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Is Ethereum a bubble to burst? Learn everything about Ethereum here.

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Investing with moomoo joined discussion · May 19, 2021 05:20
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.
Is Ethereum a bubble to burst? Learn everything about Ethereum here.
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?
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.
Is Ethereum a bubble to burst? Learn everything about Ethereum here.
How did Ethereum become popular?
Is Ethereum a bubble to burst? Learn everything about Ethereum here.
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 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
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
Is Ethereum a bubble to burst? Learn everything about Ethereum here.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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