Investing in Ethereum (ETH)
The idea of Ethereum was suggested by Vitalik Buterin in 2013, but the platform itself appeared two years later. It is represented as a software solution based on blockchain technology. Its network is where decentralized finance applications and non-fungible tokens are developed. Because of the reliance of the crypto world on Ethereum, its native coin, ETH, has become the second-biggest cryptocurrency.
Ethereum is appreciated by investors. Except for buying the ETH cryptocurrency, investors put their funds in stocks of projects powered by Ethereum. This is a good option to diversify a portfolio that includes only Ethereum assets.
Despite the diversity of investment opportunities, today, we are going to review only the prospects of putting in the ETH coin. How is ETH price changing , and what impacts it? Let’s find this out.
How does Ethereum work?
The Ethereum technology has much more useful functions than just operating the ETH cryptocurrency. This is the network that provides every modern developer with the possibility to design original apps based on blockchain technology. Such a concept allows making a huge contribution to the development of different sectors, without which we cannot live normal lives.
The Ethereum network is efficient for writing programs and designing applications because of the smart contracts applied. Smart contracts are special self-executing and self-enforcing protocols, deployed to Ethereum-powered blockchains. When everything corresponds to the conditions of these contracts, the network executes them. Thanks to the nature of blockchain technology, developers are confident in its reliability, because nothing can be changed after it’s executed there.
If we compare Ethereum to Bitcoin, it becomes obvious that the Ethereum platform offers a wider range of useful services. Does it play any role for investors? Yes, it does, because transaction fees for decentralized applications on the Ethereum blockchain are paid in Ether. The more often it’s used, the more attractive for investors it will be.
Key Events Impacting Ethereum Price
- In 2015, when Ethereum was launched, the ETH price had not been changing for the entire year. At that time, the coin was trading at $1. However, Ether interested many big investors because of the white paper released by the project developers. At that time, the potential of smart contracts in apps development seemed quite prospective for them, which contributed to the increasing popularity of the coin throughout the following year.
- The first time when the ETH price exceeded $1 was the first week of January 2016, when the coin increased up to $2. Throughout the year, the pace of the growth didn’t stop, and in six months Ether reached $12. By the end of 2016, the Ethereum price amounted somewhere to $8 per coin.
- 2017 was much more volatile for the price rates of Ethereum than 2016. By June 2017, the Ethereum price increased to $362. In December of the same year, the owners of the coin could sell it at $826. It was a new record for the coin, set in 2017.
- Although a new record of $1,396 was achieved in 2018, that year wasn’t the best for the Ethereum investors. By the end of 2018, the Ethereum price fell as low as $141.
- The new breakout happened because of the increasing popularity of the NFT market. In 2021, the NFT industry became mainstream in the crypto world, which heavily contributed to the increasing popularity of Ethereum. This network is one of the most effective protocols for trading NFT, that’s why the increasing demand for non-fungible tokens helped Ethereum to increase its traffic. Thanks to it, the Ether price reached its new record of $4,800. This happened in November 2021.
Trade Ethereum with DotBig
Before you find out all the advantages and disadvantages of cryptocurrency trading, you should find the platform to do this. DotBig.com is a great variant for both beginning and experienced investors who want to deal with the Ethereum assets.
The DotBig forex broker offers exposure to over 600 crypto assets, including cryptocurrencies and cryptocurrency pairs. Cryptocurrencies are backed with Ether. With DotBig.com, cryptocurrency trading is easy because of the number of advanced tools and updated charting systems.
The DotBig forex broker is great for making deep market research to react to all the changes promptly. With such solutions, clients of the DotBig forex broker can make trading almost 100% automated and earn passive income in different markets.
Pros & Cons of Investing in Ethereum
Pros
- The increasing community of developers. More and more developers choose the Ethereum network to create decentralized applications. This increases the supply of Ether and makes this coin more beneficial for investors.
- Ethereum offers a decentralized and transparent structure.
- Ethereum offers more than just a single crypto coin. You can invest in Ethereum by putting money into projects powered by the network.
- Unlike Bitcoin and many other popular cryptocurrencies, Ether is not capped.
- Ethereum offers great security, which is better than offered by an average crypto network
- It is believed, that by the end of 2022, the developers will release Ethereum 2.0, which will be based on the proof-of-stake model. The successful launch will increase the demand for Ether.
Cons
- The multifunctionality of the Ethereum network often leads to bugs.
- Ethereum charges a high transaction fee, which is not appealing to many developers.
Conclusion
Many experts predict that blockchain technology will become a very important tool in the financial sector in the nearest future. If that’s true, Ethereum has great prospects because today it’s a core network for developing blockchain-based projects. Therefore, adding Ether to your diversified portfolio of assets might be a very good move in terms of future returns.
