The price of ethereum, a bitcoin rival, fell more than 15.5 percent Wednesday amid a flood of demand and increased worries it may face a divisive debate on how to upgrade its network.
Ethereum, also known as ether, traded near $303 Wednesday afternoon, according to CoinDesk.
The sharp fall comes after ethereum shot up more than 3000 percent this year, far surpassing bitcoin’s already stellar 180 percent gain and coming close to beating bitcoin as the digital currency with the greatest market value.
Ethereum 1-week performance
Both cryptocurrencies are based on the same blockchain technology — a fixed, transparent record-keeping system that allows money to quickly change hands regardless of geographical location. However, ethereum has grown in popularity for its ability to support applications, potentially becoming a structure for a decentralized, next-generation internet.
On Tuesday, investor demand at the funding launch for an ethereum-based messaging app called Status clogged the ethereum network. Online investors were also reportedly unable to withdraw funds from digital currency depositories known as wallets.
“The Status.im token launch was constructed in a way that caused a huge number of transactions to be formed to chase purchases of the token, so the pools of unprocessed transactions grew large and are being worked though,” Joe Lubin, an early supporter of ethereum and founder of blockchain software developer ConsenSys. “We can expect many future experiments as we all figure out the most effective and fairest approaches to building these kinds of systems.”
Status did not immediately respond to a CNBC request for comment.
In the last several weeks, a surge in digital currency prices has contributed to a flood of investor demand, which has overwhelmed websites and attracted cyberattacks.
Growing pains have affected both as well. Bitcoin’s price fluctuated in the last few months as developers debated the best way to upgrade the network. News last week that two upgrade methods, BIP148 and SegWit2x, may be able to work together helped bitcoin recover from its lows of the month. Now, a flood of demand for ethereum increases similar concerns.
“The scaling issues are a function of rapid adoption which should have a positive effect on the price eventually,” Benjamin Roberts, co-founder and CEO of Citizen Hex, an ethereum-focused start-up backed by three Canadian venture funds.