The popularity of cryptocurrencies has skyrocketed lately, and this trend shows no signs of slowing down. With all the talk about these digital assets, you might be wondering if it’s time to invest now. But before pulling the trigger, it is always helpful to get an idea of the underlying asset. Cryptocurrency is no exception, and it is not at all the same as investing in stocks or bonds.
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Therefore, we will take a look at the popular blockchain technology called Ethereum. Like many blockchains, Ethereum has its own coin called ether. Let’s take a closer look at what Ethereum is and whether you should consider investing.
What is Ethereum?
Ethereum – decentralized blockchain technology… The native coin of Ethereum is called ether. This coin is one of the largest cryptocurrencies by market capitalization, second only to Bitcoin (BTC). Although Ether has a smaller market cap than Bitcoin, Ethereum is the most widely used blockchain.
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The important thing to understand about Ethereum is that it is not the same as Bitcoin. While Bitcoin’s goal is primarily to be a digital currency, Ethereum is much broader. In fact, Ethereum is an open source operating system and computing platform. It also supports distributed applications (dApps) and smart contracts.
Another key aspect of Ethereum is that it provides decentralized funding, which is an important part of how the system works. Since the system is inherently decentralized, no organization controls it or the cost of ether.
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What is Ethereum worth?
Like many cryptocurrencies, the price of Ether has fluctuated a lot since its launch in 2015. Then its price was about $ 1 and remained at this level for several months. In January 2018, the price reached $ 1,358, which was the highest price to date. The price began to fall, as did the price of many cryptocurrencies; ether dropped to $ 83 in December 2018.
Since then, the price has increased and increased, but has generally risen. In early April 2020, the price was around $ 140; now it’s almost $ 2,100. In other words, in just a year, the price has increased by 1400%.
Read: Cryptocurrency Basics
Should you invest in Ethereum?
If you decide to invest in Ether (and therefore Ethereum), you must first ask yourself why you are investing. While the coin’s price has risen significantly over the past year, it can be extremely volatile. So, if you buy Ether just hoping the price will go up, you might get discouraged.
On the other hand, the Etherum blockchain can be used for many different applications, said Tully Greenberg, Allnodes’ head of business development. “Ether is the cryptocurrency required for any transaction made on Ethereum, a blockchain-based application network. On the other hand, blockchain is a technology with limitless potential. It is not only based on Ethereum, and it can be used to change our future with or without cryptocurrencies. “
See: 10 Best Cryptocurrencies to Invest in 2021
Sam Bretzmann, owner Blocklink, I agree with this opinion. “The difference here is that instead of investing in individual projects that may or may not be implemented, you can invest in infrastructure. You can think of it this way, go back to 1999, and instead of trying to choose which new and new businesses will survive, you can just choose the Internet and invest in it. “
This article is part of the GOBankingRates series “Explaining Economics” to help readers navigate the complexities of our financial system.
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Last updated: April 7, 2021
This article first appeared on GOBankingRates.com: Ethereum (ETH): What Is It, What Is It Worth, And Is It Worth Investing?