Whenever you talk about crypto, there are a few cryptocurrencies you simply cannot miss out on. Ethereum and Bitcoin and 2 such crypto leaders. It is a given that cryptocurrency will be a part of the future of finance. It remains to be seen how big a part and which smart cryptos will make it to the top. For example, given the doge to INR value, you may think it will make an impact, but it all depends on the upgrades and applications. The altcoin that everyone is betting on is Ethereum. Ethereum is not like other cryptocurrencies. It is an entire ecosystem within itself that houses over 2500 projects. Despite the uproar around Ethereum, there are traits of this cryptocurrency that should be considered when you are making an investment or not. Here is a complete guide on things to know about Ethereum.
What is Ethereum?
Ethereum is an innovative technology that uses an open-source blockchain technology that supports financial transactions as well as smart contracts, decentralized apps, tokenized assets, and decentralized financial services. The cryptocurrency used on this platform called “Ether” is the second-largest cryptocurrency by market cap.
Now that we know that it is Ethereum let us take a look at the pros and cons.
Pros of Ethereum
The founder of Ethereum is known, unlike Bitcoin, and they have managed to keep the trust factor alive by providing a transparent roadmap. This is the reason, the community of Ethereum is better than most cryptocurrencies. The developer ecosystem is also expanding, and currently, there are more than 2.5 lakh developers. Such strong support is a great advantage when it comes to Ethereum investing.
One of the advantages of Ethereum has been that it has a decentralized structure. Since blockchain technology was created to curate an alternative to traditional banking, there was a need for a decentralized platform to ensure that security is better. Despite the rise in the number of users, there is no over-concentration of users with more than 1.5 lakh nodes spread around the globe.
As mentioned before, Ethereum is important for the crypto community for more than its cryptocurrency. The potential applications of Ethereum are being unearthed steadily but so far it is clear that Ethereum is a boon to all sectors. It has already proven its usefulness in gaming, medicine, tokenization of art, and so on. It supports business essentials like smart contracts, decentralized apps, and DeFi projects.
Ether is not capped
Unlike its peers, Ethereum is not capped and has an astounding number of applications. The ultimate goal of Ethereum is to process about one million transactions per second.
Security by community
In the crypto world, the larger your community, the higher the security. The only crypto more secure than Ethereum is said to be Bitcoin. The large community that is peppered around the world is always active and it is harder for users with ill intent to be successful.
The systematic plan to upgrade Ethereum is already in motion and Ethereum 2.0 will be uploaded in parts. There is no definite date on when the process will be completed but the end of 2022 will be the target.
These reasons are enough for one to consider investing in Ethereum. Apart from this, it is obvious that Ethereum is the second most popular crypto in the world and that makes it a trustworthy crypto for those who do not understand the technicalities of the crypto world. While we are at it, let us also look at the cons of Ethereum.
The features and benefits of Ethereum that keep getting added on make Ethereum attractive but leave it exposed as well. Investors are wary of the weak points that may leave a small scope for hackers and that can lead to bugs and crashes. Ethereum needs to deal with scaling and network congestion issues to attract more crypto investors.
Spike in transaction fees
The spike in transaction fees in 2021 proved too expensive for some projects. There were irregular spikes and uncertainty halted more than one project on this blockchain. Building dApps becomes more difficult when there is such uncertainty.
Ether is not capped
As funny as it sounds, it is both a pro and a con. Since the amount is unknown, if the market is suddenly flooded with Ether, the value will drop down fast.
Should you choose Ethereum to make an investment?
If you want to buy Ethereum, you won’t be the first one and you would be absolutely right. It all comes down to whether you have the risk appetite for Ethereum. Although the pros outweigh the cons, Ethereum is still a cryptocurrency that can be volatile and has competitors who are doing better in terms of scalability and transaction fees. This crowdfunded project turned out to be a turning point in crypto. You would be the best judge of whether to invest in Ethereum or not.