For a long time, crypto traders had the misconception that Ethereum is Bitcoin’s poor cousin. But in fact, its blockchain powers several crypto verse trends like the NFT mania and the metaverse. If you plan to add Ethereum to your investment portfolio, it might be the best decision to have made so far because it’s the world’s second-largest cryptocurrency.
Bitcoin created momentum in the digital currency market that put cryptocurrencies like Ethereum on an upward trajectory. These days, Ethereum outperforms all cryptocurrencies by a big margin. In 2021 it gained over 400% in value and outperformed even Bitcoin that registered only a 62% raise. Ethereum attracts crypto investors deterred by Bitcoin’s price because it’s more affordable, but it’s not a cheap asset. Over the last months, cryptocurrency has made rapid technological strides, attracted greater attention from crypto investors, and gained more acceptance among developers.
But should we expect to see it continue its meteoric ascent, or will it experience a drop in popularity like other crypto assets? The following lines provide information about its functionality and features, the factors that impact its evolution, and the ways investors can purchase it.
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What is Ethereum
Before telling you if 2022 is the ideal time to invest in Ethereum, we should explain what Ethereum is. Ethereum is defined as a blockchain and open-source software platform that facilitates decentralised apps development. You can use its native currency, Ether, to complete transactions and pay for computational services on the blockchain. Similarly to the other digital currency, it’s built on blockchain technology. However, it has gained greater popularity in the industry because it allows developers to build applications, adding a smart contract functionality. Smart contracts are self-executing agreements that exist on the blockchain to verify and record transactions without a central authority or intermediary.
Ether is one of the few cryptocurrencies with real-use potential, as the Ethereum blockchain is the most popular development platform for smart contracts. The investors who want to deploy smart contracts need to use Ether to pay the associated costs. The Ethereum blockchain also enables the creation of innovative use cases like non-fungible tokens, decentralised finance, identity management, advertising, supply chain management, and identity management. Ethereum’s uses prove its impact in the sector. The NFTs are the fastest-growing innovation, and DeFi is a system that facilitates the lending and transaction of digital currencies on the decentralised blockchain network. Ether has also recently gained great popularity as an accepted payment method among organisations that allow clients to buy goods and services with digital currencies. Cryptocurrency specialists believe that DeFi will be more commonly accepted worldwide in the following years and transform the Ethereum blockchain into an integral part of financial transactions completed outside the traditional environments.
Should you invest in Ethereum?
Ethereum is still in its early days (it came out in 2016) and has great potential for growth and mass adoption. Its evolution, so far, has encouraged the development of new functionalities for Ether, which bodes well for its price. The high-tech behind Ether makes it a brilliant investment in 2022 and beyond. Experts predict that it has the potential to exceed Bitcoin’s value within the following 5 years. The latest surges in the digital coin’s acceptance, media, and price attract more and more investors, increasing its visibility and demand. Ethereum backers recently implemented the Eth2 upgrade or the Merge that has the role of improving the blockchain’s infrastructure. The investors are enthusiastic about harvesting Merge’s benefits as it makes the network more secure, sustainable, and scalable. Most organisations explore the benefits Ethereum would bring them if they’d integrate it into their operations. They’re aware of the market dominance, brand recognition and other various benefits it would offer.
Reasons why Ethereum is a good investment in 2022 and beyond
Ethereum has often been compared to a world computer
The ability to run smart contracts has provided Ethereum with its massive popularity. Ethereum’s smart contracts enable investors to secure assets like luxury cars, artwork, or real estate. Investors worldwide don’t have to deal with the bureaucracy of foreign nations’ systems to purchase artwork or real estate abroad. They can use the smart contracts built on the blockchain and pay with Ethereum. Binance offers valuable information on Ethereum’s price to help investors identify the ideal moment when to buy or sell the asset. The world is interconnected due to the Internet, but Ethereum provides new and more effective levels of interconnection for individuals and organisations.
Ethereum offers Tokenization
The surveys from the World Economic Forum concluded that 10% of the global GDP will be stored and transacted using blockchain technology between 2025 and 2027. It means that all countries will use blockchain technology for 10% of their GDPs. Investors who still wonder if they should invest in Ethereum should learn more about the concept of tokenization to understand why digital assets are the future of cryptocurrency.
Ethereum enables uncensored apps operation
People hate nothing more than censorship. Social media platforms reserve their rights to hide, modify, or delete contact if it doesn’t meet their requirements. Ethereum is decentralised, so it can keep the online world free and informed. No one can shut down the information stored on the blockchain, regardless if we talk about smart contracts, dApps, or data. Ethereum can help people make educated decisions.
Ethereum encourages innovation
Ethereum might have lost some of its price value over the years, but it won’t die as many other tokens did. Similarly to the Internet, it showed that it could survive challenges and gain more strength. The blockchain enables the development of interesting new projects like home mortgages, microgrids, crypto collectables, and charging stations for electric cars.
Ethereum is different from the other crypto coins available on the market
Ethereum is a platform for smart contracts before being a cryptocurrency. While some crypto coins store value and enable users to pay for services and products, Ethereum enables them to tokenize assets and use smart contracts to harvest other advantages.