At the end of 2022, we can definitely say that we have witnessed some very interesting and unexpected situations on the crypto market. Although the price of cryptocurrencies went down, this doesn’t mean that they have lost their value, and are not worth investing in.
One of the most popular cryptocurrency is Ether (ETH). It is a native token on the Ethereum blockchain network, and is the second-largest crypto by market capitalization, after Bitcoin. Of course, as any other digital currency, ETH is a risky investment.
One of the main reasons for Ethereum to gain such big interest is its capacity to serve as a platform for other technologies. Ethereum plays a huge role in the NFT market, decentralized apps, decentralized finance, as well as the creation of many other cryptocurrencies.
Ethereum is described as a distributed computer, while Bitcoin is described as a distributed ledger.
Of course, as any other digital asset, Ethereum has its pros and cons. As a potential investor, you must always be aware of them. Despite the significant jump of the Ethereum price, it has also seen some big dips. For example, its price on November 22 was less than a quarter of what it was a year ago. Furthermore, Ethereum can be slower and more expensive than other cryptocurrencies.
So, here are the main benefits and drawbacks of Ethereum to help you decide for yourself, if it's a good investment or not.
Pros
It is an established name
Similar to Bitcoin, Ethereum has built an established name in the cryptocurrency world. Its whitepaper was released in 2013, and the first Ether was sold in 2014. It took only a year for Ethereum to earn a place in the top-five cryptocurrencies, measured by the value of its circulating supply. At the beginning of 2016, it became second on the list, after Bitcoin. As we have already said, it has kept this position until now.
Many different use cases
While Bitcoin works mostly as a digital currency, Ethereum offers more. As it was written in the whitepaper, Ethereum “moves far beyond just currency”, and will also be “a foundational layer for numerous financial and non-financial protocols in the years to come.”
This means that developers are able to build applications and anyone can write a smart contract. Many of those apps even have their own cryptocurrencies, which means that if Ethereum disappears, a huge part of the crypto world will disappear as well.
Ethereum staking
After the Ethereum merge, blocks of transactions are being verified using proof-of-stake protocol. This means that users can commit their Ethereum in exchange to approve a new block of transactions and earn a reward. This is a great way for earning passive income from Ethereum.
Cons
Transaction fees
The cost for using Ethereum is based on supply and demand. This means that if the network is busy, you will pay more. Furthermore, the network can process only about a dozen transactions per second, which results in periods of high prices.
Volatile funds, and irreversible transactions
Although Ethereum is a recognizable name, this doesn’t mean it comes with a guarantee for growth and stability. As any other cryptocurrency, it is highly volatile. Moreover, Ethereum transactions are irreversible, which means you must be careful when making transfers.
A risk
Keep in mind that storing Ether, as well as other cryptocurrencies, always comes with a risk. Many platforms have already crashed or have been hacked, leaving users with no access to their funds.
Conclusion
So, to answer the question “Is Ethereum a good investment?” we can say that as with any other crypto project, it is highly volatile, and can bring big profits, as well as massive losses. We cannot give you any financial advice. What we can do is to remind you always to do good research before making an investment, and never invest more than you are willing to lose.