Ethereum isn’t dead, but it may be facing some serious challenges. The price crashed because there were too many people trying to buy it at once.
That caused a shortage of ETH, which made prices drop. However, even though the price has fallen, it still remains above the $2,000 mark.
There are also cryptocurrencies that have risen in value since then, making the overall market much healthier. Cryptocurrencies are not guaranteed to make an amazing comeback.
However, every time before the recent crash they were proven wrong. Ethereum rose to its all-time high of 4,160 USD and subsequently crashed by more than 90%.
But, Ethereum recovered and eventually soared to more than 4,100 USD. However, Ethereum, Bitcoin, or other cryptocurrencies are not guaranteed to make another spectacular comeback.
The cryptocurrency market is very volatile. It can go up or down on any given day. This means that you should never invest more money into something that you cannot afford to lose.
If you do decide to invest your money into cryptocurrencies, make sure that you only invest what you can afford to lose.
But is Ethereum dead? And why is it currently down so low that it is giving people this impression? Let’s find out.
Why Is Ethereum Down?
Tesla’s CEO Elon Musk announced that he sold off $1.5 billion worth of bitcoin. This caused the price of bitcoin to drop by about 40%.
Elon Musk tweeted that Tesla’s decision to stop accepting bitcoin was due to concerns over the use of fossil fuel to power Bitcoin mining.
He later clarified that the company most likely will resume bitcoin payments once it can confirm that more than half of the energy used to power bitcoin mining comes from renewable sources.
The Chinese government’s crackdown on cryptocurrencies caused the price of Ether to plummet. The price of Ether dropped from over $3,000 to under $1,700 in less than two weeks.
This caused investors to lose faith in Ether and start selling off their Ether holdings.
Cryptocurrencies are still far away from recovering. Their value has dropped significantly since the beginning of the year.
Bitcoin and Ethereum are now worth less than half of what they were at the start of 2017.
However, the idea that Ethereum is dead is illogical. It is definitely alive and well. A strong rally in prices shows that the community is optimistic about the future, irrespective of any prior crash.
Prices may go up or down, but there’s no doubt that it’s alive and well, so there is still reason to maintain optimism about investing into Ethereum.
What Can I Do With My Ethereum?
Ethereum is one of the best options for those who want to invest in cryptocurrencies.
You can use it to purchase things online, pay for services, or send money across borders. Here are some ways that you can use it:
Buy Items With Cryptocurrency
For example, you can buy clothes, electronics, books, video games, or anything else using Ethereum. Instead of paying someone in dollars, you could pay them in Ether instead.
Invest in ICOs (Initial Coin Offerings)
These are companies that issue tokens to raise funds for their projects. They usually offer discounts if you buy early.
Create Smart Contracts
Smart contracts allow you to automate agreements between parties.
For example, you could create a contract that automatically pays out dividends to shareholders if certain conditions are met.
Will The Government Increase Regulation On Ethereum?
It is unlikely that the US government will increase regulation on Ethereum. However, this doesn’t mean that we won’t see increased regulation on other cryptocurrencies.
We already have regulations in place that govern how people can trade Bitcoin, which is why many exchanges require users to provide identification before trading.
There are also laws that regulate how banks handle cryptocurrency transactions. If a bank fails to comply with these laws, they could be fined heavily.
However, digital casinos are something lawmakers need to protect their citizens from. They’re also a new source of revenue.
Most countries tax crypto profits at an ordinary income rate. So corporate taxes, income taxes, and transaction fees may be introduced.
People will likely write off their losses, but those losses could destroy tax revenues and cripple government services.
So, in short, it is difficult to determine what regulations will be brought in with regard to Ethereum.
What About The Transaction Fees?
People hate transaction fees. It is why people ditched PayPal for money transfers and moved over to Wise.
As Amazon showed in every market it entered, shaving profit margins down to the bone is what won in the long run. Because, after all, what was corporate profit but the final efficiency?
ETH’s gas fees are pretty harsh, and Bitcoin’s transaction fees leave plenty of room for competitors to undercut those fees.
Is Ethereum Bad For The Environment?
The biggest concern surrounding Ethereum is its energy consumption. Its proof-of-work system requires miners to use lots of electricity to keep the network secure.
This means that mining Ethereum is not environmentally friendly.
However, the same thing has been said about Bitcoin since day one. Ethereum is trying to address this problem by introducing the Casper protocol.
This protocol will reduce the amount of power needed to mine Ethereum.
To conclude, Ethereum isn’t dead, but it does face some challenges.
The biggest challenge is scalability. While Ethereum is more scalable than Bitcoin, it still needs to scale up.
This is because there are only so many computers that can solve the problems associated with the proof-of-work algorithm.
In addition, the price volatility makes investing in Ethereum risky. But as time goes on, Ethereum may still become a better investment option than Bitcoin.
In cases like this, it is only really time that can tell for definite.
Thank you for reading!
If you enjoyed this article, you might enjoy our post on ‘How To Get XRP Out Of Coinbase‘.