Ether, a cryptocurrency "victim" of its blockchain? An interesting perspective on the fate of the Ethereum project.
Despite being the Bitcoin the most capitalized cryptocurrency in the world, in recent weeks is its main rival, Ether, to capture the headlines, with its blockchain technology (Ethereum) which is motivating the concerns of many investors, now on the run.
But let's go in order. We first recall how virtual currencies suffered enormous difficulties globally after the US banking giant Goldman Sachs withdrew from its plans to open a trading desk to bitcoin: an unwelcome signal to the sector, which saw the banker's move as a sort of abandonment of interest in a sector to which it no longer has great motivations.
Among those who suffered the greatest damage there was Ether, the cryptocurrency of Ethereum, which lost 20% in value, gaining a further lunge after the publication of some questionable comments from Vitalik Buterin, his co-founder, who earlier this month told Bloomberg that "the space for the blockchain (Ethereum) is reaching its maximum evolution point ".
La blockchain it is - essentially - a ledger for recording transactions, open to all who use it, but extremely secure. A variable that allowed the rise of cryptocurrency trading, but it certainly did not solve the serious problems of the ecosystem such as, for example, its scalability.
Unlike the blockchain di bitcoin, which performs transactions involving only the cryptocurrency, Ethereum it can indeed accommodate several virtual tokens and also enable some digital applications and the so-called "smart contracts". Such programs can for example automatically activate payments without the use of a third party when predefined conditions are met, such as winning a sports bet. Or they can allow better tracking of goods in transit, and so on.
Ethereum is also home to two-thirds of the Initial Coin Offers (ICOs), a fundraising tool for companies that issue cryptocurrency tokens, just like (or almost) issuing shares on a stock market. Just the explosion of the number of ICOs in 2017, two years after the launch of Ether, led the price of the cryptocurrency to bounce over 160 times its original value in a period of only 12 months.
However, the craze around ICOs also caused Ethereum network congestion, contributing to the collapse of currency prices starting in January. "The more requested it is, the more likely the network will become clogged," said Jerome de Tychey, president of Asseth, an association that promotes the use of Ethereum.
A clogged blockchain results in higher tariffs for customers who wish to prioritize transactions, so much so that average tariffs hit a record high of $ 5,50 in July, according to bitinfocharts.com. Generally, however, commissions should fluctuate only a few cents.
Think Markets merchant analyst Naeem Aslam said Buterin "is not doing the job it should do" - that is, making companies "trust the technology and provide them with what they need."
As for the trend assumed by the values of the cryptocurrency, the drop in the value of Ether was truly dramatic. Since the beginning of August, it has lost more than half of its value and, going back up to May, the drop has been 75%, with the total value of the virtual currency now plummeting to about $ 23 billion from $ 82,5 billion. originating.
Still, the huge drop did not reset Ether's price to zero, but only brought it back to just over a year ago, at around $ 220 for a token. Another factor that weighed on the ether price was the success of the ICOs. Companies that raised funds over the air with ICO now need to sell them to cover operating expenses in legal currencies. According to industry analysts, Diar, the companies that raised funds before the price boom late last year have sold around 20% of their Ether holdings since April, monetizing its price.