It’s blockchains all the way down
For now, that bull run has continued unabated. Last week was the first time that Ethereum’s market capitalization reached half that of Bitcoin’s, a massive milestone for the relatively new blockchain.
What explains the price increase? Speculation and other factors are no doubt at play here too, but it’s likely the architecture behind Ethereum’s blockchain system that makes it uniquely valuable, or at least uniquely flexible and extensible.
Bitcoin is a relatively bare-bones blockchain system that requires layers of protocols to be built on top of it to make it a usable platform for utilities like smart contracts. Platforms like Counterparty and Omni are both built on the Bitcoin blockchain and have sprouted their own collection of digital assets and services that ride on top of them.
Ethereum, on the other hand, was launched with its own scripting language baked in, making it possible to build complex smart contracts, decentralized autonomous organizations (DAOs), decentralized autonomous apps (DApps) and even other cryptocurrencies with relative ease.
This ease of development, combined with the rising price of Ether and a desire by early stakeholders to re-invest in the Ethereum ecosystem, has made Ethereum the platform of choice for crypto-asset entrepreneurs — at least for now.
Based on the same data extracted from TokenMarket we looked at earlier, we charted the proportional share of Ethereum-based assets versus all other assets that have either ICO’d already or soon will.
From zero percent of the monthly asset offerings less than a year ago, to more than half of all the closed or announced ICO events tracked on that page, the growth of Ethereum is impressive.
Ethereum’s flexible, extensible blockchain system makes it relatively easy for developers to build and launch their own DApps, DAOs and crypto-assets. But ease-of-use is not sufficient to explain Ethereum’s growing traction in the new digital assets space. It’s where a disproportionate amount of the money is, too.
For these final charts, we extracted the rows from CoinMarketCap’s listing of digital assets. The table lists names, blockchain platforms, market capitalizations and prices of some 119 assets.
Although roughly a third of the assets listed were built on Ethereum, just over three-quarters of the market value of all of these assets is tied up in assets built on top of the Ethereum platform.
At the time of writing, there’s approximately $3.4 billion in market value represented by the 119 crypto-assets listed on CoinMarketCap’s digital assets page. Of that, around $2.6 billion is tied up in assets based on Ethereum.
Just the top four Ethereum-based assets — Golem, Augur, Basic Attention Tokens and Gnosis — represent $1.27 billion in market value. This is roughly half of all the value attached to Ethereum-based assets and more than a third of all the market value of crypto-backed assets and tokens in general.
The value of crypto-assets listed on CoinMarketCap is divided between those built on Omni and those built on Counterparty. Ethereum is the platform of choice because it offers a blockchain platform with a built-in abstraction layer, which serves to unify the ecosystem.
Ethereum offers the tantalizing promise of one chain to rule them all, or at least one chain to act as the foundation. Ether traders, entrepreneurs and developers alike are keen to let a thousand tokens, DApps and DAOs bloom because, although each of these assets is distinct, their roots run deep and ultimately back to Ethereum.