Despite heart-breaking volatility, continued regulatory uncertainty, and questions about its usefulness, the crypto market doesn't look like it's going away any time soon. Investors will continue to look for winners among wild asset classes.
Ethereum (Ethereum 0.08%) It might be a wise choice.this blockchain Network prices are historically high. If he were smart enough to invest $1,000 in Ethereum five years ago in early 2019, his current balance would be $21,500. This equates to a whopping 2,000%+ gain for him, crushing broader gains. Nasdaq Composite index.
Let's take a closer look at Ethereum's past while considering what investors can expect in the future.
second virtual currency
Bitcoin was launched as the world's first cryptocurrency shortly after the Great Financial Crisis of 2008 and 2009. This invention allows you to send value to others anywhere in the world without intermediaries. It was truly revolutionary.
But Ethereum wanted more than this. This was his second cryptocurrency launched in 2015. The difference with Bitcoin is that with Ethereum you can create: smart contract. These are software programs that run automatically when the parties to a transaction meet their requirements. For example, consider that escrow payments are released to the seller only after the buyer receives the property. This innovative feature has brought Ethereum into the limelight.
There are currently many other cryptocurrencies that enable smart contract functionality. But Ethereum remains the leader. According to venture capital fund Electric Capital, there are 2,400 full-time developers working on advancing the Ethereum network every month, far more than any other crypto asset. This bodes well for Ethereum's ability to continue introducing new features that may drive adoption in the long term.
Nevertheless, Ethereum has already become the most popular cryptocurrency. decentralized application (dApps). There are 3,000 different dApps running on Ethereum. Ethereum’s ultimate success will depend on its ability to drive larger use cases, and compared to other cryptocurrencies, Ethereum is well-positioned to do so.
what will happen in the future
Like Bitcoin, Ethereum was initially proof of work consensus mechanism. This meant that so-called miners had to spend computational resources and energy to approve transactions and verify the blockchain.But critics believe this is a waste of electricity, so Ethereum has been long awaited proof of stake It will be modeled in late 2022 to coincide with the completion of The Merge. The system relies on Ethereum holders who have locked up their holdings to approve transactions. The aim is to significantly improve energy efficiency.
This merger was seen as a major advancement for Ethereum, not only because of its lower energy demands, but also because it would set up the cryptocurrency to scale better in the future. The problem with Ethereum is that it can still process only 13 transactions per second, which is nowhere near the 65,000 transactions of large payment networks. visa I can handle it. If Ethereum wants to become more popular around the world, it needs to scale better. And merging is his one step in that process, as it helps reduce transaction fees while speeding up processing time.
Ethereum developers have a number of other technology updates in the pipeline. Although this adds a lot of implementation risk, many unforeseen issues can arise, so it is reassuring for proponents to see blockchain constantly trying to improve itself.
Ethereum is currently 52% below its all-time high. Bullish investors who have been sitting on the sidelines may want to take a closer look at this cryptocurrency. It is best to start with small positions and add more as your knowledge and confidence grows.
Neil Patel and his clients have no positions in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Visa. The Motley Fool has a disclosure policy.
