What is Ethereum in Foreign Exchange Trading, which ranks high in the market capitalization of virtual currencies: When it comes to “virtual currency,” many people think of Bitcoin first. However, there are already more than 1000 types of virtual currencies on the market.
Among them, Ethereum is said to be second only to Bitcoin. As of May 2021, Ethereum holds second place after Bitcoin in terms of market capitalization. In this blog, I will explain the features and prospects of Ethereum.
What is the virtual currency Ethereum in Foreign Exchange Trading?
Ethereum is a virtual currency (cryptographic asset) whose prototype was distributed in 2014. The developer was Vitalik Buterin, a 19-year-old young man at the time.
By the way, many people think that Ethereum is a virtual currency, but it is not exactly. Ethereum is the name of the platform, the currency used in it is called “Ethere”, and the unit is expressed in “ETH”.
There are several characteristics of Ethereum, but one of the major ones is the adoption of smart contracts. A smart contract refers to a technology that can automate various transactions such as remittance.
Traditionally, financial transactions have been established by actually exchanging money. If you use smart contract technology, you can decide by simply recording on the blockchain that “○○ ETH in your account will be sent to Mr A tomorrow” without actually moving the money.
The amount of money is paid to the other party. Since transactions are possible without the actual exchange of money, there is no need to worry about being intercepted by a third party on the way.
Moreover, since transaction information is recorded on the blockchain, money can be traded more reliably.
Ethereum prices and charts
From April to May 2021, cryptocurrencies were generally on a downward trend. This is thought to be caused by a combination of multiple factors.
The main one is that the price adjustment of Bitcoin has started. The price adjustment trend has continued since mid-April 2021, and prices have fallen sharply.
In addition, the tightening of regulations on the handling of virtual currencies in China has also had a major impact. Since China is one of the major cryptocurrency nations, the entire cryptocurrency market is on a downward trend.
However, in such a situation, Ethereum is in the upward trend of prices. On May 3, 2021, the momentum was maintained so that it reached a record high.
As of May 4, the price has risen to 360,000 INR. As of mid-May, the upward trend has begun to settle down, but as of May 20, it has maintained a value of around 300,000 INR.
Ethereum has been moving at price in conjunction with Bitcoin, but now it is showing an inversely proportional price movement, and it can be said that it is a different trend than before.
What is the future of Ethereum?
Looking at past price movements, it has been rising and falling repeatedly, so if you buy Ether, you should watch the chart regularly.
However, looking at the long-term trend, it is highly likely that it will continue to rise steadily in the future. This is because it is perceived by investors as a promising and promising currency.
Large companies that are well known in the world are entering Ethereum one after another. There are more than 200 companies in the related organization called the Ethereum Business Alliance.
Microsoft, JP Morgan, and Toyota are also participating in the members. If you look at the company, you can see how Ethereum is a reliable platform.
Another reason why it is said to be promising in the future is that the theory that it will be listed as an ETF is widespread. An ETF is an exchange-traded fund, which means that it may be handled by a stock exchange.
If it is bought and sold not only on cryptocurrency exchanges but also on stock exchanges, there is a high possibility that the number of participating investors will increase dramatically. As a result, prices may rise more than ever.
Ethereum’s past soaring and future
When Ethereum first appeared in 2015, it was around 80 INR. After that, it soared from around September 2017 and reached the 40,000 INR level in November.
In the background, Byzantium has been operating as planned. Byzantium refers to the hard fork of Ethereum. The hard fork is a term often used in the cryptocurrency industry to refer to a fundamental rule change.
By the way, at this time, virtual currencies were attracting worldwide attention, and the market was generally on an upward trend. It is thought that this was also a tailwind and soared.
In January 2018, it soared to about 160,000 INR, but discussions on the regulation of virtual currencies were held at the G20 held in March of the same year.
Partly because of this, the price of virtual currencies generally fell, dropping to the 40,000 INR level in April, and the value was only about 1/4 of the time.
However, after that, it will enter a soaring phase again. On April 20, 2018, a developer meeting was held to discuss how to deal with the G20 statement.
Among them, changes to the consensus algorithm and the introduction of new code were announced.
The measures were well received in the market and succeeded in recovery. In 2019, the daily payment amount of blockchain exceeded Bitcoin.
After that, it entered a downward phase again but entered a recovery trend again, and as mentioned above, it reached a record high in May 2021.
Recently, prices have been rising even in an unfavourable environment, such as the tightening of regulations in China and the plunge of Bitcoin due to Mr Elon Musk’s “mask market”.
In the background, VISA has decided to adopt USDC. USDC is a virtual currency issued on the Ethereum blockchain.
The trust of international brands in the Ethereum blockchain has had a major impact.
Advantages and disadvantages of owning Ethereum
If Ethereum will be used as an actual currency in the future, its high convenience can be said to be a merit. Because the remittance process is very fast.
In the case of Ethereum, it is said that the remittance procedure will be completed in about 15 seconds. In the case of Bitcoin, which is the most well-known virtual currency, it takes about 10 minutes to process the remittance.
Looking at this time, you can see how quickly Ether can complete the deal. Another merit of Ethereum is that as of May 2021, there is no issuance limit.
Since Bitcoin has an issuance limit, it has been pointed out that new issuance may become difficult shortly. In the case of Ethereum, there is no issuance limit, so it is expected that coins will continue to be stably supplied to the market.
Investors can rest assured that they don’t have to rush to buy Ether and can carefully assess price movements and timings when trading.
However, it cannot be denied that the issuance limit may be set in the future due to changes in the environment surrounding Ether and requests from users.
Check back often for the latest information. While Ethereum has its advantages, it also has its disadvantages. It’s a scalability issue.
I introduced the speed of remittance processing as a merit, but there is an additional precondition that I can demonstrate my original ability.
In addition to currency exchange, this platform can also use other functions such as ICO, and when other functions are used, the speed of remittance processing can not keep up and there is a risk of causing a bottleneck phenomenon.
However, this disadvantage may be improved shortly. It is said that they will start improving the Leiden network.
The Leiden network is a method of proceeding with time-consuming processing other than blockchain and is expected to reduce the burden of remittance as a result.
The fact that smart contracts are used can also be a disadvantage. Although it is a highly practical system, vulnerabilities are often pointed out. The most famous is “The DAO Incident” which occurred in 2016.
It is believed that in the case where Ether was stolen for 7 billion INR, it was stolen with a bug in a smart contract.
The possibility of such an incident occurring in the future is not zero, so it is advisable to consider measures in case of an emergency.
Ethereum, a virtual currency that will continue to attract attention
Ethereum has established itself as a cryptocurrency next to Bitcoin, but further growth is expected in the future. As large companies are adopting platforms one after another, it may be more practical.
There are many issues such as scalability issues and platform vulnerabilities, but since the developers are also responding quickly, there is a high possibility of stable growth.
Since it can be purchased at domestic exchanges, it can be said to be one of the effective options for those who are considering investing in crypto assets other than Bitcoin.
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