Ethereum in the Spotlight

The enormous hype around Ethereum these days has hardly been a surprise. With its market cap steadily being second to Bitcoin’s, and mind-boggling price surge of nearly +1,200% during only first three months of 2016, the project and its native token have become even more popular than good old Bitcoin.

There is a common perception that Ethereum, in general, is something like Bitcoin 2.0, a substantial practical upgrade on the same philosophy. Some experts believe that cryptocurrency’s success cannot be considered a uniform phenomenon, and, in fact, is a result of a complex combination of its own advantages and Bitcoin’s ongoing failure to settle the conceptual dispute around block size increase, along with some difficulties in the processing of Bitcoin transactions.

The project has drawn interest from such well-established giant entities like JPMorgan Chase, Microsoft, and IBM. All of those corporations have already employed Ethereum solutions. Microsoft, for instance, runs so-called Blockchain as a Service on its cloud platform Azure to provide a development environment for creators of applications. R3CEV, a startup and a consortium, well-known to all and ominous to some, employs Ethereum’s blockchain to run its experiments in cooperation with the world’s leaders of traditional finance.

With this being said, the recent months saw Ethereum rising at downright relativistic velocity, and some believed it was artificially caused to create a bright and shiny background for its new stable release, Homestead. However, right after the Pi Day, when Homestead was finally presented to the general public, the ETH price dropped from somewhere near $14 to about $12.6, striking as low as about ten bucks for a brief moment, and even lower during the next week.

Thanks to the recent article by Nathaniel Popper, an author of the well-known book “Digital Gold”, Ethereum became a star of New York Times. In his article, Mr. Popper describes numerous existing applications based on Ethereum. The very fact that the project had found itself in the spotlight of an incredibly respected publication, raised the Ethereum community’s confidence in the project’s future.

However, Ethereum’s mainstream publicity has launched yet another set of disturbing ripples across Bitcoin community. Many consider Ethereum a long-awaited adversary worthy of Bitcoin’s steel, which had obviously started covering with rust in the course of the community’s conceptual problems.

Thus, Mike Hearn, a developer now mostly known for a grandiose exodus from bitcoin ecosystem, has once again vocalized his deep disbelief in Bitcoin’s future and even blamed every its problem on Gregory Maxwell. Adrian McNeil, the former head engineer at Coinbase, suggested that any cryptocurrency is doomed without a “genuine respected leader” due to lack of mutual understanding in important issues like block size.

While the seas are stormy in Bitcoin’s world, there are some problems with Ethereum as well.

Following Nathaniel Popper’s eulogy in the New York Times, Chris DeRose, community director at the Counterparty Foundation, claimed in Twitter that Ethereum is hardly worthy of its cult following, and is, in fact, a big nothing. He wrote:

The statement has a profound conceptual basis. DeRose claims that, as Counterparty is closely related to Bitcoin, and is, in fact, a part of its general ecosystem, its chances to eventually succeed are way higher than those of Ethereum, as it is actually a stranger to Bitcoin. Thus, DeRose’s opinion is mostly based on the premise that blockchain-based technologies ignoring Bitcoin are less likely to succeed.

However, some believe that Counterparty’s wrath has more to do with the fact that Ethereum is the project’s immediate competitor. Still, it was not the first time DeRose dismissed Ethereum in comparison to Bitcoin-based solutions. Earlier he claimed Ethereum lacks Bitcoin’s security.

Counterparty has been at daggers drawn with Ethereum for a while. Counterparty supporters often speak negatively about Ethereum, and the debate as to whether Ethereum, being Bitcoin-independent, is capable of accomplishing anything that Bitcoin-based technology can not, is still ongoing.

Ethereum tokens, ETH, have drawn much attention as an investment asset, mostly because of its exchange rate’s skyrocketing behavior. However, the question of whether the surge is justified, or the price is simply being artificially pumped, remains unsolved for the crypto-community, and those willing to invest in ETH in particular.

“Even if small exchanges start purchasing Ether, it won’t change anything. There can be a serious surge only if Chinese exchanges come into play. However, the contrary is possible as well. People have lots of coins now. Any part of that amount may dramatically lower the price. However, I consider the technology as a profitable investment. What it comes to, only evolution can tell,” says cryptocurrency expert Alexei Sherstnyov.

Boris Komarov, investor and online entrepreneur agrees that the situation is complex.

“It is in the eyes of the beholder. I’m an investor, so I look at it as an investor. In terms of investment, Ethereum is very interesting, I believe. As for technology, it is interesting as well, as smart contracts fit the new world of technology, robotics, and internet. However, I believe the twenty-fold surge is a pump, as there is no actual need for ETH that could justify such a demand,” he says.

by Jenny Aysgarth