Cryptocurrencies are barely a speculative investment class these days. Retail and institutional investors are increasingly taking digital assets very seriously. Thanks to their unique features, investors are using crypto for short-term profits and as long-term investment options.
There are currently over 17000 digital tokens in the market. So which cryptocurrency should you choose to buy? Due to various reasons, experts believe that investing in Ethereum right now could make you a millionaire retiree. Keep reading to learn more about the crypto platform taking the world of tech and finance by storm.
Ethereum: The Crypto Investment That Could Make You A Millionaire In The Long Term
The Ethereum blockchain network is growing at a rapid pace, making Ether a stellar investment
Ethereum is currently the second-largest cryptocurrency by volume. But, its many uses can create a much larger learning curve for new investors than Bitcoin. Instead of creating value as a “digital gold” like Bitcoin, Ethereum is a software platform that runs on a blockchain. Users can interact with the platform using Ether, the cryptocurrency associated with Ethereum, or buy and hold it as a store of value. Developers commonly use Ether, but people can buy ETH for its potential to be worth more over time.
Had you invested just $5,000 in Ethereum at the beginning of the year, your investment would be worth more than $23,000 by now. The network is advancing far beyond the realm of enabling quick monetary transfers like Bitcoin or even smart contracts. Instead, it is rapidly evolving into an ecosystem where decentralized digital infrastructures and marketplaces are developing on the network. So is it too late to buy Ether? No, it is not.
The much anticipated "flippening," where Ethereum's market cap surpasses that of Bitcoin, may happen within a few years at this rate of development. Investing in ETH now can help you become a part of this growing ecosystem.
Let us take a deeper look at what Ethereum is and how it is rapidly reshaping the future of technology.
Ethereum: Solid Fundamentals
Ethereum is emerging as the future-ready blockchain, making now a great time to buy ETH.
It is nearly impossible to learn about the crypto market without hearing about Ethereum. This unique platform has helped revolutionize the crypto space. Ethereum is an open-ended, decentralized, blockchain-based, public software platform that facilitates peer-to-peer contracts, known as smart contracts and decentralized applications (dApps).
Smart contracts allow users to exchange value without requiring an intermediary. Instead, they are agreements with defined terms and protocols in place to enforce them. But unlike traditional contracts, written in human languages and enforced by courts of law, smart contracts are written in code that a computer can execute, eliminating ambiguity.
The Ethereum network acts as a single decentralized computer that runs the smart contract code. This means that all computers participating in the Ethereum network will form a consensus on the outcome of each smart contract. Traditional software applications often rely on central authorities to store data and perform operations on that data, requiring trust in the central authority.
DApps can make use of smart contracts on the Ethereum network to achieve decentralization. Smart contracts can store data. The Ethereum network enforces that all operations on the data happen according to the smart contract code. In other words, the data maintains its integrity without a central trusted party.
As such, ETH consistently ranks as the second most popular cryptocurrency based on market cap. Notably, a combination of factors has led to the popularity of ETH in the crypto space. Ethereum borrows some key features from Bitcoin. However, there are various changes, too, such as the PoW consensus mechanism (more on that later). Ethereum also utilizes some of the strategies employed by BitTorrent to create a truly decentralized operating system for dApp programmers to build upon.
Within the Ethereum ecosystem, Ether’s primary role is to compensate miners for performing EVM computations. EVMs are virtual stacks embedded within each full Ethereum node. EVMs simplify the process of building decentralized applications. Consequently, these protocols are critical to Ethereum’s performance because they execute contract bytecode.
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Ethereum and Smart Contracts
With superior-tech offerings, Ethereum investments are already paying off early investors.
Smart contracts allow creators to build decentralized applications, which can serve different purposes. These applications include financial tools like cryptocurrency exchanges, decentralized lending platforms, and data services like Matcha. But there are also categories of dApps for buying and selling digital artwork, gaming, and developer technology.
Ethereum’s open-source concept allows developers to build entirely new cryptocurrencies on top of it (example: Chainlink and XRP), which are known as tokens. Some of these assets come in the form of different popular cryptocurrencies like Tether (USDT), Uniswap (UNI), or USD Coin (USDC).
Ethereum and Non-Fungible Tokens (NFTs)
The NFT boom has made Ethereum one of the best-performing cryptocurrency platforms.
Simply put, an NFT or a Non-Fungible Token is a collectible digital asset, which holds value as a form of cryptocurrency and as a form of art or culture. Much like art is seen as a value-holding investment, now so are NFTs. It is a digital token that is a type of cryptocurrency, much like Bitcoin or Ethereum. But unlike a standard coin in the Bitcoin blockchain, an NFT is unique and cannot be exchanged (hence, non-fungible).
NFTs are part of the Ethereum blockchain, so they are individual tokens with extra information stored in them. That additional information allows them to take the form of art, music, video (and so on) in the format of JPG, MP3s, videos, GIFs, and more. Because they hold value, they can be bought and sold just like other types of art. Like with physical art, the value is set mainly by the market and by demand.
The NFT craze has put Ethereum, the blockchain-based computer network that backs it, on the map again and increased its value immensely.
Ethereum and Decentralized Finance (DeFi)
Investing in Ethereum now could help you invest in the future of banking and finance.
The rise of cryptocurrencies has led to the increase in infrastructure that solely exists in cyberspace, dApps. They span all sectors, including but not limited to finance, games, online casinos, decentralized exchanges (DEX), social networks, insurance, and healthcare. But the one factor tying them all together is that there is no central development team or staff behind any of the apps.
There are more than 3,000 dApps across 16 major blockchains, and over 2,800 of them are based on the Ethereum network. They have a total of around 100,000 daily active users.
The rapid growth of these applications is increasing the value of Ethereum, making now a great time to buy ETH.
The Highly-Anticipated Ethereum 2.0
Jump on the Ethereum bandwagon and buy ETH, the top cryptocurrency of 2021.
By the end of 2022, Ethereum will transition from a proof-of-work (PoW) to a proof-of-stake (PoS) network, which could reduce its energy consumption by over 99% from current levels. Under this setup, token holders, not miners, validate transactions by pledging their ETH for lockup in a staking pool. So not only can stakers benefit from capital appreciation of their tokens, but they also receive small "interest" payments in return for staking their ETH and validating transactions. The interest can then be re-staked back into the pool, leading to compounding returns.
What's more, future protocol upgrades could allow users who do not have enough ETH to stake their tokens into a pool for a commission instead. On top of that, the Ethereum network is prime for the adoption of blockchain integration, which would enable users to stake their ETH to validate transactions on other blockchains for more rewards. Overall, due to its critical role in creating NFTs and dApps, and its innovative potential after transitioning into a PoS network, Ethereum is the top cryptocurrency investment of the year.
Cryptocurrencies are changing the way we look at money. Assets like Ethereum are emerging as stellar investment options. Experts believe that investing in Ethereum right now could make you a millionaire retiree. That said, cryptocurrencies can be volatile. Therefore, investors are advised to perform due research before buying any digital asset.