If we look at the price curve of Ethereum, we notice that it explodes in recent weeks catching up with Bitcoin. Why?
Some good news.
The first tests of the Ethereum 2.0 network showed that this new version of the network was operational and able to communicate with the current network. As a reminder, the Ethereum network will move from a proof of work system to a proof of stake system. This change should greatly improve the amount of transaction possible per second. This update should also allow a drastic reduction in transaction costs.
A huge potential.
Benefiting from the largest developer community and the largest number of blockchain-related projects, the potential of Ethereum is therefore enormous. However, the very high transaction costs hinder the proper development of the project. The explosion of fees is paradoxically linked to the success of Ethereum. Indeed, the higher the number of transactions, the higher the fees will also be. This is called network clutter.
A bold bet.
The developers of the project made the bet that it was better to take time for the new network to be operational instead of quickly updating Ethereum and perhaps making mistakes. This is a very wise decision however it leaves time for Ethereum’s competitor to develop. This is what has made the binance smart chain so successful. Until Ethereum 2.0 is fully operational, many similar blockchain will be able to take advantage of the vacuum left. The encouraging news of the Ethereum network have therefore restored confidence to many investors who were waiting for clear and encouraging news.