Although Bitcoin is the world's largest and most popular cryptocurrency today, if you want to invest in crypto, it’s worth keeping in mind that thousands of other cryptocurrencies are available for you to consider.
Ethereum is the second-largest cryptocurrency by market cap. Its main goal is to enable individuals to use digital money without the need for banks. Along with this, it is programmable, providing a rich marketplace for financial services, apps, and even games.
Although Ethereum might not make the headlines quite as often as Bitcoin does, that’s not to say that it’s not as worthy of investing in. Keep reading to find out more about some of the top reasons to consider investing in Ethereum and adding it to your cryptocurrency portfolio.
Whether you are new to the crypto industry and just getting started with investing, or have invested in crypto before and want to diversify your portfolio of digital currencies, some of these reasons may be surprising.
Widely Known and Accepted
Similar to Bitcoin, Ethereum is also a cryptocurrency that is widely known and accepted throughout the world. Anybody who knows anything about Bitcoin will usually also know that Ethereum is its biggest rival. The popularity of this cryptocurrency means it is easy for you to trade it across any cryptocurrency channel. No matter which crypto exchange you sign up for, ETH is typically available to trade almost anywhere.
Earn Interest with Staking
Since Ethereum was upgraded to Ethereum 2.0, this has moved the platform to a proof-of-stake network. As a result, users are now required to stake their Ethereum to the network, to help to validate transactions.
By doing this, you will earn ETH as a reward, in a similar way to how you earn interest. Stake more to earn more. Current participants earn around a ten percent yield each year on their staked Ethereum. Bear in mind that this can vary over time, depending on the number of stakers that are currently on the network.
Practical Value
Each day, there are new cryptocurrencies introduced into the market. However, only those that survive the test of time will hold any practical value, and Ethereum is certainly one of them. In fact, experts say that Ethereum is the only cryptocurrency that has more practical value than the others, even Bitcoin. This is because Ethereum is the base for the application of Non-Fungible Tokens (NFTs). Over the last few years, data shows that NFTs have grown significantly.
Possibility for High Growth
As you can see by looking at the Ethereum current price charts, this cryptocurrency is on the up and up. Today, transaction volumes for Ethereum are at record numbers, which just goes to show how useful the network has become over time. Known as the ‘world computer’, Ethereum’s core philosophy is all about providing disruptive peer-to-peer apps. It has the endless scope and the potential to power as many applications as you could possibly think of.
Robust Use Case
Ethereum provides a technology that allows for the building of new applications on top of it such as decentralized gaming, digital art, crowdfunding, and more. Decentralized Finance or Defi has become one of the biggest use cases of Ethereum.
Defi allows for seamless peer-to-peer lending and borrowing without the need for a third party, ultimately removing the need for time-consuming, costly traditional banking services. The loans are available through Ethereum’s robust smart contracts and do not require any lengthy borrowing contracts or background checks to be set up. You can lend or borrow instantly and the interest rates are generally better for both parties involved.
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Diversify Your Portfolio
Portfolio diversification is the concept of spreading out your investments to limit your exposure to a single type of asset. By diversifying your portfolio, you can reduce the volatility, and balance your portfolio’s risk and reward over time. Cryptocurrencies such as Ethereum are often seen as a diversification asset, as they provide a hedge against inflation.
With the government’s mounting debt and increasing money supply, it is no surprise that an increasing number of investors are interested in using cryptocurrency to diversify and balance the risk of their portfolios. Investors can diversify further by investing in Ethereum and other cryptocurrencies such as Bitcoin or Litecoin.
The Place for Defi
Decentralized finance or Defi refers to the act of removing traditional banks between two parties. Instead, it enables direct, peer-to-peer financial transactions to be easily facilitated. Thanks to Defi, consumers can seamlessly and easily lend and borrow money peer-to-peer with no need for a third-party middleman.
If you are interested in Defi and moving towards a world where this is the norm, rather than relying on third-party financial institutions, then Ethereum could be the perfect investment type for you.
Competitive Advantage
One of the main perks of investing in Ethereum is that it gives you more leverage over all the other cryptocurrencies out there. ETH has the UNISWAP advantage, with a vertically integrated ecosystem that provides a significant boost to its performance and sustainability over the long term. Each transaction that is performed on the Ethereum blockchain needs to pass through Ethereum, which generates an unprecedented demand in the market.
Technical Advantage
Technical robustness is another reason why ETH is an excellent cryptocurrency to invest in. One of the main reasons why ETH has become so successful is that it is built on a user-friendly programming language.
Anybody who understands C++ or Python will be able to learn and use the programming language easily. And, Ethereum’s Virtual Machine (EVM) is the main cornerstone that has improved its adoption rate. This complex, programmable platform allows you to build pretty much anything and has powered the development of thousands of smart contracts around the world so far.
If you are considering investing in cryptocurrency for the first time, or want to diversify your crypto portfolio, then Ethereum is one worth considering. Ethereum is one of the oldest platforms ever built in the blockchain space, and its token, Ether, is one of Bitcoin’s biggest rivals.
