Is Ethereum a Good Investment? Here is What You Should Know
As the cryptocurrency frenzy continues to rise, investors worldwide struggle to pick the best digital currencies for their portfolios. While Bitcoin continues to rule the charts, another digital coin has grabbed the second spot in a relatively short time frame, attracting many investors’ attention. This second-ranked cryptocurrency is Ethereum. Ever since Ethereum was launched in 2015, its early investors have gained profits over 270 fold. Such gains are rare to witness, especially from an asset class that is highly volatile in nature.
So should you invest in Ethereum too? When it comes to investment, every person should assess the risks attached and estimate the ROI before taking any decision. One’s risk appetite and investment goals also play a crucial role in deciding if a person should invest in something or not. The best way to determine if Ethereum is a good investment for you or not is by getting to know this digital currency better, so you can make an informed decision.
What is Ethereum?
While you may know Ethereum as a digital token, it is much more than that. It is a large, decentralized system built on blockchain technology that allows developers to create multiple dApps that can be used for real-life applications across sectors, like finance, healthcare, gaming, etc. What separates Ethereum from the world’s leading cryptocurrency is its inclusion of smart contracts. As Ethereum has infinite use cases compared to other cryptocurrencies, its store of value is significantly higher.
Things to Know About Ethereum
Now that you have a fairly decent understanding of what Ethereum exactly is, it’s time to know this digital token a little better. The following points on Ethereum will help you determine if this digital currency is worth your investment or not.
- Ethereum Offers High Liquidity
Thanks to the growing popularity and demand of Ethereum; all top cryptocurrency exchanges now support Ether (ETH), Ethereum’s native currency, on their platforms. It means investors can buy and sell Ethereum on any exchange they like without any hassle. Many cryptocurrency exchanges support only the popular, top-performing cryptocurrencies, and luckily, Ethereum is one of them.
So if you have Ethereum in your portfolio, you can also convert it to your preferred FIAT currency almost instantly by paying a transaction fee to the platform. Such high liquidity was earlier limited to gold alone, but with Ethereum offering similar benefits, investors may consider including it in their portfolio.
- Ethereum Hosts Various NFTs
Non-Fungible Token (NFT) is the new buzzword in the crypto space that has got everyone talking about Ethereum again. For those who don’t know, various NFTs are now hosted on the Ethereum network.
As artists now have the opportunity to get due credit for their artwork and sell it directly to an interested buyer, this concept has received a massive thumbs up from the artists’ community. And as more people come in favour of one cryptocurrency, its prices and value are bound to increase in the long run.
- Ethereum is expected to Rise Exponentially
This point can be debated by some people as cryptocurrencies are highly volatile in nature, and no one can accurately predict if their prices will skyrocket or tank. But if there is one fact that applies to all, regardless of the asset class they belong to, is that digital assets that have a tangible and real-world utility tend to perform better than those who don’t. And Ethereum is clearly a winner in this case.
While most digital coins don’t have any real-world relevance or utility, it is not the case with Ethereum. And seeing the roadmap for Ethereum as drafted by its creators, one can be hopeful that this currency is here to stay for the longest period. People, who invested in Ethereum early, reported massive profits. Even if you aren’t up for the long run, you can consider profiting from short-term investments. Whenever the market shows positive trends, you can convert your Ethereum to INR by selling your holdings and transferring the proceeds into your bank account.
- Ethereum Powers Various Real-World Applications
The crypto market has various open-source, decentralized, blockchain-supported digital currencies, but none offers a real and tangible utility like Ethereum does. Today, many developers are relying on Ethereum to develop dApps and several other crypto-focused projects. While Ethereum too possesses currency-like features, its use cases are not limited.
It has paved the way for decentralized finance and many other real-world applications that can run without any third party working as a middleman. Ethereum’s potential has attracted the attention of investors worldwide, and for all the right reasons.
- Lower Inflation Risk & Volatility
The best part of cryptocurrencies is that no world government can meddle much into these decentralized digital currencies. Thereby, the chances of high inflation rates remain pretty low compared to the government-controlled currencies. As blockchain, the underlying technology behind Ethereum is infinite; the risk of your Ethereum holdings getting depleted drastically remains very less. And as wise investors have now started to realize the cycle of market patterns, they capitalize on the parabolic gains created by market bubbles. Thereby, tending to profit from Ethereum’s volatility instead of losing money.
Now that you’re aware of the A-Z of Ethereum, you shouldn’t find it challenging to decide if Ethereum is a lucrative, good investment for you or not. And if you finally decide to purchase it, do it from a reputed crypto exchange platform. Ethereum is a reasonably safe investment option for beginners willing to join the cryptocurrency bandwagon, but it should still be purchased at one’s risk appetite to prevent any unpleasant shockers.