After enjoying a year of popularity for its smart contract functionality, Ethereum has seen a rapid general decline relative to Bitcoin, with a dominance percentage hovering at 14% and dropping, while Bitcoin’s is at 54% and rising.
It has been the second most popular cryptocurrency since 2017. For a brief time in June 2017 it looked like Ethereum might overtake Bitcoin as the #1 cryptocurrency when its dominance percentage rallied to 32% while Bitcoin’s dominance percentage crashed to 38%.
Ethereum is the most popular cryptocurrency that has smart contract technology, which can be used to build decentralized apps (Dapps), which are like normal apps except they are integrated with the Ethereum blockchain, giving them cryptographic security and immutability. A plethora of Dapps and cryptocurrencies have been created with Ethereum since it initially rose to global popularity in 2017, but now Ethereum appears to be losing popularity. Currently, its native currency Ether’s price is down to USD 260 as of 14 August 2018 after dropping 20% in a single day, far worse than the 6% drop encountered by Bitcoin during the same day. This is the lowest Ethereum’s price has been since it rose to become one of the top cryptocurrencies.
To put this in perspective, Ethereum hit an all-time high near USD 1,400 in January 2018, and only a month ago Ethereum was near USD 500. Essentially, Ethereum has lost nearly 50% of its value in a month, indicating that it is losing popularity and leaving Bitcoin firmly in the #1 rank for cryptocurrencies.
The exact reason for Ethereum’s decline is unknown. Perhaps developers are choosing to create their own platforms and blockchains rather than use Ethereum’s blockchain, which lowers demand for Ethereum. Major cryptocurrencies like EOS and Tron have left Ethereum to go to their own native blockchains recently. This is particularly easy since Ethereum is open source, so anyone could copy Ethereum’s code and start their own cryptocurrency. Additionally, there are cryptocurrencies like Cardano and EOS which claim to be like Ethereum but better. Regardless of if they’re better, clearly Ethereum has competition now whereas before, it had practically none.
Perhaps more importantly, Ethereum’s decline relative to Bitcoin could be due to investors recognizing that Bitcoin is the gold standard of the cryptocurrency world. Bitcoin is the first cryptocurrency, the most secure due to its tremendous hashing power, the most reputable, the longest running and the most widely used. Bitcoin is the obvious best choice for cryptocurrency investment. Ethereum is a fairly good investment for speculative purposes, since if Dapps proliferate on Ethereum then Ether’s price will go up as Ether is needed to pay for executing smart contracts and running these Dapps. However, Dapp activity on Ethereum might be slowing down now due to all the other platforms available, which would cause a decrease in Ethereum’s price like we’re seeing.
Ethereum will still be comfortably in second place in the crypto world for the foreseeable future as its market cap is above USD 26 billion, while Ripple in third place is only at USD 10 billion. To put this in perspective, Bitcoin is sitting at USD 103 billion, and the gap between Ethereum and Bitcoin has only been widening.
Follow BitcoinNews.com on Twitter at https://twitter.com/bitcoinnewscom
Telegram Alerts from BitcoinNews.com at https://t.me/bconews
Image Courtesy: Pixabay