Ethereum is still compared to Bitcoin, especially among new cryptocurrency investors. However, Ethereum is much more than a Bitcoin-like currency, as it has far more use cases. Indeed, 94 out of the top 100 coins rely upon Ethereum tokens. As Fintech CEO Jeremy Allaire states, Ethereum occupies a special place within cryptocurrency, noting that, “One of the things that really catalyzed the [cryptocurrency] market last year was actually that ethereum, in particular, kind of got to a place where you could build apps on top of it,” he said. “You could issue new tokens on top of it; you could create new kinds of financial contracts, using the smart contracts technology.”
Allairs asserts that, because of this, Ethereum played a pivotal role in popularizing
Initial Coin Offerings (ICOs). In addition to helping digital currency projects raise funds, the advent of ICOs brought new investors to the market. At present, firms have raised more than $10 billion through ICOs in the first half of this year.
Although Bitcoin retains a healthy market cap lead, it’s not inconceivable that the cryptocurrency may eventually be overcome by Ethereum. Given that third-party transactions can run on its network, the platform exercises exceptional influence upon the digital currency space.
According to Bitinfocharts, Ethereum’s daily transaction rate is now triple those of Bitcoin (621,305 vs 184,628). Likewise, Ethereum is also gaining on Ripple in the transaction race. Late last year, the latter dominated the former in transaction volume by a 3 to 1 margin. Today, Ripple slightly lags Ethereum in transactions (545,970).
Analysts frequently interpret the metric as a measure of utility and adoption. For instance, Bitcoin’s transaction volume will invariably grow as it becomes more scalable and viewed as an alternative currency. Moreover, this volume is expected to exponentially increase once a scaling solution known as the Lightning Network is in place.
In contrast, Ethereum’s high transaction volume results from the popularity of decentralized apps, now estimated at more than 1700. And according to Etherscan, these applications have an estimated sum of 100,500 token contracts. Not incidentally, these dapps have helped to further expand the the cryptosphere as well, as a DApp’s development team will frequently remove its DApp from the Ethereum network to start its own mainnet (i.e., EOS or Tron).
What’s Next? Ethereum’s Second Layer
Ethereum developers are now working on building a second layer of blockchain infrastructure called Plasma. Plasma would reside on the blockchain itself. Frequently referred to as a sidechain, a second-layer blockchain will enable transaction parties to store additional data and payment details. Once a transaction has completed, the results will be stored on the primary blockchain layer as an immutable record. This improvement removes the need to have every single network node validate a new transaction block.
As Vitalik Buterin wrote in the Plasma white paper, “we seek to design a system whereby computation can occur off-blockchain but ultimately enforceable on-chain which is scalable to billions of computations per second with minimal on-chain updates.”
Ethereum is certainly becoming an indispensable part of the cryptosphere, and its attempt to scale will be highly beneficial to cryptocurrency in general.