Recent speculation surrounding a Bitcoin bubble has led some analysts to be cautious from an investment standpoint. Flashbacks to the housing market collapse are likely helping give this notion life, which doesn’t help other digital currencies. As the second most popular alternative currency on the market, Ether users can’t help but wonder if there is a bubble present.
Ethereum’s value has grown exponentially in 2017. It started off at $8 per coin and has since grown into upwards of $300 per coin. Basic investment intuition tells analysts that this rapid growth (to the tune of nearly 40 times in a year) is a sign of a bubble. However, Ehtereum has some unique factors that make investors optimistic the currency a viable opportunity.
For starters, there is no cap on Ether tokens. Bitcoins are maxed out at 21 million, meaning there can be no more Bitcoins in circulation past that mark. Ethereum is unlimited. Perhaps the biggest redeeming quality Ether possesses is its blockchain network. The Ether network allows developers to build out applications, IPOs and other smart contracts. Bitcoin has no such capability. This feature creates a sustainability unparalleled by any other cryptocurrency network.
An example of an application that could potentially be built out is something similar to Provably Fair Technology. Provably Fair technology is exclusive to Bitcoin gambling sites and allows users to test the fairness of casino games and poker hands in real time. This creates complete transparency between the user and the online casino. One of the biggest concerns of online gamblers is fairness, so this technology gives peace of mind. As Ethereum creeps up the rankings, it is not too farfetched to think that a similar application can be introduced to Ethereum gambling sites.
If something like this was developed, Ethereum online casino sites and Ethereum online poker sites would explode. Online gambling is already a billion-dollar industry, and people like cryptocurrencies due to their anonymity and independence from regulated financial industries. Bitcoin has more potential to be in a bubble situation, so if something like that occurs, Bitcoin investors could migrate over to the Ethereum network.
The only real problem Ether is facing is that it, like all other cryptocurrencies, exists in a bear market. Widespread panic could drive Ether’s value down at any point. For example, if everyone believed that there was a bubble, it could push investors away and cause the market to collapse. Ether’s sustainability is more palpable than Bitcoin’s, which should help the digital currency avoid the pitfalls of a bear market.
So, to answer the question, Ethereum is not facing a bubble. It looks poised to eventually take over as the #1 digital currency. Smart investors should jump on the bandwagon now before it’s too late.