With new technologies and advancements are clouding the cryptocurrency space, Ethereum is also at the forefront of major transformation. Over the past month, Ethereum’s price has been on a roller coaster ride with the digital token reaching an all-time high in November, which eventually fell to a major catastrophe now. At the time of writing, ETH was traded for US$4,180 with a market capitalization of US$495.34 billion. On Saturday, the cryptocurrency has recorded a 10.14% loss, the largest one-day percentage fall since November 26, 2021. When things look very unstable for Ethereum, we explore if the crypto has the opportunity to make a comeback in 2022.
Ethereum is a blockchain model that focuses not just on finance but all types of applications. Non-fungible tokens (NFTs) and decentralized finance (Defi) have grown hugely in popularity over the past year, which has led to scalability becoming a priority. Blockchain is seen as “the” solution to all advancements in blockchain technology. The Ethereum platform, for example, started out as a marketplace where cryptocurrencies are traded. Ethereum has had many changes over the years that have led to lower transaction fees and improved speeds. Although this is inevitable, Ethereum’s price is still plummeting which leaves some people worried. Recently, the digital token has reached an all-time high of $4,864.06 on November 10, 2021. It came as a surprise to everybody because usually ETH follows the trend of Bitcoin and does not typically make this much progress even day after day when Bitcoin is making such an effort. This time around, Ethereum’s price made a record even when Bitcoin was falling. Nonetheless, the value of Ethereum fell shortly after its price soared. Nevertheless, the cryptocurrency has since recovered to its normal state. In this article, we consider what could happen in 2022 and beyond if ETH becomes more prevalent.
Ethereum Network
Ethereum was originally designed to slow down and become more expensive as it gets more popular. But with Layer 2, the underlying blockchain can keep its ground without issues. When updates are made to Ethereum, it is possible that Ethereum will only be used for big transactions. Transactions with large sums of money, such as those from ICOs, would happen on a ‘Layer 2’ network.
Layer 2 solutions such as Arbitrum, Loopring, Optimism, and StartkWave will lead the transition. According to L2Berat, about 7 billion US$ in transactions is locked in layer 2 this year, which is near twice the amount locked at the beginning of the year. But much more needs to be done before Ethereum can grip dominance in 2022.
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Ethereum has held a strong position in the non-fungible token market.
Recently, the success of Metaverse’s ecosystem and the emergence of play-to-earn gaming is gaining traction among people. Not just crypto investors, even non-investors are venturing into these new models. Axie Infinity, a Ronin-based NFT game that has been around for a while, has already sold millions of dollars worth of in-game content “virtual pets” thanks to its utilization of the blockchain. As the finance and gaming industries grow closer together, Ethereum can help to bridge the divide.
Another contributing factor to wealth distribution is the use of airdrops and equity distribution. It has been significantly more successful than traditional methods in creating a more equitable environment. Ethereum is the world’s second-largest cryptocurrency and has a lot of potential for further growth. If it manages to break through all barriers over the course of this year, 2022 will be a great year for Ethereum. Bitcoin should also watch out, though – Ethereum can manage to overturn Bitcoin in 2022.
Ethereum’s Support to dApps
Although Ethereum and Bitcoin share many similarities, Ethereum’s underlying blockchain makes it stand out. It allows developers to create dApps on the blockchain without making them an issuer of digital currency. This is different from Bitcoin, which was created in 2009 and has a public ledger as its underlying network. It is unfortunate that Bitcoin has not undergone many updates over the years. Today, Ethereum is driving the game as it creates new concepts to significantly improve the dApps ecosystem. Beyond the use of non-fungible tokens, applications can also be created on Ethereum. One example of this is tokenizing real estate.
Future of Ethereum in 2022
Unlike Bitcoin, Ethereum is set to get institutional investors in the next few years. The Ethereum price has seen a growth of over 500% in 2021, which is larger than for Bitcoin. The addition of the “Ethereum Burn” option has given Ethereum an advantage over its major competitor, Bitcoin. Experts predict that Ethereum will surpass its resistance at $5,000 in 2022 and can go all the way up to $10,000. Many things need to come together for this to happen, but we’re excited to see what happens with Ethereum in the coming year.