Traders of cryptocurrencies have come to accept that much of what drives their values these days is the prospect of their adoption for mainstream use. Ethereum, the second most widely used cryptocurrency, could be poised for what is being called “a monumental break out” once smart contracts begin to adopt it, according to a leading art-tech agency.
Ethereum price action
Ethereum’s price has seen some sharp action this week, jumping 4% on Monday and adding 8% over the last week. At the time of writing it was Ethereum was trading at around $208.
“Ethereum is back in bull territory and is on track to enjoy considerable gains before year-end,” asserts Ian McLeod of Thomas Crown Art. “I maintain that we can expect Ethereum to hit $500 by the end of 2018 and go on an overall upward trajectory throughout 2019.”
McLeod bases his very bullish assertions on oracles, which act as the connection between Ethereum-run smart contracts and the real world. He believes they will serve as a critical platform for Ethereum’s ongoing evolution.
What is an oracle?
Oracles are trusted data feeds that deliver information into a smart contract, removing the need for the contracts to access information outside their network. They are usually supplied by third parties who have been authorised by an organisation to use them. For example, oracles can be used by insurance companies to help with the authorisation for pay-outs for flight delays or by sports betting firms. In the art world they help dealers to quickly prove the provenance of the works they are buying.
“Using a blockchain to authenticate artwork is an ideal use-case for smart contracts,” adds McLeod. “They provide the ability to store a permanent, immutable record of artwork at the point of creation, which can be used to authenticate registered works. Oracles will further enhance this concept and lighten smart contracts’ work processes.”
McLeod says that the feeding of robust and reliable information into Ethereum-based smart contracts through oracles will drive the Ethereum price upwards. He forecasts that Bitcoin will lose 50% of its cryptocurrency market share to Ethereum, still its closest rival, within the next five years.
As with all cryptocurrencies, much of the price of that crypto rests within the real world utility of the currency – beyond its simple store of value. If a cryptocurrency can be demonstrated to have a value to people trying to solve practical problems, then its intrinsic value will also increase. Bitcoin seems to have reached a plateau at the moment which sits marginally north of the current cost in terms of energy and processing power of producing one BTC. It will be interesting to see whether McLeod proves correct, and that Ethereum is poised to benefit from the growth in smart contracts.