Generally, the consensus among blockchain enthusiasts is that Ethereum will be the platform that powers Web 3.0. However, Ethereum’s developers, including its founder Vitalik Buterin, are characteristically muted when talking about their creation’s potential. Last week, one of Ethereum’s top developers even tweeted the following:
Still not safe or scalable https://t.co/RgnAhzIe4f
— Vlad Zamfir (@VladZamfir) January 4, 2018
This frankness runs contrary to many others in the cryptocurrency space and is perhaps one of the reasons that Ethereum has performed well in recent weeks, as the wider market has been gripped by particularly volatile price swings. Hype is prevalent in the blockchain space and as the total market capitalisation of all coins and tokens approaches $1trn
Over the Christmas period, the cryptocurrency world was gripped by Ripple’s extraordinary rise from around $0.2 in late November to highs in excess of $3 in early January. The financial institution-friendly cryptocurrency managed to overtake Ethereum’s market cap to reach a high of around $130bn on the news that it was the first cryptocurrency to receive institutional support and was on the cusp of widespread adoption. Indeed, Ripple’s CEO briefly became wealthier than Mark Zuckerberg based on the market value of the 50,000,000,000 XRP that he currently holds.
However, the hype died down and the reality that no banks have yet fully adopted the Ripple protocol soon set in. Ripple promptly tanked some 50% before recovering slightly, settling for a market cap of around $80bn and returning to the number three spot. The hype still lingers and many mainstream media outlets are still hailing Ripple the “new bitcoin”, thus showing their ignorance of its price movements and technological differences with the grandfather of cryptocurrencies. But the market has recognised the scale of hype around Ripple was not proportional to its adoption, and XRP has been punished for it (though it of course remains 1000% up from its price in November).
Throughout Ripple’s brief time at the top, Ethereum’s developers maintained their usual modesty. They could have easily tweeted about the potential that their platform has or the fact that dozens of companies have joined the Enterprise Ethereum Alliance (oddly enough, JPMorgan is one of them, despite its CEO having an overwhelmingly negative view of blockchain).
In fact, on 27 December 2017, Buterin tweeted this:
*All* crypto communities, ethereum included, should heed these words of warning. Need to differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society. https://t.co/aNpEnBNGsA
— Vitalik Buterin (@VitalikButerin) December 27, 2017
Since that tweet, Ethereum’s price has steadily climbed from about $700 to nearly $1,400, despite the market stumbling on the news that South Korea might ban crypto trading. Evidently, the crypto market is moving away from one that relies solely on hype and that rather cloudy term, “potential”, into one that is rewarding developer activity above all else.
That, of course, will not stop speculators from contributing to the extraordinary price rises lower down the cryptocurrency food chain. New coins promising new features are cropping up at an extraordinary rate. While both hype and the so-called anti-hype that characterises the Ethereum Foundation contribute hugely to price movements, it is also important to recognise that huge price increases are also driven by the simple fact that since new coins and tokens are not backed by assets, they start at zero.