Ethereum is definitely among the top five of cryptocurrencies. It was launched in 2015 and has earned huge popularity with crypto investors. The reason for this is its amazing transaction speed and widespread adoption.
It is believed that Ethereum will soon overtake Bitcoin.
What is Ethereum?
Ethereum is an open-source, decentralized, public platform for smart contracts and secure cryptocurrency trading, without the need of a third party.
Ethereum offers two available accounts - externally owned, controlled by private keys, and contract accounts.
Ethereum vs. Bitcoin
Bitcoin is the first and most popular cryptocurrency. Anyway, Ethereum has an impressive growth and for that it is believed that it will soon overtake Bitcoin.
There are a lot of similarities between the two cryptocurrencies, but there are also some differences.
Ethereum offers different methods of exchange - crypto trade, smart contracts and Ethereum Virtual Machine, while Bitcoin trades in cryptocurrency only.
Ethereum uses a “proof of stake” security protocol and Bitcoin uses a “proof of work” system.
Ethereum allows permissioned and permissionless transactions, while Bitcoin allows only public transactions.
The block time for Ethereum is around 12 seconds, and for Bitcoin - 10 minutes.
Investing in Ethereum - advantages and disadvantages
Ethereum takes the second place in the cryptocurrency market, and has maintained this position for the last few years. It is a high-risk investment that could also bring high profits.
As any other cryptocurrency, it may cause a lot of losses for the investors, but it has an outstanding performance that has attracted a lot of investors during the years.
Let’s have a deeper look at the advantages and disadvantages of investing in Ethereum.
Advantages
Variability - This may be looked at as a negative, as well as a positive, factor for cryptocurrency investors. While it could cause losses, it could also bring profits generated by market bubbles.
Liquidity - Ethereum is one of the most liquid assets. At a cheap cost, you are able to exchange Ethereum for different currencies or even gold.
Low danger of inflation - As the blockchain system is limitless, there is no need to worry about the deflation of your cryptocurrency.
Disadvantages
Scaling issues - As we already explained, Ethereum serves as a ledger, a smart contract platform, etc., and this could lead to breakdowns and hacks.
Difficult programming language - Ethereum’s native language is not really beginner-friendly, and this sometimes can be an issue.
Risky investment - This is an issue for every cryptocurrency investment. As we know, cryptocurrencies are volatile and can bring both huge profits or numerous losses.
Investing in Ethereum - 2021
While there is always a risk in cryptocurrency investments, Ethereum is considered a successful currency that could bring profits in the long-term.
First, the team behind it has a good reputation in the crypto community, and this is always a good sign. Despite its changeability, Ethereum has kept its position as the second cryptocurrency after Bitcoin. This is convenient enough for potential investors that Ethereum will not drop off the map.
Secondly, Ethereum has a huge market capitalization and is available to be purchased at most popular crypto exchanges.
Another thing that can make Ethereum a profitable future investment is Ethereum 2.0. It should be a huge improvement, allowing it to handle a great number of transactions. It is expected that Ethereum 2.0 will move away from the mining of tokens to an energy-efficient process called staking. Ether owners will store tokens in their crypto wallet and then use them to validate new Ether tokens.
Ethereum 2.0 will be able to create a network that could process 100,000 transactions per second. It will create a sustainable network and will introduce smart contracts to a broader audience. This will definitely increase the utility of Ethereum, so we can surely say that Ethereum 2.0 is worth the wait.
Investing in cryptocurrency is a risky game, so before you dive into it, make sure you are aware of all the opportunities ahead of you.
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