Find out Why Ethereum and Ripple are Going to Explode in 2021
2020 was a positive year for cryptocurrencies. The crypto space has been steadily growing for the past couple of years, since the troubles of 2018. Cryptocurrencies like Ethereum and Ripple have seen their price rally throughout 2020. Both assets have seen retail and institutional interest rise dramatically over the last one year. Investors are eager for the bullish run to continue into 2021. What will drive their growth in 2021?
Let us look at Ethereum first
Why Ethereum is going to explode in 2021?
Ethereum is one of the oldest cryptocurrencies. It is the second-largest cryptocurrency both in terms of market share and popularity, second only to Bitcoin. The Ethereum platform uses smart contracts to enable users to carry out completely secure transactions. Ethereum’s native currency, Ether, is not capped, making Ethereum much more scalable than its peers. However, experts believe two main factors will drive Ethereum’s growth. These are the imminent arrival of Ethereum 2.0 and Decentralized finance.
What is Ethereum 2.0? The launch of Ethereum 2.0 is considered to be the most significant event since Bitcoin. Ethereum 2.0 will address longstanding issues that Ethereum faces, specifically, issues with scalability and security.
So what is Ethereum 2.0? Also known as Serenity or Eth2, it will address the scalability, speed, and efficiency of the Ethereum network. The update will also enable the platform to process more transactions, eliminating bottlenecks on the network.
Ethereum 2.0 will see Ethereum switch from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. Proof-of-stake will see mining phased out, increasing efficiency and making expensive ASICs obsolete. In a proof-of-work system, miners compete amongst each other using computing power to solve complex mathematical problems and validate transactions. Once a problem is solved and the transaction validated, it will be added to the blockchain and stored along with the other transactions that make up the blockchain.
Miners are rewarded for their efforts in the form of Ether generated when transactions get added to the blockchain. The problem with this approach is that it is energy-intensive and requires vast amounts of computing power, leading to the concentration of mining in the hands of a few.
Proof-of-stake works differently. In place of miners, validators stake part of their crypto to earn the right to verify transactions on the blockchain. The validators propose a block based on their crypto and the time they have had it for. Other validators need to attest they have seen a block, following which the block is added to the blockchain. When a block gets added to the blockchain, the validator is rewarded in the form of Ether.
Ethereum 2.0 will also see Ethereum’s scalability issues addressed. The upgrade promises to process up to 100000 transactions per second through the implementation of sharding.
Decentralized Finance (DeFi) is also poised to power Ethereum’s growth over 2021. DeFi helps people take out loans, deposit money in accounts, and trade in financial products, all without intermediaries or any paperwork. Ethereum is the go-to platform on which DeFi is built. Ethereum uses smart contracts, which are programs running on a decentralized blockchain.
DeFi on Ethereum is dependent on the scalability of Ethereum. DeFi projects make up a large part of the Ethereum ecosystem. DeFi has seen incredible growth, and the growth is intertwined with the development of Ethereum.
The growth of Ethereum and DeFi can change the way money is used. DeFi on Ethereum has the potential to change the way the financial world functions.
Growth Prospects of Ripple
Why Ripple is going to explode in 2021?
Ripple is a cryptocurrency platform and a currency. The Ripple protocol is designed to allow quick and cheap transactions. Ripple has formed a host of partnerships with some of the biggest companies in the world. These partnerships are in line with Ripple’s efforts of pushing for the mainstream adoption of its native currency, XRP. Since the beginning of the year, Ripple has entered into several partnerships.
Ripple is already the preferred platform when it comes to cross border transactions. XRP can be referred to as a bridge currency. It does not discriminate between traditional fiat currencies or other cryptocurrencies. This makes it extremely easy to exchange one currency for another.
Ripple is already available in more than 40 countries and has tied up with over 200 financial institutions. Ripple has enabled banks to offer payments in new markets that were previously difficult to reach. Financial institutions have considerable incentives to tie up with Ripple. It offers them a new source of revenue by giving them access to new markets. Transaction costs are lower and have fewer liquidity requirements.
Ripple has recently announced a tie-up with ETH Zurich, Ryerson University, and the Instituto Tecnologico Autonomo de Mexico (IATM). The platform is also working alongside the University of Zurich to create the world’s first interdisciplinary research centre in the DeFi ecosystem.
XRP is also poised to see soaring growth thanks to a highly anticipated airdrop scheduled for December 12. Currency exchange Coinbase has lent its support to the airdrop, with users who hold XRP to receive spark tokens from the exchanges. Most experts predict that Ripple and XRP will see considerable growth over 2021.
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