Ether is the main currency of choice used to purchase non-fungible tokens, or NFTs, the digital assets that have become increasingly popular in the art and sports collectibles world. So why has ethereum, which now has a combined market value of about $400 billion for all its coins in circulation, taken off lately?
“Why is there so much interest in ether right now? With the explosion of NFTs, people are viewing alternatives to bitcoin like ether as a real utility. It’s not just a store of value, the digital gold that bitcoin is,” said John Wu, president of Ava Labs, an ethereum-compatible blockchain firm. Ether, like bitcoin, is going mainstream
Ether also just went through a hard fork — essentially an upgrade to the ethereum blockchain network that will help increase transaction speeds. But ether’s rise goes beyond technical reasons.
Coinbase, the giant crypto brokerage firm that recently went public, is now supporting transactions for Tether and USD Coin, two so-called stablecoins that are pegged to the dollar. Each of them are compatible with ethereum digital wallets. Wu added that ether is also getting a boost thanks to two other more technical developments.
He said that up until recently, new cryptocurrency investors only cared about bitcoin. Then they started to show interest in other cryptocurrencies, particularly ethereum, as a way to diversify their holdings. “There is a real, fundamental, and persistent demand shift happening right now,” said Jeff Dorman, chief investment officer at Arca, in a blog post this week.
“Traditional financial markets and digital assets are no longer mutually exclusive markets,” said Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices, in a press release. S&P Dow Jones Indices has validated cryptocurrencies as well. The index provider behind the Dow and S&P 500, said Tuesday that it was launching a bitcoin index, ethereum index and cryptocurrency megacap index. “Ethereum has now crossed the Rubicon into the mainstream, and despite the difficulty understanding it, investors of all sorts are finding reasons to add ETH to their portfolios,” Dorman wrote.
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