverted back if the majority of the validators on that block misbehave. On a proof-of-work network, blocks are successfully mined after achieving consensus. However. A proof-of-stake network successfully mines a block based on probabilistic consensus. This might negatively impact immutability as one of the blockchain’s major features.
- You cannot be a validator if you don’t have 32 ETH to stake: Ethereum’s proof-of-stake consensus requires upto 32 ETH for anyone who wants to participate in the network as a validator.
Ethereum(ETH) Price Forecast: Conclusion
Ethereum has a high chance to become the leading cryptocurrency of choice. The blockchain already has a great team, a diverse ecosystem of builders and developers, as well as a vibrant community of users. Users only want Ethereum to solve the high gas fees, and scalability issues and the blockchain will not bleed more users anytime soon. In our Ethereum(ETH) price forecast, we evaluated the altcoin’s potential, the benefits of scalability and the risks of the recent Ethereum upgrade. Check this space for more updates about crypto and more future forecast for ETH.
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