The Ethereum (ETH) price is up around 25% during the month of November 2020. ETH, the world’s second-largest cryptocurrency by market cap and adoption, is trading at a little over $500 at the time of writing.
During this past week, Ethereum managed to reach a new year-to-date high at $495 (which it has again surpassed recently), benefiting from a significant rise in deposits made into the decentralized finance (DeFi) markets and the ETH2 deposit contract that’s part of the upcoming Ethereum 2.0 upgrade (a major system-wide update that will involve a transition from proof of work to proof of stake based blockchain consensus, something that has never been done or attempted before on a DLT network as large as Ethereum).
As noted in a report from OKCoin:
“ETH has been steadily rising since September in anticipation of the upcoming Ethereum 2.0 Serenity upgrade. … Serenity would increase demand for Ethereum transactions on the network due to increased speeds, decreased costs, and more utility. Ether is required to send transactions, so demand for the crypto is expected to rise with transactions.”
Vitalik Buterin, one of the main Ethereum founders, recently claimed during an AMA that Ethereum 2.0 would “most likely” be launched on December 1, 2020. The exact date, however, would depend on the platform being able to secure at least 524,288 ETH (over $260 million at current prices) and other technical requirements in order to successfully launch the Beacon Chain in a secure manner.
As of November 20, 2020, there’s only 20% of the required amount of Ether that has been staked in the ETH2 deposit contract, OKCoin confirmed. Since there’s not enough ETH locked into smart contracts, it might delay the planned ETH2 upgrade to early 2021 (or longer). If the ETH 2.0 upgrade deadline is missed, then the selling pressure on Ethereum might rise considerably. According to OKCoin’s analysis, this may push the ETH price down below the $460 mark, while “panic selling” might push ETH down “below the critical $400 level,” the exchange predicted.
As confirmed by the exchange, the Ethereum network hashrate has “increased 16% since September [2020] as more [ETH] miners have joined the network ahead of ETH2.” OKCoin explained that as the hashrate (computing power securing the Ethereum network) increases, so does the security of the blockchain network.
Ethereum was supposed to function like a “world computer” but the developers of EOS, which aims to compete with Ethereum, claim that the smart contract platform has not delivered on its promises. Ethereum runs on a vast and geographically distributed network of computing nodes and established the foundation for the modern Internet, often referred to as Web 3.0.
While Ethereum’s ongoing development has been criticized for being controlled (and therefore centralized) by a select few developers, it’s still arguably the second-most decentralized cryptocurrency network available right now.
Second only to Bitcoin (BTC), Ethereum has a market cap of over $50 billion at the time of writing. Ethereum-based solutions have been widely adopted by large enterprises across the globe and the ERC-20 Ethereum token standard has been used to issue thousands of digital assets.
But Ethereum suffers from network congestion (because so many people are trying to use it), which has severely limited its ability to scale. However, the upcoming Ethereum 2.0, which will be a very gradual transition, should help address scalability and overall performance issues, but only if it is successful.
