Ethereum price has skyrocketed over the years. Had you invested ₹6,000 in one Ether in December 2018, your investment would have easily grown 12 times today’s market price. In the world of investment, we often undermine such opportunities as risky bets. What if there is a logic with such investments? Today, we introspect if Ethereum is a good investment for you to grow money.
Why has the ETH price risen recently?
To those who have just observed the graph of Ethereum, tracking its momentum gives one an aura of surprise. After all, Ethereum as a crypto played like a second fiddle to Bitcoin which had caught the market frenzy. Over the course of time, however, blockchain enthusiasts realized the importance of the Ethereum network and its usability factor.
Ethereum has become increasingly popular among developers and businesses looking to build decentralized applications (dApps) and smart contracts on its blockchain. This has led to increased demand for ETH, which has driven up its price. In the last 10 years, Ethereum prices have sky-rocketed by 200x and captured the imagination of everyone right from novice programmers to decentralized finance (DeFi) specialists.
What influences Ethereum price?
Besides improved usage, a series of upgrades and improvements also gave a boost to Ethereum prices. The transition to the Proof of Stake (PoS) consensus mechanism and the implementation of Ethereum Improvement Proposals (EIPs) enhance the network’s functionality. Such upgrades boost confidence in the platform, leading to increased demand for ETH. Of course, volatile market sentiments and speculation have also driven Ether prices.
High traffic and utilization
High traffic and utilization can strain the Ethereum network, leading to congestion and higher transaction fees. However, some view this as a sign of the network’s growing adoption and use cases, which could potentially increase the value of ETH in the long term. The transition to the Proof of Stake consensus mechanism will likely boost the network’s scalability and reduce congestion.
Ethereum has a first mover advantage in the decentralized application and smart contract space, allowing it to attract a large developer and user community. The advantage could lead to continued growth and adoption, as long as Ethereum continues to innovate and stay ahead of competitors.
Competition from ‘Ethereum-Killers’
Ethereum faces competition from other blockchain platforms that offer similar or improved functionalities, such as Cardano, Solana, and Polkadot. However, Ethereum’s large developer and user community, extensive ecosystem, and ongoing upgrades and improvements give it a strong position in the market. However, it is a moot point if these competitors will impact Ethereum’s long-term growth and adoption.
How Ethereum is different from Bitcoin
Although Ethereum and Bitcoin are decentralized and open-source blockchain platforms, they differ in their purpose, programming language, consensus mechanisms and even the mode of governance. Bitcoin is a peer-to-peer electronic cash system, while Ethereum is a platform for building decentralized applications (dApps) and smart contracts.
A major difference is Ethereum having its native crypto called Ether (ETH) which one can use as gas to pay (transaction fees) for transactions. This incentivizes nodes to validate transactions and add them to the blockchain. Bitcoin’s crypto is BTC which has a fixed supply cap. Ethereum has a more flexible and adaptive governance system as upgrades and changes are proposed and implemented through the Ethereum Improvement Proposal (EIP) process. Bitcoin’s governance is more rigid, with upgrades and changes being proposed and implemented through a more decentralized process.
How to buy Ethereum (ETH)?
You would need a brokerage account that supports Ethereum to buy Ether (ETH). From a brokerage account, transacting for Ether can be made more simpler if you have a digital wallet that supports buying and selling of Ether.
How to sell Ethereum?
Once you open an account with a crypto exchange, you can add funds to the crypto account using a bank transfer, debit/credit card, or other payment methods supported by the exchange. Once you have funds in your account, you can buy Ethereum by placing an order on the exchange’s trading platform. You can specify the amount of Ethereum you want to buy, the price you’re willing to pay, and the type of order you want to place (market order or limit order).
Once your order is filled, you can hold your Ethereum in your exchange wallet or transfer it to a personal wallet for safekeeping. To sell Ethereum, you can place a sell order on the exchange’s trading platform, specifying the amount of Ethereum you want to sell and the price you’re willing to accept.
Future of Ethereum
The future of Ethereum looks bright as it continues to be one of the most widely used and adopted blockchain platforms for building dApps and smart contracts. The upcoming transition to the Proof of Stake (PoS) consensus mechanism will likely improve the network’s efficiency, scalability, and sustainability, and attract more developers and users to the platform. Additionally, the ongoing development of layer 2 scaling solutions, such as Optimism and Arbitrum, would improve the platform’s scalability and reduce transaction fees.
If you are seriously contemplating an investment in Ethereum, we recommend building your risk assessment and establishing your financial goals. The reason for the price increase in the Ethereum network is its growing usage in building dApps, smart contracts, and transactions for Web 3.0. In other words, the unusually high demand for ETH is leading to an increase in its price. Moreover, Ethereum has stayed ahead of the competition by investing in newer consensus mechanisms and tackling governance risks. While cryptos often face regulatory issues, Ethereum has a unique model with its DeFi service providers using the network to build newer applications. The overall sentiment for Ethereum is positive. However, any good investor will do adequate homework (research) before investing their hard-earned money.
Is Ethereum (ETH) a good investment?
Whether ETH is a good investment depends on your financial situation and investment goals. However, many investors and analysts believe that Ethereum has strong potential for growth due to its expanding adoption, network upgrades, and increasing use cases for dApps and smart contracts.
When is the best time to buy Ethereum?
Timing the market is tricky and can be risky. Experts recommend approaching crypto investing with a long-term perspective and to invest regularly rather than trying to time the market. Dollar-cost averaging is a popular investment strategy in which an investor buys a fixed amount of crypto at regular intervals, regardless of the market price.
Is Ethereum a good long-term investment?
Many experts and investors believe that Ethereum has strong potential for long-term growth due to its expanding use cases and adoption, improvements to the network, and transition to a more sustainable and efficient consensus mechanism. However, it’s important to do your research and make investment decisions based on your financial situation and investment goals.
How to invest in Ethereum?
To invest in Ethereum, you need an account with a crypto brokerage or an exchange. You can transfer the funds from your bank account to your crypto account. However, investors should research and only invest after evaluating their risk strategies.