Don’t count out Ethereum: Sony’s big bet signals a bright future for cryptocurrency

It’s no secret that Ethereum (ETH -4.54%) has been on a rough patch lately. He just can’t catch a break. It has fallen over 25% in the past month and is only up 4% year to date. The situation was so dire that Ethereum co-founder Vitalik Buterin even posted an artificial intelligence (AI)-generated image of a bull with a sign around its neck that read “Ethereum is good,” upping the ante of how bad things have gotten. .

But things are better than they seem and a recent development proves it.

I was told that we needed to “do less philosophizing and do more ethereum bullposting”. So here’s an Ethereum bullpost courtesy of stable 3 inpainting + gimp broadcast. pic.twitter.com/ZcPjNVImpn

— vitalik.eth (@VitalikButerin) August 21, 2024

Sony meets Ethereum

On August 22, Sony (SONY -2.13%) announced that it will launch its own blockchain, Soneium, on Ethereum through a joint venture with Startale Labs. Soneium is a Layer-2 blockchain, meaning it runs on top of Ethereum, leveraging its security while offering faster and cheaper transactions.

This layered design is crucial because it addresses one of the most important issues in blockchain technology today: scalability. Using Ethereum’s security as its foundation, Soneium can provide a more efficient platform for transactions without compromising the reliability that comes from Ethereum’s extensive network.

But why does a company like Sony need a blockchain? The answer lies in Sony’s vision to integrate Soneium into its existing business ecosystems, such as Sony Music, Sony Pictures and Sony Bank, among others.

As for what those new business models might look like, Sony could use Soneium to facilitate the direct sale of digital music and movies, allowing artists and creators to monetize their work more efficiently while ensuring transparent royalty payments . In addition, Sony could develop decentralized applications (dApps) on Soneium for managing intellectual property rights, enabling safer and more efficient licensing of its vast content library across platforms.

Jun Watanabe, president of Sony Blockchain Solutions Labs, outlined the strategic intent behind Soneium, saying in a statement: “We will work to create diverse businesses and new use cases with the goal of reaching as many users as possible with customer value which you can only enjoy with Web3 technology.”

The common thread is born through Ethereum

Sony’s announcement may not seem like a big deal at first glance, but it’s worth noting that it’s the world’s 132nd largest company by market capitalization and the first non-financial company to launch its own proprietary blockchain.

Sony joins a growing list of notable companies betting that the future of business will be onchain, and specifically Ethereum. These companies, including BlackRock (NYSE: BLK), PayPal (NASDAQ: PYPL)and Coinbase Global (NASDAQ: Coin)they all have one thing in common — they chose Ethereum as their blockchain of choice.

In March, BlackRock launched BUIDL, its tokenized money market fund hosted on Ethereum. Tokenization is seen as a highly bullish development for Ethereum, with BlackRock’s CEO describing tokenization as the “next generation for markets” and one that some analysts believe is a $10 trillion opportunity.

Coinbase, the largest US cryptocurrency exchange, launched its own Layer-2 blockchain, Base, in August 2023, again based on Ethereum. During that time, Base became one of the most popular blockchains and brought in over $50 million in revenue for Coinbase.

Last but not least, PayPal has followed suit by developing its own stablecoin, which is also built on top of Ethereum. Stablecoins are expected to make up 10% of money in the global economy over the next decade, and Ethereum’s dominance in this space further solidifies its position as the core blockchain for companies looking to explore innovative financial applications.

Adherence to the long-term strategy

The convergence of these major businesses on Ethereum is something no other blockchain can claim. With adoption by such influential entities, recent developments prove that Ethereum is the only blockchain companies trust when diving into crypto.

However, as optimistic as this is, it is only a catalyst for Ethereum in the long run. Ethereum also dominates decentralized finance (DeFi), one of crypto’s most prominent use cases, where it supports more than 50% of all value in the decentralized economy. It also has a thriving developer community that constantly drives innovation through smart contracts and decentralized applications, further solidifying Ethereum’s position as the backbone of the Web3.

It may test your mettle (and it certainly tests mine), but treating this downturn as an opportunity to buy Ethereum at a discount to its future potential seems to be the game. While Ethereum may be down, it’s certainly not up.