Created by Vitalik Buterin in 2014, the purpose of cryptocurrency is to be a platform on which smart contracts can be executed.
In other words, Ethereum is intended to be a global computer.
If Bitcoin stores a list of transactions on its blockchain network, the Ethereum system is designed to store various types of data that can be accessed and used by computer programs running on it.
What determines the price of Ethereum
Many people wonder how the price of ether is determined.
It is important to know that it works no differently than it does with other cryptocurrencies.
The price of ether is determined in the same way as anything else – through social consensus.
What does this mean
The value of a cryptocurrency is determined by how much its owner sells it and how much the buyer would pay for it.
The seller’s price is usually called the “ask price” and what the buyers pay is called the “bid price”.
The difference between the two values is called the spread price (difference between the buy and sell price) and the last transaction is the “current value”.
Gold, real estate, stocks and even fiat currencies are determined in the same way.
If tomorrow someone is ready to give you goods worth 90 cents a dollar, then you will have to accept that price. But you may want to wait for it to rise. In addition, you could offer this dollar for 95 cents.
It is, in essence, a rather flexible system whereby any price on the market is determined.
The most important thing to say is that the value of ether is what you and the seller are willing to trade.
The claim that ether is worth nothing is a myth
Those who say that ether or bitcoin are worthless because they are not backed by anything, are wrong too much.
Many people claim that US dollars and other fiat currencies are backed by the country’s assets. The question here is: “Who decides what the value of these assets is?”
The answer to the question is simple
One dollar is worth a dollar because of the social consensus made by those who provide and accept the currency.
Similarly, if social consensus decides that Ether costs $ 1 million, with both buyer and seller agreeing to these terms, then one Ether will cost $ 1 million.
Investors and traders use the economic foundations of ether to make the best possible assumption about its future value. They use data on the demand, supply and market conditions of the cryptocurrency and try to determine what the market price will be.
In the case of ether, it has limited supply and can be used to blockchain-based smart contracts in its growing consumer base.
All this indicates that the future price of cryptocurrency will be higher than it is today. Although Ethereum has competitors that can take market share if they prove to be a better network for smart contract applications.
And if that happens, then the ether may lose its value.
These are speculations used to determine whether or not ether is a good complement to the