Cryptocurrencies are the most potentially lucrative investment vehicles in the world right now with the investors who are looking to expand their investment portfolio getting into Bitcoin and Ethereum. Ethereum is the second largest cryptocurrency right now and unlike Bitcoin it is more than just a simple payment system.
While the world of cryptocurrencies has had an immensely tumultuous time this year so far, the volatility in prices is only a defining characteristic of this new form of currency. A lot of people considered the world of cryptocurrencies to be nothing more than a speculative bubble that will burst at some point. While that point has not come to pass, a very important question still arises in the minds of many considering the investment in 2018 (which has been pretty bad in the cryptocurrency world in general): Is Ethereum still worth it?
Let’s discuss some of the pros and cons of investing into Ethereum to help you make a more informed decision.
So What is Ethereum Exactly? How Does it Work?
Ethereum, just like the very basic cryptocurrency Bitcoin, makes use of blockchain technology. That being said, it is very different from Bitcoin in the sense that it does not just function as a currency. Ethereum is a whole platform which was created by Vitalik Buterin in 2015. On this platform there is a whole infrastructure which can support many decentralized applications (dApps) and the mode of transaction on this platform is Ether (ETH). Therefore, Ethereum can be considered more than just a cryptocurrency, it is a whole financial system that is decentralized and makes use of Ether as its native currency.
Its utilities extend far beyond being a medium of exchange with the programming language that allows developers to create decentralized applications and smart contracts that function on the platform.
Just like how traditional contracts work, the smart contracts on Ethereum also lay down the particular terms and conditions of an agreement between parties. Ethereum facilitates the agreement between parties and enforces the terms of the agreement by making use of the code. The smart contracts work by executing the terms automatically once the conditions which have been agreed upon are met. This automation helps in the sense that any delays or additional costs which are involved with enforcing the terms of traditional contracts are removed.
Cons of Investing into Ethereum
Before we discuss the reasons why investing in Ethereum is a good thing, we will take a look at some of the cons of investing into Ethereum.
First off, the biggest issue with Ethereum is its volatility. Even though the Ethereum blockchain has shown a lot more innovation and potential when it comes to the world of cryptocurrencies, it is not safe from the issues of volatility. In the traditional investment market, any asset that has a percentage in value fluctuation of over 4% is considered to be a highly volatile investment. While the fluctuation of 100% in valuation during the course of a year can lead to an investment asset being considered extremely volatile.
The last year saw Ethereum
While Ethereum wasn’t as worse off as Bitcoin, it has still seen a bit of the tumultuous time and is trading
The second con of investing into Ethereum is that while it is becoming popular with each passing day, it is not as well-known as Bitcoin just yet. Shopkeepers aren’t exactly putting up sign boards saying that they are accepting Ethereum as a payment method right now.
Pros of Investing into Ethereum
While Bitcoin does enjoy dominance in the market of cryptocurrencies right now, Ethereum is slated to be the one cryptocurrency to take the top spot due to its immense potential. There are quite a few pros of investing into Ethereum but here are some of the most important ones.
Ethereum has a lot more utility than other cryptocurrencies. Ethereum is a complex platform which offers the prospect of smart contracts. These applications run on the Ethereum blockchain without the problem of censorship, downtime, fraud and eliminate the involvement of third parties to provide oversight.
Ethereum has actual value in and of itself. It is being developed by the Ethereum Foundation, which is a Switzerland based nonprofit company, and it also enjoys the backing of major companies that make up the Enterprise Ethereum Alliance. Mastercard, J.P. Morgan, and Microsoft are a few of the companies that the Enterprise Ethereum Alliance consists of.
Ethereum is widely spread among cryptocurrency exchanges and can be bought or sold for almost any fiat currency. Here are several platforms with the high trade volume in the most popular currencies (USD, EUR, GBP).
Bitfinex. At the time of writing Bitfinex is a leader in the ETH/USD volume of trading. Though the exchange is headquartered in Hong Kong, it operates in most countries worldwide and has
Kraken. Despite being a
CEX.IO. It comes as no surprise that a London-based exchange has a large trading volume in GBP. This platform offers 8 cryptocurrencies to trade and suits both beginners and expert traders. Sure, it’s not a
All these factors go to show that Ethereum has more value and more potential when it comes to being seen as an investment opportunity to get into. In spite of the current decline that all of the cryptocurrency world is seeing right now, Ethereum is still something people are investing heavily into due to the fact that they recognize its potential beyond a payment system. Just be sure to weigh all the risks and invest smartly and you will be good to go.