Is Ethereum a bubble to burst? Learn everything about Ethereum here.
According to Coinmarketcap, Ethereum is the second largest cryptocurrency by market cap, close behind Bitcoin on rankings.
Read also: Understand what Bitcoin is and how it works.
Most people heard of Ethereum this year because of its soaring price. But last week, the world of cryptocurrencies suffered a great loss - almost 35% of its total capitalization vanished in one day.
Is Ethereum a bubble to burst? Do you really understand what Ethereum is and how it works?
Is Ethereum a bubble to burst? Do you really understand what Ethereum is and how it works?
How was Ethereum invented?
Ethereum was invented by Vitalik Buterin, a 19-year-old Russian-Canadian teenager in late 2013.
Buterin saw the limitation in the blockchain system of Bitcoin and designed a decentralized, open-source blockchain with smart contract functionality.
Smart contracts are self-executing agreements in which a chain of actions could flow from defined conditions and contingencies. The objectives of smart contracts are to reduce the need for trusted intermediators, arbitrations and enforcement costs, fraud losses, and malicious and accidental exceptions.
What is Ethereum?
Ethereum is the most actively used blockchain system.
But for most crypto investors, Ethereum or Ether (ETH) is the native cryptocurrency of the platform. Besides, Ethereum belongs to Altcoin, an alternative digital currency to Bitcoin.
How did Ethereum become popular?
1. Back in 2017, Ethereum came into sight because of initial coin offerings, or ICOs. At that time, many new coins were made using the Ethereum system and can be sold for Ethereum, pushing its price once above $1,200. (though many ICOs were proved to be scams soon later)
Startups then realized Ethereum is useful in peer-to-peer fundraising, eliminating the need of banks and venture capital funds.
2. The next boom of Ethereum came in the summer of 2020, when decentralized finance (DeFi) projects flourished.
Ethereum was widely used by startups for traditional finance, lending and collateral management purposes.
3. The latest and maybe wildest Ethereum development has been non-fungible tokens, or NFTs.
Most NFTs are part of the Ethereum blockchain.
What is NFT: Learn about the mysterious and artistry "NFT"
What are its risks?
1. Regulatory risks
In many parts of the world regulators are only now catching up with the innovations created by cryptos. The risk is that overly onerous financial or tax rules could shift development and energy away from certain countries.
- In the U.S., the Internal Revenue Service (IRS) views cryptocurrency as property that's subject to capital gains taxes, which is a big disincentive for people to spend their crypto.
- In China, the People's Bank of China apparently warned against using digital coins as payment on May 19, 2021.
"Late yesterday in Asia, the PBOC issued a warning about a rebound in speculation in virtual currencies. China announced that financial and payment institutions are banned from pricing or conducting business in virtual currencies. The story did not get much traction overnight but seems to be picking up steam this morning," said Jeffrey Halley, senior market analyst at Oanda, in a note to clients.
2. Safety issues
Your crypto might be stolen by scammers. And you might misplace or screw up the private key needed to secure your digital assets.
Is it a bubble?
Hear from Bloomberg
Hear from Bloomberg
Some market observers certainly think so.
They see the recent boom as a combination of reach-for-yield risk-taking and the kind of retail investor enthusiasm that pushed little-known stocks like GameStop Corp. to stratospheric heights.
Then there is the fact that a small group of users, known as whales, own significant portions of Bitcoin and Ether and have the potential to move prices at their whim.
Even crypto supporters acknowledge that the sector’s volatility can be extreme. But they point out that the major cryptocurrencies like Bitcoin and Ether have rebounded from their downtrends over the years to rise to new highs over several cycles.
-- Bloomberg Analysts
Hear from Ethereum founder
Although the collapse of cryptos last week took markets by surprise, Vitalik Buterin, the 27-year-old billionaire founder of Ethereum, revealed that he's been expecting the crash.
"We've had at least three of these big crypto bubbles so far ... And quite often, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn't there yet," said Buterin.
He stated that cryptocurrencies are "in a bubble," but it's hard to say when it will burst. "It could be over by now ... It could be over in months," Buterin said.
Source: Bloomberg, Dow Jones Newswires
Although the collapse of cryptos last week took markets by surprise, Vitalik Buterin, the 27-year-old billionaire founder of Ethereum, revealed that he's been expecting the crash.
"We've had at least three of these big crypto bubbles so far ... And quite often, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn't there yet," said Buterin.
He stated that cryptocurrencies are "in a bubble," but it's hard to say when it will burst. "It could be over by now ... It could be over in months," Buterin said.
Source: Bloomberg, Dow Jones Newswires
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Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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ThatcherRichard : Ever since the dot.com crash and the stock market crash of 2008, there’s always someone wanting to be the one “ who called the crash” for their own prestige and profits. Every week we get the latest naysayer trying to cash in ...shhhh.. there might be a crash...
Look at last week’s correction in crypto markets. It looked like some one wanted to start over with lower prices. 30-50% losses looked like crashing to me, but no, it’s normal in crypto currency world....
Maybe the people claiming the crash is coming could be helpful and point out the causes so we could avoid problems into the future...
e13v3n : Everything is in a bubble. But you can make profits from bubbles. Anyway, the real question is, when can we start trading crypto on Moomoo?
Investing with moomoo OP e13v3n : Thanks for your question
And please stay tuned for our update once it’s available.
Ellen 69 : VB VB VB
MiMoo : Thanks for sharing
Froriano : thanks for sharing
Alicia spc : New here… everything to me at this stage is bubble LOL
103025150 : float with the bubble and crystalised at the high.
win 11118 : Nice
Zaleha96 : Good
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