By now I guess you all know Bitcoin regardless if you hold it or not, unless you are from Mars😜. The utility for Bitcoin is very similar to gold, store of value due to its unique nature with limited quantity available and more and more adoption of it globally. Sure there are still high profile people like Buffett, Munger or Yellen etc denying the reality either intentionally or naively due to ignorance of the centurial innovation! Having said that, apart from its monetary utility, there is virtually no other functionality for Bitcoin. That's why you see a lot of other cryptos that have been invented for various utilities. The most famous and well-established one is of course Ethereum. While Ethereum can also be used as money with the feature of store of value, it has evolved into a platform that supports billions of dollars' worth of economic activity.Two major trends are driving this surge of activity: DeFi (decentralized finance) and NFTs (non-fungible tokens). These trends are the core reason for Ethereum's impressive rally and are key catalysts that will propel the Ethereum price to $10,000 and beyond. Of course, I'm not talking about the short term trend but in the long run.
The most important addition was to make the Ethereum network itself programmable. It basically means the Ethereum network can operate as a giant global computer. In particular, it means Ethereum can execute "smart contracts." These are similar to real-world contracts, except the conditions are written in software. The contract executes when the conditions set forth in the contract, using data from a trusted online source called an oracle. This seemingly simple idea is the foundation of almost everything that has been built on the Ethereum platform. More than anything else, it's what makes Ethereum valuable. If you still have a hard time to understand what it means, just think about the Ethereum platform as the Window operation system, on which various applications have been developed that have become the foundation for the morden Internet economy!
"What really changed everything was smart contracts," billionaire investor Mark Cuban said on March 25. "Smart contracts came along, and that created DeFi and NFTs. That's what changed the game. That's what got me excited. That's why it's a lot like the Internet." Cuban made his fortune by selling an Internet-based company he co-founded, Broadcast.com, to Yahoo in 1999.
Over the past year, money has poured into projects built on Ethereum, particularly DeFi. DeFi is a term that describes the use of smart contracts, decentralized exchanges, and special-purpose tokens people are using to perform financial transactions such as borrowing and lending. According to CoinGecko, the total value of financial services associated with DeFi has grown to $140 billion. That may not sound like much compared to the tens of trillions of dollars of value in the global banking system, but DeFi is growing at an exponential rate. The DeFi "market cap" is up more than 550% in 2021 alone. One year ago, it sat at just $3.2 billion, which means the value of DeFi has skyrocketed 4,275% over the past 12 months.
Ethereum's other growth engine, NFTs, has seen a similar rise – most of it concentrated in activity this year. According to the website NonFungible, the value of NFT sales on the Ethereum network rocketed from $94 million in the last quarter of 2020 to $2 billion in the first quarter of 2021. Fueled by NFTs and DeFi, the total value of all transactions on the Ethereum platform was $1.5 trillion in the first quarter – a sum higher than the seven previous quarters combined.
I think these are the reasons why we are seeing some trend divergence between Bitcoin, which is a bit struggling at the moment, vs Ethereum which is making new highs more and more. Don't get me wrong to think that its price will only go up from here. I think the sentiment for it is a bit euphoric and too high. This is often a contrary indicator, suggesting a sizable correction is doomed to come sooner or later. But the point here is that Ethereum has a fantastic long term trend. If you are fortunate enough to have already bought it, especially at a low price, then just keep it and forget about it! It may turn out to be a fortunate for you in a few years from now!!💪😜
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