The massive jump of Ether price in the past few months has caught the attention of lots of investors. However, many of them are still questioning whether this cryptocurrency is viable for being adopted by the crowd.
Some common arguments are that Ethereum can currently process around 20 transactions per second, while Visa is capable of handling over 24,000. Another argument can be that it is challenging for somebody with little technical experience to set up an Ether wallet.
These are all valid logical reasonings. However, there are also some facts that may indicate that Ethereum is actually moving towards mainstream adoption.
The Internet didn’t go mainstream the moment Tim Berners-Lee developed the Hypertext Transfer Protocol (HTTP). It went mainstream when search engines like Google, social networks like Facebook and email services like AOL were introduced.
We may be seeing a similar trend with the Ethereum network right now.
Since early 2017, the crypto space saw a massive Initial Coin Offering craze. Nearly every single day, there’s a company somewhere around the world that is issuing a token to collect enough capital to start developing their idea. Investors that were active in the late 90’s will see the similarities between this and the dot-com bubble that burst in 2001.
The good part about the current exuberance in the ICO space is that a lot of startups that would have never obtained funding through traditional ways like VC’s are now raising millions in just seconds. Of course, most of these businesses will end up failing in the long-term. However, some of them will survive and play an important role in the mainstream adoption of the Ethereum Blockchain.
It is yet to be seen if projects like Status, True Flip and ICONOMI that recently had successful ICO’s will manage to become those “Killer Apps.” One thing is sure mainstream apps will come. And at the current pace of one ICO per day, it probably won’t take too long.
Most Ethereum supporters predict that in the future, Ether’s market cap will surpass Bitcoin’s. This event is called “The flippening” and can be followed through websites like Flippening.watch.
If this event occurs, it will most likely have a positive impact on the adoption of Ether as a mainstream method of payment. Right now, very few people know that cryptocurrencies exist, even less have a clue about what Bitcoin is, and only a fraction have ever heard about Ethereum.
By comparing charts on Google Trends, we can see that the search volume is twice as high for Bitcoin than it is for Ethereum. Since Bitcoin is the largest cryptocurrency by market cap out there, many new investors consider it the most reasonable investment.
If the flippening happens, it would be a highly covered event by the media. Every major news outlet that has written about Bitcoin once will inevitably post something along the lines “Ether just became the largest cryptocurrency in the world. Sorry Bitcoin.” This would very likely trigger a wave of investors that suddenly become interested in Ether, which is the key to mainstream adoption.
On the other hand, it is also important to note that currently, Ether’s market cap is of around $25 bln, while Bitcoin’s is over $40 bln. So unless something very unexpected happens, the flippening is still just wishful thinking.
Proof of Stake (PoS)
Transactions on the Ethereum network are verified through the Proof of Work Protocol. People that are called “miners” make use of huge computing power to solve complex cryptographic problems of Ethereum’ s Blockchain. Every time they solve one, they get rewarded with new Ether.
However, this system is not a long-term solution. Proof of Work consumes a lot of electricity, it can’t protect the network from a 51 percent attack, and it has a limited amount of transactions that it can verify per second.
Therefore, many core developers at Ethereum are working on implementing a new protocol for early 2018. This protocol is called Proof of Stake (PoS). Once it is implemented, every Ether holder can use his stake to verify transactions.
For now, it is still unknown what annual return investors might receive as a reward, but it will most likely be in the five to 10 percent range. This would make Ether very interesting for investors that are seeking dividend-paying assets.
This aspect, together with the fact that the network will be capable of handling a lot more transactions, makes the successful switch to PoS a crucial step toward mass adoption.
Enterprise Ethereum Alliance
Last but not least, there’s the Enterprise Ethereum Alliance (EEA). The EEA connects Fortune 500 companies with Ethereum experts. Some notable members of the alliance are Microsoft, JP Morgan, Credit Suisse and Intel.
The objective of the EEA is to solve the problems of large corporations using the Ethereum Blockchain and the Ether token. By doing so, the Alliance is discovering new applications of Ethereum on a monthly basis.
Until now the EEA has been very secretive with their achievements. But for the coming months, there are expectations for some game-changing announcements.
Although Ethereum’ s future is still uncertain, several indicators show that its core technology is moving in the right direction.
Exciting times are ahead of us.
Enjoy the ride.
– By Pascal Thellmann
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