Ethereum (ETH) News – What are the causes behind the declining clout of Ethereum (ETH)?

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When you look at the overall performance of Ethereum (ETH) this year, you will realize that it has lost a significant amount of value. At one point in time, it was trading around $ 1200. Currently, it is trading around $ 117. Thus, it has lost more than 90% of its value from the peak. Most of the people have no clue regarding the reasons behind such a drastic fall. We will today look into a couple of these reasons.

What are the causes behind the declining clout of Ethereum (ETH)?

The 1st cause is more fundamental in nature. One of the main reasons why Ethereum (ETH) was able to gain a significant amount of traction was due to the ICO market. Many of the companies were launching an ICO based on Ethereum (ETH) blockchain. With ICOs coming into the focus of SEC as well as various other regulatory organizations around the world, it is becoming very difficult for companies to launch the ICOs. Owing to this very reason, the number of companies launching the ICOs has decreased significantly. This has reduced usage of the Ethereum (ETH) blockchain as well.

The main problem, however, is related to scalability. Currently as well, Ethereum (ETH) has over 39,000 pending transactions. This clearly indicates that even if the usage of the Ethereum (ETH) blockchain increases, it is not able to handle larger amounts of transactions. Due to this very reason, the entire blockchain will actually slow down. If the entire blockchain is slow, scalability cannot be achieved.

However, when you look at the actual users who are initiating the transactions, you will realize that the growth in the number of Ethereum (ETH) wallet addresses has slowed down significantly. This means that the same people are using the Ethereum (ETH) blockchain again and again. There are no new users which are coming to Ethereum (ETH) blockchain. This is another problem which is being faced by Ethereum (ETH).

Unless and until the scalability issues are solved, it will be difficult for Ethereum (ETH) to gain the same clout. In order for the developers to use the smart contract capability as well, proper scalability will be needed. Only when there is proper scalability, it will be easier for the developers to use the smart contract features.

Thus, these are some of the reasons why due to which, the clout of Ethereum (ETH) has been consistently declining as well. Unless and until these issues are tackled, it will be very difficult for Ethereum (ETH) to rise once again. In all the likelihood, there will be no meaningful recovery in Ethereum (ETH) considering the fact that it is fallen all the way from $1200.

About Priya 131 Articles
I am an IT engineer by qualification and like to explore the crypto and blockchain space in my free time.

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