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There number of crypto projects has expanded tremulously since Bitcoin, the first digital currency, was been launched in 2009. However, many of these projects are inactive or have been abandoned soon after their inception. Some have crashed during one of the several bear runs that have marked the crypto history, while others have failed to perform as expected and have therefore never made it into the spotlight.
According to recent statistics, there are over 22,900 digital currencies in existence at this moment, but only 9,000 of them are active and a lot fewer are listed on crypto exchanges, being available for trading. It’s no wonder most traders and investors have ceased looking for the diamond in the rough and gone back to old favorites like Ethereum. Of all the altcoins available on the market, Ethereum shines the brightest, although the current Ethereum price doesn’t necessarily reflect this reality.
Second only to Bitcoin, Ethereum remains to this day the largest altcoin judging by popularity and market cap. That’s no small achievement considering the increasing number of contenders it faces today and all the ups and downs that the project has experienced throughout its existence. So, how did Ethereum manage to stay on top of all the other coins in the crypto sphere and maintain its supremacy for so many years in a row? A quick look at its history and unique characteristics will help us find the answers.
A promising beginning
As you may suspect, Ethereum didn’t start its journey in the crypto industry from the position it holds today but had to earn it over the years through hard work and continuous innovation. The concept that laid the foundation for today’s network was presented by programmer Vitalik Buterin in 2014, in Ethereum’s white paper. One more year passed until the project was launched as an open-source programmable blockchain platform.
Ethereum drew inspiration from Bitcoin’s model but further expanded its capabilities by introducing smart contract functionality which enables the creation of decentralized applications or dApps. Although blockchain-powered dApps already existed, the platforms lacked interoperability. Ethereum addressed this issue and filled in the gap by providing a platform that could ensure dApp compatibility, and so it became the top network for smart contracts and dApp deployment.
The first Ethereum transaction took place in August 2015, and for the better part of the year, Ethereum maintained an average price of $1, which was already significantly higher than the value of many newcomers. As more developers became aware of Ethereum’s huge potential and flocked to the network, the ETH price continued to increase, surpassing the $10 mark in 2016. The following year, Ethereum reached the $100 mark and was on its way to becoming a household name in the crypto industry. By January 2018 Ethereum managed to establish itself as the second-largest crypto by market capitalization and upheld its position as the altcoin leader throughout the years.
A host of use cases
Unlike Bitcoin and many of the other crypto projects that exist today mainly serve as payment methods or stores of value, offering an alternative to fiat money, Ethereum has a different purpose. As a decentralized blockchain-based software, Ethereum aims to support the creation of a wide range of products and services that can be used by anyone, regardless of region, nationality or background. This makes Ethereum particularly appealing to users in underdeveloped countries where the financial infrastructure and government controls limit their ability to open a bank account or access different financial products.
Through its smart contract functionality, Ethereum has already given rise to a multitude of applications such as data storage, decentralized exchanges, NFTs, yield farming platforms, and an increasing array of financial apps. Ethereum has emerged as a hub of innovation in the crypto industry, powering an entire ecosystem of decentralized applications that are being employed across a variety of industries and sectors, including finance, healthcare, real estate, supply chain management, governance and gaming. Therefore, Ethereum’s diverse and fast-expanding use cases have helped the network gain a major advantage over its competitors and solidify its position in the crypto space.
A sustainable blockchain platform
Ethereum has taken major strides toward improving the platforms’ efficiency, scalability and suitability. The most important measure in this respect is the Merge – a massive overhaul that saw the network transition from its former proof of work (PoW) protocol to a proof of stake (PoS) consensus mechanism.
Under the new PoS model, miners are replaced with validators through the newly introduced staking functionality. Users have to stake 32 ETH in order to qualify as validators, which allows them to validate transactions and enhance the network’s security. In exchange for their contribution, validators are rewarded with Ether. Apart from eliminating the competition from the process of validating transactions, the PoS mechanism also reduces the network’s energy consumption, which has dropped by 99% since the upgrade was finalized. Ethereum’s green credentials have boosted its popularity among traders and investors, having a positive influence on its value.
First-mover advantage
It pays to be a first mover in any space, and crypto makes no exception. Ethereum was the first blockchain platform to introduce a smart contract feature in the cryptocurrency arena, and that has helped propel it to the top of the industry. There have been many altcoins that have challenged Ethereum’s status, but none has managed to come close to its performance, let alone steal its position.
Despite the numerous contenders, Ethereum remains the preferred platform for dApp deployment, attracting more users than any other smart contract blockchain available at the moment. Ethereum’s proven track record of success and reliability in the DeFi space continues to draw developers and investors to this innovative platform.
Wrapping up
Ethereum might not be bigger than Bitcoin, but it’s certainly the undisputed leader of the altcoin pack and the most important platform in the dApp ecosystem. Considering its resilience and the huge influence it holds in the market through its smart contract capabilities we can conclude that Ethereum’s domination is not going to end anytime soon.