Ethereum seems all set to beat Bitcoin in popularity, in 2022! The blockchain’s features and Dapps seem to be luring numerous investors. It is why experts are predicting an extremely bright future for Ethereum. In fact, they even suggest that its prices may double.
Reasons for Ethereum’s Price Rise
There are several reasons why Ethereum may experience a drastic price hike.
First Mover Advantage
True, developers of other blockchains are coming up with technologies that are more environment-friendly than Ethereum’s are. Regardless, the Ethereum blockchain provides a unique ‘first mover advantage’ that ensures success in the future too.
First mover advantage refers to placing its products in the marketplace before any of its competitors do. Ethereum also has the benefit of many users, who are committed to buying its coins. Thus, the blockchain seems quite capable of meeting future demands with confidence.
Smart contracts and the Ethereum blockchain are synonymous with one another. They enable developers and artists to display their innovativeness through NFTs. They can mint/make them, and sell them. These non-fungible tokens (NFTs) are apt samples of digital creativity.
However, the popularity also led to bottlenecks or traffic jams showing up on the Ethereum blockchain. In turn, usage/transacting on it, became expensive, too. Fortunately, the Ethereum team has been diligently at work on the infrastructure. Today, it is much improved. It is also quite capable of handling competition.
Reduction in Transaction Fees
The new ETH 2.0 is proving to be a boon for investors. This kind of upgradation of the Ethereum blockchain is enabling a reduction in transaction charges. Currently, the reduction is almost 35%.
The new network is moving towards 100,000 transactions per second. When this scheme gets off the ground, there will be a further reduction in transaction fees. Even settlements will go through much faster than before.
Enhancement of Activities Involving NFTs and DeFi
The Ethereum network is renowned as a decentralized one (DeFi). It is also the primary pathway for transactions and exchanges involving NFTs (non-fungible tokens).
According to a survey by nonfungible.com, NFTs latest sales touched an all-time high of over $20 billion. An examination of locked assets in the DeFi network revealed them to touch $100 billion. This figure is expected to increase.
OpenSea contributed heavily to these profits. It is a peer-to-peer marketplace for NFTs. The transactions crossed $5 billion in January 2022. Most of these exchanges like BitIQ occurred on the Ethereum network.
Development of Web3
Web3 is an innovative version of the existing Internet that is using blockchain technology. This version is an open-access one. In other words, it will permit greater transparency regarding transactions taking place. Furthermore, investors will be able to control and own their data more securely. Finally, with the aid of their cryptocurrencies, users will retain major portions of the infrastructure.
True, Ethereum is not the only company working on creating a suitable infrastructure for Web3. Even Tezos, Solana, Cardano, etc., are doing the same. However, Ethereum seems to be doing a better job of it.
Reduction in Supply of Active Coins
The latest news about Ethereum is that the blockchain engaged in a fee burn exercise. Fee burn refuses a mechanism of self-destruction. In other words, it destroys or burns out a specific percentage of ETH coins from the total quantity in circulation.
These burned coins would have been utilized as fees for miners. They would have received rewards for proof of work. However, proof-of-stake has replaced proof-of-work in the upgraded Ethereum network.
This new feature insists on making Ether more valuable. A decrease in supply increases the value of the coin. Until date, the fee burn has destroyed ETH worth more than $4 billion U.S. dollars.
How Far Will It Go?
The predictions about how far the price will stretch in 2022, swing wildly! Finder, the survey company, states that it may begin the year at $7,000, but lessen by the year-end.
Other experts are optimistic that it will touch the $12,000 mark by year-end. Their predictions are based on the behavior of Ethereum since 2020. ETH’s market capitalization rocketed to $400 billion then.
It helps that the Ethereum blockchain is so versatile. Its software programs and applications are suitable for entertainment, gaming, music, etc.