Will Ethereum Hit 20k? By many measures, Bitcoin has gone mainstream. Anyone can trade it through well-known brokerage apps like Robinhood, and significant organizations such as Tesla (TSLA) and Square (SQ) have elected to substitute Bitcoin for a portion of the cash on their balance sheets.
Bitcoin is just one of 4,000 unique cryptocurrencies, and others are starting to grow in popularity. Elon Musk says Dogecoin is certain to be the next big cryptocurrency winner, but based on the numbers, Ethereum’s Ether appears more likely to succeed.
By 2021, Ether had risen as high as $2,500. From a market capitalization perspective, that puts Ether in second place behind Bitcoin and well ahead of any other cryptocurrency competitors.
Certain cryptocurrency experts believe that this is just the beginning for Ethereum’s Ether. They expect its value to rise exponentially in coming years. Are they right? Will Ethereum hit $20k?
Is Ethereum the Next Bitcoin?
It’s a little-known fact that Ethereum is the name of a specific blockchain that offers smart contract functionality. The store of value or cryptocurrency associated with Ethereum is referred to as Ether (ETH).
Ether is awarded to miners who do the work required to process blockchain transactions. The miners can also earn Ether from transaction fees paid by cryptocurrency users.
These features are similar to Bitcoin’s structure, but there is one big difference. There can only be a total of 21 million Bitcoins. The Bitcoin system is set up to put a limit on the cryptocurrency’s supply, which may have an impact on its value.
Ethereum’s Ether, on the other hand, has no such limit integrated into its code. Whether and how that will impact its value remains to be seen.
Is Ethereum Better Than Bitcoin?
Bitcoin was developed as a new form of decentralized currency powered by blockchain technology. After its launch, other disciplines saw additional uses for blockchain technology. Ethereum wasn’t designed to compete with Bitcoin, though that has been the practical result.
Originally, Ethereum was intended as a tool for storing computer code, and Ether was a by-product that powered the blockchain.
This distinction may prove to be critical to the future of both cryptocurrencies. Because Ethereum puts the technology first, it may ultimately prove superior to Bitcoin.
From a strictly technical perspective, Ethereum is better than Bitcoin because it has a long list of applications. Bitcoin, as mentioned, was created to serve as an alternative currency – it wasn’t intended to serve other purposes.
Ethereum is now the biggest, most well-established software platform of its kind. It makes the deployment of smart contracts possible, and it enables the building and running of decentralized applications (dApps).
What is Ethereum Used For?
Decentralized applications operate through blockchain, which can also be defined as a network of computers. That differs from traditional applications that operate on one computer or under a single authority’s control. This decentralized system makes it nearly impossible for a third party to manipulate applications or conduct fraudulent transactions.
That’s appealing across industries – particularly financial services. In fact, more than 150 organizations have come together in the Enterprise Ethereum Alliance to explore use cases for Ethereum and build out related infrastructure. Members include Banco Santander, Intel (INTC), Mastercard (MA), and Microsoft (MSFT).
Ethereum’s Ether is essentially a by-product of the Ethereum platform. It serves as an incentive for miners to power the technology by processing transactions. This is a must, because of the very nature of a decentralized system.
As Ethereum has grown in popularity, Ether has gained a following in its own right. Global users rely on Ether to store value and make payments as they do with Bitcoin. Because Ethereum offers greater utility, most industry experts believe that Ethereum – and Ether by association – are better than Bitcoin.
Will Ethereum Hit $20k?
The best indicator that Ether/Ethereum will hit $20k is the speed at which Fortune 500 companies are adopting this technology. In March 2021, Visa (V) chose Ethereum for settling stablecoin transactions.
A month later, financial giants JP Morgan Chase (JPM), Mastercard (MA), and UBS announced a $65 million investment in ConsenSys – a firm that focuses on building out the infrastructure required to expand the use of Ethereum.
The first goal is to increase the number of transactions that can be conducted. The next version of Ethereum, which will be known as Ethereum 2.0, is expected to grow the current capability of roughly 15 transactions per second to tens of thousands.
Most industry experts predict that these developments are just the start of something huge. As more companies dive into Ethereum technology and the number of transactions increases, Ether will be in high demand.
And even if “gas” prices decline, demand increases will outweigh the gas price commoditization, causing Ether to further rise due to the growing network effect.
How High Can Ethereum Go?
Cryptocurrency experts, financial advisers, and market analysts have all made predictions on how high Ethereum will go. These range from $3,000 to $250,000.
In truth, there is no visible limit to how high Ethereum can go – and how high it will go remains uncertain. However, those that are betting on Ethereum/Ether over Bitcoin have reasons to be hopeful.
Ethereum’s Ether was introduced later than Bitcoin, so comparisons are possible. While Ethereum’s Ether is following a similar trajectory to Bitcoin’s, it is reaching critical milestones sooner. For example, Real Vision Group’s CEO Raoul Pal pointed out that Ethereum’s market cap upon reaching one million active addresses is higher than that of Bitcoin at the same point.
How To Predict Ethereum Value
Predicting Ethereum’s long-term value isn’t an exact science, but Metcalfe’s law would imply that more Ethereum and Ether users mean increased value.
Consider this example of Metcalfe’s law: the invention of the telephone was an important achievement, but the first telephone wasn’t especially useful – there was no one to call. As more users installed telephones, each telephone became more valuable. They could connect with a larger number of users.
The same concept applies to Ethereum. The platform and its cryptocurrency aren’t especially valuable if there is no one else using them. However, as rates of use grow, Ethereum and Ether are more useful. That increases their value.
Is Ethereum/Ether a Buy? The Bottom Line
The bottom line is that blockchain technology and cryptocurrency have hit a tipping point. The world’s most powerful businesses are on board and exploring new ways to apply these tools.
Investors who want to enter the cryptocurrency market find Ethereum appealing, because it can be used in a wide range of applications.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.