If you are an investor who often dabbles in cryptocurrencies, or even if you are “crypto-curious,” you are familiar with Ethereum ETHUSD. It is considered the world’s second expensive cryptocurrency. It comes after bitcoin BTCUSD and the blockchain. It is equipped with the ability to write automated smart contracts straightly into the code involved in a transaction between 2 people.
Challenges with Etherium
What you may not be aware of are some of the complexity of how the Ethereum blockchain works and the problems it faces in terms of security, scalability, and energy consumption. Ethereum’s market value exceeds $250 billion, making it five times larger than its competitors. However, high fees and network congestion have deteriorated performance and pricing some activities out of the market, allowing several competing blockchains to develop.
These blockchains conceived and financed in 2017 compete to make inroads into the innovative contract business by offering alternate answers to some of its challenges.
These blockchains, with names that sound like they belong in a horse race (such Cosmos, Solana, and Polkadot), each have their own competitive qualities that have positioned them advantageously against Ethereum’s difficulties. (Bitcoin, being the first and largest blockchain, is and will continue to be the unrivalled “digital gold.”)
Drawbacks of Etherium That Developers Are Seeking To Support
One significant disadvantage that Ethereum developers are working to address is that, like bitcoin, mining requires a considerable amount of energy. The “proof of work” (PoW) consensus algorithm, which is currently used by both bitcoin and Ethereum, consumes so much computing power to solve ever-more complicated equations that the University of Cambridge evaluates Ethereum’s annual electricity consumption to be furthermore than Ecuador, which is a country of 17 million people.
According to their estimations, Bitcoin would be equivalent to Argentina’s yearly energy usage.
Other blockchains have solved this issue by employing “proof of stake” (PoS) methods, in which bitcoin is used as collateral to safeguard activity rather than depending on computations generally performed in massive data centres. Ethereum is likewise moving in that direction and may arrive as early as the fourth quarter of this year.
Another technical issue affecting Ethereum is congestion, which occurs when a high activity raises transaction fees, known as gas pricing. In this case, Ethereum is a victim of its own success, drawing many more users than competing blockchains. In some ways, it’s similar to a popular restaurant where it’s tough to get a table.
Nonetheless, this has created a window of opportunity for rivals as customers seek cheaper and quicker options elsewhere. Because of its ultra-high scalability, Solana, which closed a $314 million funding round last month, is considerably faster and more affordable to utilise.
How Ethereum experienced the boost with 1.96%
The global cryptocurrency market experienced a boom on July 24. The crypto market cap is now $1.39 trillion, up 1.28 per cent from the previous day. The total crypto market volume for the last 24 hours is $70.73 billion, a 1.54% decline.
The overall volume of all stable currencies is now $57.22 billion, accounting for 80.89% of the entire volume of the crypto market.
Ethereum gained the most, increasing by 1.96 per cent, followed by Bitcoin, which increased by 1.65 per cent. XRP, on the other hand, plummeted -0.64%.
The following are the values of the top ten cryptocurrencies as of 7:10 a.m. on December 10. (data from https://coinmarketcap.com):
|S.No||Name||Price||24H%||7D%||Market Cap||Volume (24H)|
|4||Binance Coin BNB||$298.92||0.55%||2.73%||$50,172,605,579||$1,603,856,791|
|7||USD Coin USDC||$0.9999||0.01%||0.03%||$27,012,812,487||$1,836,679,250|
|10||Binance USD BUSD||$0.9998||-0.01%||-0.04%||$11,711,075,988||$4,476,420,908|
Role of Elon Musk In Boosting The Value Of Cryptocurrencies
The price of Ethereum (also known as ether) has hiked after Elon Musk tweeted about his investment in that cryptocurrency.
On Wednesday, the technology mogul spoke alongside Twitter CEO and renowned crypto supporter Jack Dorsey at The Bitcoin Word conference, and his remarks pushed the bitcoin rival past $2,000.
“Bitcoin does some things well, and it’s evolving… Usability for the average person is not great, but it has a lot of potentials,” he said.
“On balance, I support bitcoin and cryptocurrency in general.”
Earlier this year, Tesla CEO Elon Musk made news when he announced that his firm would accept bitcoin as a means of payment for electric vehicles. However, he then reversed his decision, citing environmental worries about bitcoin’s network.
With a massive fall in China on bitcoin mining activities, initially fueled by coal-fired power plants, the cryptocurrency has transformed increasingly towards renewable energy sources.
Tesla invested $1.5 billion in bitcoin in the month of February 2021. Due to this, Tesla became the world’s second-largest corporate investor after software firm MicroStrategy.
A tiny amount of this was later sold, but the vast bulk is still retained by Tesla, despite the current price drop.
After reaching more than $64,000 in mid-April, bitcoin’s price has dropped to almost half its peak and is now trading at a little around $32,000.