Since its launch in 2015, Ethereum has grown to become the most heavily utilized blockchain network in the cryptocurrency space. Ethereum is particularly relevant in Decentralized Finance as it backs up numerous cryptocurrencies. Due to its market cap and daily trading volume, Ether has also become the second most popular cryptocurrency, after Bitcoin.
This increase in value was fueled by a lot of factors. Some of them include the vast array of Decentralized Applications and non-fungible tokens (NFTs) available on the blockchain. The increased popularity of Decentralized Finance and several reputable cryptocurrency exchanges providing a platform that facilitates Ethereum online trading for beginners also played a major role in the boost in value of the Ethereum blockchain alongside its official currency, Ether.
The Ethereum blockchain presently powers over 200,000 ERC-20 tokens on its network. Many of them have since been listed among the first 100 highly rated currencies in the cryptocurrency space. Day-to-day data, transaction, and blockchain activity can be monitored using the Ethereum explorer.
The advent of Decentralized Finance has allowed users to trade, exchange or buy digital assets without involving third-party organizations like commercial banks or the government. In addition, users can collect and lend money to other users. The DeFi platform can also be used to obtain loans, get insurance, and make payments alongside performing other financial transactions.
Ether can also be traded using the several mainstream brokerage platforms available. It is advised that beginners stick with the two most established digital currencies when starting out their crypto journey.
What Exactly Is Intrinsic Value?
Discussing the Ethereum intrinsic value, will firstly require an understanding of what the term ‘intrinsic value’ means. In simple terms, intrinsic value is referred to as the actual value of any asset. The intrinsic value of any asset is not to be misunderstood for its market price. This is due to the fact that market price can either be under or overvalued.
When relating to digital currencies, the intrinsic value can be defined by slightly different terms. The intrinsic value of any digital currency is determined by its scarcity, real-life applications, and general technological uses. This simply means that the higher the utility of a digital currency, the higher its intrinsic value.
Over a span of years, crypto has slowly but steadily gained popularity as being a storehouse of value. This also promises to be useful for future exchange and transactions.
As Ethereum’s utility in real-life operations grows, its value has risen significantly and it has gained much attention within the cryptocurrency space.
Varied features enhance the utility of the Ethereum blockchain and its network, the foremost being the usage of smart contracts.
These smart contracts are considered to be the first and most important utility feature of Ethereum. This results from the fact that smart contracts function like a backbone for several real-life uses of the network such as the development of NFTs, dApps, and DeFi. Blockchain transactions are automatically executed without any need for legal or financial third-party interference using smart contracts.
Eth smart contracts have demonstrated high potential of changing the financial community by altering the way transactions are managed through governance , digital ID, supply links, and market structure.
In mid 2021, more than 3,000 listed Decentralized Applications were officially available on the Eth network. As a result, the Ethereum blockchain was made the undisputed champion of the Decentralized Application space.
Factors Affecting Ethereum Intrinsic Value
Asides from smart contracts, other factors contribute to Ethereum’s intrinsic value. Some of them are given below;
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Improved Connection
Ethereum has shown great promise in being able to bring the financial and technological worlds together. As DeFi is liable to revamp the financial space, Ethereum network will play a crucial role as it is the largest supporter of DeFi.
As Ethereum aspires to support the change of the financial ecosystem, it provides a platform that is unrestricted and open-source. This will open up the portal for mass interaction and connections that will further raise the network’s value.
Having a strong fan command, an efficient team of developers, alongside massive popularity, the Ethereum ecosystem certainly is evolving and this growth will lead to an increase in the value of the token, Ether.
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Speed of Transactions
One distinguishing feature of Ethereum is its fast networking speed. A new block is validated in 10 – 15 seconds and a transaction is finalized within 5 minutes. This is much faster than Bitcoin’s blockchain which requires ten minutes for block validation and roughly 40 minutes for transaction completion.
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Protocol Upgrade
Ethereum presently works on the PoW protocol technique which requires the use of miners. The main function of these miners is overall network supervision and authorization of new blocks for which they receive rewards.
Nevertheless, Eth is preparing a transition from the present PoW protocol to the more cost-efficient PoS protocol. The incoming Eth 2.0 is set to fully function using the beacon chain as opposed to the Ethereum Classic blockchain presently in use. This will lead to an increase in network speed, scalability, and efficiency.
Unlike Eth 1.0 which makes use of miners, ETH 2.0 mainly needs validators. These validators are expected to have a stake in the network in a bid to prevent selfish behavior. The transition is set to occur in three main steps; Phase 0 (Beacon chain), the ‘Merge’, and finally, the shard chains.
The Effect of Eth 2.0 on Ethereum’s Intrinsic Value
According to cryptocurrency experts, 2022 will surely be a defining year for Ether. The currency in recent years has grown in leaps and bounds which attracted a lot of buyers. Several newbies jumped on the crypto train via online trading for beginners as a result of Ether’s steady increase.
The new upgrade seems to bring a lot of hope for the network with features like enhanced scalability and even speed. This will, nonetheless, rely on the achievement of the anticipated upgrade.
Until the upgrade has been completed and tested successfully, it is predicted that the Ether price will fluctuate regularly, which would affect its value.
