Ether plunges more than bitcoin

Finance


Ether was the star cryptocurrency last year, way outperforming its predecessor bitcoin. But 2018 has been a different story.

The world’s second largest digital asset is down 76 percent this year and can’t seem to catch a break. Investor patience is wearing thin — mainstream adoption isn’t here yet, folks can now short the market, and blockchain competitors are gunning to be the top platform for developers.

Ether is the name of the cryptocurrency but it’s closely associated to the popular Ethereum blockchain. Unlike bitcoin, which gives access to a global financial network, ether gives you access to a computer network. Its use has been compared to gasoline for a car. Developers can use ether tokens as fuel for certain functions on that blockchain.

Tons of initial coin offerings, or ICOs, built their applications on the Ethereum blockchain late last year. Investors saw that as an opportunity.

“When people saw the trends in ICOs as they kept going up, it’s easy to understand why people think this could be a long-term store of value,” said Kyle Chapman, an analyst at venture capital firm Cosimo Ventures. “That was the appeal for it, and that’s why you saw the extreme growth last year.”

Initial coin offerings raised more than $7 billion last year alone, according to data from Autonomous Next. In an ICO, coins or tokens are put up for sale as a form of crowdfunding but instead of voting rights or dividends that come with shares of a company, “utility tokens” promise access to a network, platform or service.

But many of those crypto projects have gone belly up, or been outed by regulators as frauds. Even if some projects on Ethereum’s blockchain are successful, they haven’t been perfected or widely adopted as fast as some investors hoped.

Kyle Samani, managing partner at crypto hedge fund Multicoin Capital said the price drop in ether this year is a reflection of that.

“People started building apps and software but the market got ahead of itself,” Samani said. “They are realizing you have to be in it for the long haul and some investors don’t have the patience.”



Source link

Products You May Like

Articles You May Like

Amazon event shows contrast to Google smart home strategy 
Your first trade for Friday, Sep 21
Wells Fargo plans thousands of job cuts as JP Morgan and other banks boom
‘We expect this is the bottom’ in enterprise growth
Instagram’s co-founders Systrom, Krieger said to step down from firm

Leave a Reply

Your email address will not be published. Required fields are marked *