Since you’re on this page, it’s presumed that Ethereum is among the top coins you’re most thinking about throwing your money into. Afterall, Ethereum is the second most largest cryptocurrency in market cap and has proved to be a remarkable investment overtime.
If you bought $1K worth of Ether in March ‘17 and sold it in December ‘17 when it was at its peak ($1350/ETH), you’d have made $45K on your relatively tiny investment of $1K.
For those who’ve witnessed this, Ether’s been a nice investment thus far. It’s regarded highly by a number of crypto investors and has substantial support from the industry since it is utilized by developers to begin fresh blockchain-based projects.
In this two-part guide, you’ll discover two ways on how to invest in Ether, as well as the benefits and drawbacks of each. Part 1 deals with long-term investing and part 2 deals with short-term investing. By the end of this guide, you’ll also be able to resolve the question “Is Ethereum worth investing in?”
How to Commit to Ethereum: Should I Do It Long Term?
(Holding Time of 1 Year or More)
While committing to Ethereum has gotten its very first investors mucho dinero, plenty of investors have also burnt substantial amounts while investing in the coin. The value of all crypto fluctuates daily since the market is very odd and unpredictable. Hence, if you truly believe in Ethereum and its technology, you should “hodl” (a crypto term that’s just a misspelling of “hold”) onto your investment for the long-term – HODL wasn’t made to stand for Hold On for Dear Life for nothing!
Here are 3 key reasons that make Ethereum a sound investment for the long-term:
1. The Crypto Industry’s Adoption of Ether
Ethereum belongs to the select digital currencies that is utilized by Initial Coin Offerings (ICOs), which indicates it serves as a launching platform for many fresh tokens and consequently makes Ethereum an important platform to the crypto community. In the long-run, the value of Ether should constantly grow as more individuals join the cryptomarket and utilize the coin to invest in other projects.
Presently, ETH is deemed as one of the three cryptocurrencies that are most-utilized for purchase and payment. As that sector continuously grows, ETH is very likely to remain as one of the premier coins used for transaction purposes.
2. Blockchain Improvements
An additional factor that make Ethereum a good hodl investment is the possibility for platform enhancements in the near future. Those upcoming enhancements will be crucial for the future success of Ethereum.
Despite entry of many blockchain-based projects, the fact remains that majority of market participants are built directly on Ethereum’s platform which gives it a substantial pull over newer, comparable blockchains.
3. Proof-of-Stake (POS) Tech
Ethereum and Bitcoin are presently utilizing a Proof of Work (POW) system to confirm transactions. Ethereum schemes to pull off an upgrade this year to shift over to a Proof of Stake (POS) system. The technological distinction between both systems is complex, but are essentially two distinct ways of validating blockchain transactions.
The POW procedure demands an enormous amount of computing power and electricity, while the POS procedure is cost and energy efficient.
When Ethereum successfully transitions into POS system, it can become a lot more decentralized and more precious than Bitcoin. Simply put: Ethereum’s network can become safer than Bitcoin. Presently, only the ones who could buy the most powerful mining equipment can afford to become a Bitcoin and Ethereum miner.
The Disadvantages of Committing to Ether Long-Term
Investing in Ethereum bolsters support for cryptocurrency and blockchain technologies as a whole (since most cryptos are built on its platform) and will move the market towards global adoption and becoming the top investment of the 21st century. However, there are also downsides to investing in Ethereum:
- While you can make a nice sum of money by committing to Ether, there are many investment alternatives (crypto and non-crypto) that can lead you towards profitability. Some of these investments may even offer greater returns.
- Investing for the long term doesn’t enable you to make short-term gains off of the crypto market’s volatility.
- Despite Ethereum’s current ranking as the second largest cryptocurrency, another coin can come along and become more popular and preferred. There are no guarantees in this volatile and unpredictable market.
- Government regulations can be applied and result in the value of Ethereum dropping. Therefore, you must be vigilant always when it comes to new regulations! In a word, you must make room for the possibility of having to pull out your investment earlier than you intend to if ever regulations turn sour.
This concludes “Part One” of our two-part series on Ethereum investing. In “Part Two”, we’ll look into the benefits and drawbacks of committing to Ether in the short term. Till then, read up more about cryptos and stay up-to-date with the news and media. Knowledge, as everyone knows, is the best investment of all.