Ethereum Price Predictions 2018: Experts Forecast Next Year's Value

It’s hard to imagine a better year for Ethereum than the one it had in 2017. The open-source blockchain platform saw its value skyrocket to new highs, locked up a majority of initial coin offering projects and started to gain traction in the mainstream.

Ronald Chernesky, the CEO of cryptocurrency social network InvestFeed, told International Business Times he had little doubt that 2018 would build upon Ethereum’s successes.

"The amount of transactions the Ethereum network has been processing recently has only been an indicator of increased adoption rates," he said. “With the amount of work being put into Ethereum in relation to addressing its scalability, the sky is the limit."

The number of transactions Ethereum was made to handle over the course of 2017 grew exponentially. The blockchain platform went from handling about 5,000 transactions per day at the start of the year to more than one million per day by December.

That growth is likely to continue into 2018. Geoffrey Smith, a Finance Professor at W. P. Carey School of Business at Arizona State University, told IBT, “I think the market will continue to grow as people find more uses for blockchain technology and digital currency. The only concern I have is that the price volatility needs to settle down.”

Because of that volatility, making a prediction on the value of a digital currency is challenging. Tech investment firm Profit Confidential said earlier this year that it has $1,000 as the target for Ethereum in 2018. InvestingPR suggested it could reach as high as $5,000 and could even overtake Bitcoin.

Volatility seems to be baked into the cryptocurrency market to some degree, as uncertainty always looms large. The markets operate largely free of regulation at the moment—something that could change in the futures and have unexpected consequences for the price of digital tokens.

Earlier this week, Bitcoin dropped nearly 10 percent after South Korea announced that it would no longer allow anonymous trading and would require people to use their real names when completing transactions. A similar crackdown in the United States or another large market like China could send the value of Ethereum and other cryptocurrencies into flux.

For Ethereum, regulation of initial coin offerings (ICOs) could have an effect on the cryptocurrency’s value. ICOs—which are essentially a crowdfunding effort for cryptocurrency in which investors put money up front for the promise of digital coins—became popular in 2017 and, by the end of the year, caught the attention of regulators at the U.S. Securities and Exchange Commission.

The SEC has already started to come down on ICOs it has deemed to be deceitful or outright scams. That presents a potential problem for Ethereum, which may face additional scrutiny as the platform has been the primary launching point for more than half of all ICOs .

While the association with ICOs may not be great for Ethereum, the reason so many have turned to the platform is because of its smart contract feature. According to Professor Smith, smart contracts allow users to “borrow Ethereum or even pre-schedule payments in the future, such as for the settlement of a will, with no risk that the transaction will not be completed.”

That assurance is one that few cryptocurrencies can promise and Smith said such a feature would be beneficial to Ethereum going forward. “Smart contracts can eliminate the biggest problem with typical contracts, which is the cost of enforcing them, for example, getting your counterparty to pay up on time. If Ethereum reduces the cost of enforcing contracts, then that is a huge advantage,” he said.

Smith added that, “an obvious prediction is that the digital currency with the best features will win in the marketplace,” suggesting that the prospects for Ethereum would be strong if it can leverage a unique feature like smart contracts.

There’s just one problem with having a killer feature right as the market is growing: it becomes easy to replicate. Smith said he worries about competition from other digital currencies that could bring similar or even better features to the market.

“I am... very concerned about new digital currencies that improve on the older digital currencies,” Smith said. “Value is determined by the cost of production and the cost of producing a new digital currency seems very low to me.”

The fact that Ethereum has already established itself to some degree may favor the cryptocurrency in the long run and allow it to withstand new competitors. Chernesky of InvestFeed suggested Ethereum already had a hold that will only expand.

"As the amount of members in the Enterprise Ethereum Alliance (EEA) continues to grow, it only continues to show Ethereum's unstoppable journey in its evolution," he said, making reference to the EEA , a group dedicated to expanding Ethereum’s blockchain technology to the world of enterprise businesses.

"Expect to see mainstream corporate adoption gain more traction as companies better understand the costs savings to their businesses by harnessing the Ethereum blockchain," Chernesky predicted.

Smith likewise suggested the future for Ethereum was not necessarily in the digital currency itself but in the blockchain technology that powers it. Blockchain is a digital ledger that records all transactions and distributes the process of verifying those transactions across many devices to decentralize the process and act as a constant, ongoing check on the validity of each action.

“I would focus on the blockchain technology rather than on the digital currency,” Smith said. “Blockchain may prove very valuable for public record keeping, for example, it could replace the need for government officials to keep track of real estate transactions.”

Smith predicted that the cryptocurrency market will end up playing out much like technology showdowns have in the past. “I predict this will all shake out like MySpace versus Facebook... where there are winners and losers; it might be hard to tell why one currency failed while another one succeeded, though.”