Ethereum is the second biggest cryptocurrency behind Bitcoin. It is a Peer-to-Peer public network or a blockchain. Ethereum has its own cryptocurrency called Ether. The purpose of Ethereum is to be a network on which smart contracts can be run efficiently. eth to visa
The Ethereum blockchain is developed for storing different types of data, whereas Bitcoin stores a list of transactions on its blockchain. Data stored in Ethereum can be accessed and used by running programs on the Ethereum blockchain network.
Ethereum has a current total market capitalization of over $32.98 billion.
Many people wonder how the price of Ethereum currency is determined on crypto exchange platforms. Before we dig deep into the matter, it's important to understand that it works no different from it would with other currencies.
It is important to understand the basic economic principle that supply and demand determine cryptocurrency prices. If the supply of a particular cryptocurrency such as Ethereum is limited, and the demand is high, then the value of the coin will increase. But If a cryptocurrency has a high token supply with little demand from traders and users, then its value will drop.
Other factors include the level of token utility such as how useful is the token to determine the value that has a big bearing on the price. While the mining issue of proof-of-work (PoW) tokens may additionally dictate the worth. So a higher mining difficulty would mean it is more difficult to increase the supply of the coin and cause upward pressure on the price when demand is high.
There are some more important factors on what determines Ethereum price.
Let's take a look at these five major elements that determine the Ethereum price.
Media:
The political or economic events happening around the world affect Ethereum price. Traders' perception of their investments including digital assets will be impacted by the reports coming from the media.
Energy Price:
For determining the Ethereum price, the price of commodity plays an important role. It consumes an immense usage of technology since it utilizes proof of work (POW) block chains. The movement of energy prices can weigh in on Ethereum as the commodity is also used in mining of cryptocurrencies.
Broad Functions:
The broad functionality of Ethereum has lured investors toward the market. It is also known as a multi-purpose digital currency. Big firms like JP Morgan Chase and Intel Corp are some big names that are utilizing the Ethereum cryptocurrency. Many more business owners and companies are turning to Ethereum as it can be used as incentives for developers, decentralized ledgers, and for customizing blockchain technology.
ICO Popularity:
Many major firms & organizations in a different industry used Cryptocurrency Exchange platform digital currencies through Ethereum platform in order to raise budgets and funds. The ICO or the Initial Coin Offerings activities are being widely adopted around the world. The growing activity in ICO is a consistent main driver of Ethereum prices.
Bitcoin Price:
Inclusion of the Bitcoin price on the list might surprise some, but the price of the most popular & widely used digital currency will almost always impact its counterparts including Ethereum currency. Bitcoin has a major influence on its peers because is known as the reserve currency and it is the most supported and most popular cryptocurrency Exchange coin.
On the final, though it is important to know that Investors and traders use the fundamentals of Ether to make the best possible guess about its future value. They take the demand, supply, and the market conditions of Ether today and try to determine what the current market consensus price will be.
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