When it comes to cryptocurrency, Bitcoin is the big boy in the town, but Ethereum had an incredible year. From the beginning of this year, Ethereum’s price has increased by 435%. Over past 12 months, it’s increased by more than 1,700%. The price of Bitcoin, by comparison, has increased about 100% so far this year, and 518% over the past 12 months.
Run-ups like these can be hard to refuse to see , and some experts believe Ethereum has a promising and shining future. But let’s see is it a good time to buy and hold them as well or that would be a bad decision to make?
Now, first of all let’s see what is even Ethereum: it’s significantly important for you to be able to identify the difference between Ethereum and Ether. Ether is a type of cryptocurrency, resembling to Bitcoin, but Ethereum is the blockchain technology behind Ether.
Ether and Bitcoin share many resemblance. They’re both digital currencies that can be used to make transactions. Like Bitcoin, you can invest directly in Ether by simply buying these coins. Ether is significantly more affordable than Bitcoin. Ether costs around $4,100 per coin, of course it is when this article was written , while Bitcoin costs around $57,400 per coin.
It’s also possible to invest in the Ethereum tech. Here’ s are some of your options that you can choose:
You can invest in Ether directly: When you purchase Ether coins, automatically you’re also supporting the Ethereum tech behind the cryptocurrency too. You can also in a managed fund: Funds like Grayscale Ethereum Trust let you to obtain exposure to Ether and Ethereum without even having to buy coins directly. Investing in specific stocks: Buying stocks that have some connection to Ethereum techs can be another option if you are interested . For example companies like NVIDIA and AMD, make computer chips that are often used during the coin mining process. Ethereum is a vastly used technology that has a diversity of applications. But before you invest, it’s important to understand the advantages and disadvantages of all of these options.
The flexibility of Ethereum blockchain is one of the biggest advantages of this kind of investing. While it’s frequently known for hosting Ether, it’s also used for nun-fungible tokens (NFTs), decentralized finance, and enterprise blockchain solutions.
In another saying , it has applications outside the cryptocurrency world. Even if cryptocurrency itself doesn’t succeed over the long run, Ethereum could still be used in other ways.
Moreover, one major criticism of cryptocurrency, specifically Bitcoin, is how energy-intensive it is. In fact, researchers from the University of Cambridge evaluate that the Bitcoin mining process uses more electricity than the entire country of Sweden.
But with Ethereum, aims to be more environmentally friendly. Developers of the technology are currently working to change how coins are mined to make the process more energy-efficient. This could give Ethereum an advantage over Bitcoin, especially among environmentally conscious investors.
Also, as the Ethereum network stands some changes, some of the Ether coins could be ruined in the process. This could actually be a good thing for investors, however, because a smaller supply of Ether could make it more valuable and rise up its price.
The Disadvantages and The Risks;
Regardless of its flexibility and wide range of applications, there are some risks involved in investing in Ethereum and Ether.
One of them is: you’re almost guaranteed to experience considerable volatility , mostly if you invest directly in Ether. Cryptocurrency is a risky investment as we know, in general because it’s highly suppositional at this point. Some specialists believe that we are in a crypto bubble and that digital currencies like Bitcoin and Ether are overvalued. If the case is true, prices could drop when the bubble bursts.
Also, new rules and regulations could create a threat to Ethereum’s future. Investing in cryptocurrency can come with huge and heavy taxes, which could put limitation the number of people willing to invest in these crypto coins . Pluse, law and rule makers are still understanding and finding out how to adjust the crypto market. This could result in more volatility and much bigger risks.
Before investing in Ethereum, you need to think about your endurance to take and have risks. Would you be able to sleep at night if your investment fell by 15%? What about 40%? Ethereum is a unstable investment, so at first you need to be sure whether you’re comfortable with taking risk or not, this should be considered before you buy them.
At last , if you choose to invest in Ethereum, make sure you have a well-diversified portfolio, and only invest money you can afford to lose not all of your investments . By keeping most of your money in safer investments, you can lower your risk in the such time that Ethereum drops, or you get in a bad situation.
Ethereum could be a smart investment, but it’s not right for everyone, just like many other things in the world. Be sure to weigh the pros and cons as well as consider your own tolerance for risk. Whether you choose to invest or not, be sure you’re making this decision carefully and with knowledge and surly be prepared for everything a long the way.