Ethereum/ether is a native coin of the ethereum network which can be transferred from one smart contract address to another where the transaction will reach the second smart contract address upon being verified by the miners running the network provided that the first smart contract address pays the miners fees. Several miners can lease their computing power to few mining pool so that in return they receive reward in form of mining fees charged for validating transaction as well as new ether coin mined thus considered to be using a proof of work consensus. Towards the beginning of 2020, the ethereum network transformed from from a proof of work to a proof of stake consensus thus allowing stakers to be able to stake their ether to few staking pool such as https://ethstaking.io/ and https://www.rocketpool.net/ thus in return you earn reward of up to 6% per anum or above in form of new coin minted and transaction fees charged for validating transactions on the ethereum network. Developers can also be able to create different dapps on the ethereum network where they will be paying fees for hosting their dapps over there. The same developers can also create the tokens of their dapps using their smart contract address on ethereum network in such a way that it becomes the utility coin of the community members of their dapps such that whenever their community member is using those dapps,then they will be rewarded with those tokens which they can transfer to several dex exchanges and convert them back to ethereum.In order for them to transfer those tokens from one smart contract address to another,the users of those dapps should pay a gas fees in terms of ether so that the validators running the ethereum network can initiate the transaction on the ethereum network.In late 2015, one ether was going for around $0.4. Towards the beginning of 2016, the price managed to go as high as above $1 after which it managed to go above $10 again as 2017 was starting. As 2017 was winding up,the price had managed to go as high as above $700. As 2018 was starting,the price managed to go as high as $1300 thus profiting those early miners who were still holding their ether by that time. In 2018,the price went as low as $80. Currently, one ether is trading at around $230. The increase in price was due to an increase in the number of miners leasing their computing power to validate transaction and mint new ether coin to the ethereum network since by that time, the ethereum network had not implemented dapps building on their network. The decrease in price again was due to several miners dumping their earned ether to several exchanges so that they can profit from the sudden increase in its price. Therefore, since ethereum network was able to transform from proof of work to proof of stake consensus as well as to implement building of dapps on its network, we can therefore explain its future price prediction based on dapps built on its networks as follows;
Dapps built on ethereum network
When ethereum was launched ,it was using proof of work consensus where miners could lease their computing power to several mining pool to use it to validate any transaction taking place on the ethereum network thus in return they receive reward in form of miners fees charged and new coin minted . In 2019, a new proposal was made by Vitalik to transform the network to a proof of stake consensus since it is cheaper as compared to proof of work consensus. Currently, ethereurm network uses proof of stake consensus which was implemented towards the beginning of 2020.Before proof of stake consensus was implemented, ethereum network had already initially implemented the building of dapps on its networks some years back. Although ethereum is an already established network, we will still explain its price analysis based on dapps built on its network. Therefore,we can say that as more developers are joining the ethereum network to build their dapps over there,the utility function of ether coin will increase due to increase in demand by the community members of those dapps built over there. This will result to an increase in its price. On the other hand, if the developers already building on the ethereum network start shifting to other network due to scalability issues such as high transaction fees charged, then the demand for ether coin will decline thus causing its utility function to also decline. Here are some of the dapps built on ethereum network which are key determinants to its future price;
a. Compound.finance
This is an interest bearing dapps built on the ethereum network via the metamask which is smart contract ethereum wallet. At compound.finance, users are able to earn interest of over 10% the whole year upon locking their supported ether token over there such as Dai and ethereum for a given period of time. Therefore,we can say that as more users continue to unlock their ether on the compound.finance dapp, then the ether coin will start becoming inefficiency on its network thus causing its demand to also increase . This increase in demand will in turn result to an increase in the ether coin. On the other hand, if the users who had been locking their ether coin on the compound.finance start to unlock them due to a decline on interest earned, then the amount of ether will will start becoming in surplus on its network thus causing its demand to also decline. Because of this,its price will also start to decline
B. Uptrennd
Uptrennd is a publishing social media dapp built on ethereum network that rewards all kind of creators as well as users with 1UP token for sharing their work as well as for getting engaged on the platform. Currently,uptrennd has over 60,000 registered users. Therefore, we can say that as more users continue to join the uptrennd platform, then the utility function of ether coin will also continue to increase since uptrennd users will be purchasing ether coin so that they can use it to purchase 1up coin in several dex exchange after which they will deposit those 1up coin to their uptrennd account so that they can use them to upgrade their level in order to increase their earning on the platform or to use them to advertise their business on uptrennd platform. On the other hand, if the reward for creators and users on uptrennd platform decline ,then uptrennd users will look for another platform which will result to a decline in the utility function of ether coin due to a decrease in its demand. This will result to a decrease on ether price.
C. IDEX
Idex is a decentralized exchange built on ethereum network that allows users to be able to buy different tokens created on the ethereum network with their ether balance. Users of different dapps created on the ethereum network can also be able to sell the tokens of those dapps on the idex exchange and receive their ether over there. In order to login into your idex account, you need to use your ethereum private key. There are hundred of thousands using idex to exchange their token back to ether. Therefore,we can say that an increase in the number of users on the idex platform will result to an increase in the demand of ether thus causing its price to also increase. On the other hand, if many dapps shift to other networks due to ethereum scalability issues, the idex users will also decline thus declining the demand for ether coin. This will further results to a decline in price of the ether coin.
Furthermore, we can explain the 2021 price prediction for ether coin using the bullish and bearish market condition as follows;
1. Bullish ethereum based on dapps built on its network
In a bullish market condition, the ethereum market will be moving in an upwards direction. In early 2015, one ethereum was going for around $0.4. Three years later, the price had managed to go as high as $1300 after which it dropped again to around $250 where it has managed to be trading at around that price. Currently, one ethereum is trading at around $230. The increase in price was due to an increase in the number of miners to share their computing power to be used to secure the ethereum network as well as to validate transaction taking place on the ethereum network since by that time ,ethereum network had not yet implemented the creation of dapps on its network. The decrease in price again was due to the dumping of ethereum by several miners so that they can profit from its high price. Currently, there are many dapps built on ethereum network . This will enable us to analyze its 2021 price prediction . We can therefore say that as more dapps are being built on the ethereum network, the utility function of ether will also increase due to an increase in its demand since those dapps will also want to use ether coin to pay for transaction cost of their dapps as well as for transferring their created and issued tokens from one smart contract address to another. In one year time from now, there is possibility of ether coin to go above $300 if more dapps will continue to be created on the ethereum network. Here is the bullish market for ethereum;
The above is the ethereum market in terms of USDT. Two points are being indicated. There is point A and point B. Before point A, the ethereum market can be seen to have been trending upwards all the way to above $228. This increase in price has been due to the increase in the number of dapps being created on the ethereum network. The users of those dapps after converting their earned tokens of those dapps to ethereum, they then decide to dump ethereum in several exchanges so that they can receive their fiat money. This created a surplus of ethereum thus causing its price to slightly drop downwards to point A at around $222. More developers then join the ethereum network to develop their dapps over there where they purchase the ethereum in several exchanges so that it can help them to create and issue the token of their dapp as well as to pay for transaction cost. This created a demand for ethereum again thus causing its price to further rise to point B at above $228. In one year time, mostly 2021, if more developers will continue to join ethereum network to develop their dapps over there due to an increase in the monetization of dapps, then the price will continue rising since the utility function of ethereum will continue to increase. Therefore, there is possibility of ethereum to go as high as $300 by end of 2020. For investors, this is the right time to purchase a given amount of ethereum and wait to profit when the price has gone as high as $300.
2. Bearish ethereum based on dapps built on its network
In a bearish market condition, the ethereum market will be moving in a downwards direction. In early 2015, one ethereum was going for around $0.4. Three years later, the price had managed to go as high as $1300 after which it dropped again to around $250 where it has managed to be trading at around that price. Currently, one ethereum is trading at around $230. The increase in price was due to an increase in the number of miners to share their computing power to be used to secure the ethereum network as well as to validate transaction taking place on the ethereum network since by that time ,ethereum network had not yet implemented the creation of dapps on its network. The decrease in price again was due to the dumping of ethereum by several miners so that they can profit from its high price. Currently, there are many dapps built on ethereum network . This will enable us to analyze its 2021 price prediction . We can therefore say that as ethereum network continues to have more scalability issue by increasing its transaction cost on the network, then more dapps will start shifting to other network without scalability issue so that their revenue do not decline. This will decline the demand of ethereum thus causing its utility function to also decline thus causing its price to decline. If the scalability issue will continue to increase due to an increase in network fee, then there is possibility of the price to go as low as $200 by the end of 2020 since more dapps will continue to move to other network without scalability issue problem together with their community members. Although i am not bearish for ethereum, if you think this can happen and you are currently holding your ethereum at above $230, then you can sell. Here is a bearish market for ethereum;
The above is the ethereum market in terms of USDT. Two points are being indicated. There is point A and point B. Before point A, the ethereum market can be seen to have been trending downwards all the way to below $222. This decrease in price has been due to the increase in the transaction cost for the network thus causing the scalability issue to also increase. This results to the already created dapps on the ethereum network to also start shifting to other network with lower fees where there is no scalability issue . Because of this, the demand for ethereum also decline thus causing its utility function to also decline which further causes the price to decline all the way to $222 as indicated above. The existing dapps then purchase the ethereum in few exchanges available so that they can use them to pay for transaction cost of their dapps on the network. This causes the price to slightly rise to point A at $228. The ethereum network further increases its transaction cost thus further causing the scalability issue to also increase.This result to a decline in the revenue of several dapps which have not yet exit the ethereum network for other network . Because of this, more dapps continue to exit the ethereum network for other network with low transaction cost together with their community members thus declining the demand for ethereum. This decline in demand also causes the utility function to decline thus causing the price to further decline to point B at below $222. In one year time from now, if this will continue, then there is possibility of one ether to go as low as $200 although i am not bearish for ethereum. If you think this may happen, then you can sell your ethereum at above $230 so that you don't make some losses when 2020 will be winding up.
Summary
Ether is a native coin of the ethereum network which transformed from proof of work consensus to proof of stake consensus and which can be transferred from one smart contract address to another thus making its network to be decentralized. The first smart contract address must pay a gas fee in order for it to be initiated to the second smart contract address by the validators running the network. In early 2015, one ether was going for around $0.4. Three years later, the price managed to go as high as $1300 but later dropped. Currently, one ether is trading at around $230. Since ethereum network can enable developers to build their own dapps over there, we can therefore say that an increase in the number of developers to build on the ethereum network will result to an increase in its demand thus increasing its utility function which in return increases its price. On the other hand, we can say that an increase in transaction cost will cause many developers to shift from ethereum network to other low cost network which will decrease the demand of ethereum thus causing its utility function to also decline which will further result to a decrease in the price of ethereum.
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