Where Does Ethereum’s Price Come From?

written by Geo Coelho

Where Does Ethereum’s Price Come From?

The world’s second-largest crypto is a fascinating kind of investment

The value of Ethereum 

Ethereum is an open source blockchain platform invented by Vitalik Buterin in 2015. It is software designed to run smart contracts—essentially, self-executing agreements—and help power decentralized applications. The network is fueled by Ether, which is the transactional token of the Ethereum network.

Currently, Ethereum’s open source platform is the world’s second largest cryptocurrency by market capitalization (approximately US$176 billion at the time of this writing).

Unlike Bitcoin, the Ethereum network was conceived with the goal of creating the world’s first decentralized computer, termed “The Ethereum Virtual Machine.” Ether is used to make the computer work, and hence the token’s overall value is akin to network usage. 

The price of Ethereum therefore references the general market value of Ether (ETH) on any given day. The current price of Ethereum can be viewed on OKCoin here.

Buoyed by “dApps”

There have been a number of interesting Ethereum-based projects launched on the decentralized network. These decentralized applications are commonly referred to as “dApps.”

One notable decentralized application, or DApp, is CryptoKitties. CryptoKitties is a blockchain game on Ethereum developed by Axiom Zen. A “CryptoKitty” is a non-fungible token (NFT), meaning it is a digital asset unique to each user. 

Each CryptoKitty is validated via the blockchain and its value can rise or decrease based on market value. 

Launched in November 2017, CryptoKitties has been a marked success reaching a milestone of 1 million cats bred with a volume of 3.2 million transactions on its smart contracts by October the following year.

Another fascinating project is MakerDAO, also built atop Ethereum. MakerDAO’s mission is to transform the financial industry by enabling public access to high-quality financial services, including credit lending.

The framework consists of a decentralized stablecoin (DAI) pegged to the U.S. dollar. The architecture allows community governance and collateral loans, and there’s even a DAI Savings Rate for DAI holders to make some interest off their holdings.* 

The approximate market cap of MakerDAO currently sits at over US $2.2 billion. 

Ethereum is home to wondrous projects. With the success of DApps, Ethereum’s value increases and with it the per-token price of ETH.

Ethereum’s Current Price 

The Ethereum price today (as of this writing) is about USD $1,550 per ETH. A look at Ethereum’s price chart shows the significant run-up since March 2020. This surge brought Ethereum’s cryptocurrency back into all-time high territory last seen in early 2018.

Institutional money has also been pouring into Ethereum, according to digital currency asset manager Grayscale. 

In the first quarter of 2020, roughly US $110 million of institutional investment money went into Ethereum Trust, Grayscale’s ETH-derived security.

This figure trumped the entire previous two years worth of investment into Ethereum Trust, which was $95.8 million cumulatively.
It isn’t surprising institutional money follows where retail demand is high. Visit OKCoin and start building a crypto-portfolio today. Want to trade like a pro? Try out our Premier account.

Leave a Reply

Your email address will not be published. Required fields are marked *