Back to normal: Ethereum as a stable investment

The previous year – 2017 – was undoubtedly the best year for Vitalik Buterin’s Ethereum so far. The rise in the Ethereum price was 40-fold within a single year. The surge means an investor, who had put $1,000 in Ether early on, would have had around $40,000 by the end of 2017. But, let’s explore whether Ethereum still stands a good chance to be the number-one asset for investors.

In 2015, the blockchain world witnessed the entry of Ethereum’s decentralized app platform. Founded by Vitalik Buterin, a young visionary entrepreneur, Ethereum is a unique blockchain technology. The Ethereum platform aims to host apps that run on smart contracts. The decentralization helps knock out censorship, downtime, third-party interference and fraud.

What investors need to know before buying Ethereum

Before Ethereum, there was Bitcoin. So, is Ethereum the same as Bitcoin? Well, no, at least not entirely. While both use the blockchain technology, they differ in the basics. Bitcoin aims only to exploit the digital currency field. On the contrary, Ethereum allows developers to build decentralized applications for various industries, and that is in addition to Ethereum’s role as a cryptocurrency.

Let’s talk about decentralized applications (dApps)

Ethereum is envisioned by the Ethereum whitepaper as a ‘decentralized file storage’. Loosely put, Ethereum allows any developer to publish their dApp without engaging a middleman. This decentralization of applications will mean that any services or goods can be transacted on the Ethereum platform. To date, according to statistics on all the Ethereum dApps, there are 1,675 dApps operating on the platform. 

Smart Contracts Broken Down

These are quite a mouthful to chew. However, their working principle is quite simple. As a business person, you might have signed contracts. Contracts allow you to understand perfectly the business relationship between you and the other party. Smart contracts introduce cryptography to traditional business contracts. 

So how do they work on Ethereum?  Smart contracts work in the Ethereum Virtual Machine (EMV). Any operation done in EMV can be replicated in each node of the network. The contracts are preprogrammed to be self-executing once the conditions defined in them are met by both parties. 

Ethereum’s smart contracts are employed by large companies like JP Morgan and Microsoft as they are safe, fast, accurate, and allow for storage and backup. 

ERC-20 Tokens

By now you have already realized that Ethereum is more than just a currency. You are also aware that Ethereum aims to decentralize various services. Here is some more information you will need. 

Ethereum acts as a platform, where tokens, commonly called ERC-20, circulate. The tokens are traded, sold or bought. Proposed by Fabian Vogelstelle, the tokens have risen to be the popular crowdfunding standard for initial coin offerings. ERC-20 provides the blueprint with which tokens operate, so any developer can release cryptocurrency as long as it complies with the ERC-20 guidelines.

Wondering how ERC-20 tokens are related to Ethereum’s worthiness as an investment? Here is how.

ERC-20 are fuelling the Ethereum world. The tokens have various value tags assigned to them. They are the digital representation of the assets like vouchers and real estate that add value to the Ethereum platform overall and help the Ethereum community expand.

Ether analysis

Ether is the native digital currency of Ethereum. As is the nature of any cryptocurrency, the price of Ether has been quite a rollercoaster. Additionally, any investor in crypto knows volatility is the way of life in the industry. That said, Ethereum still shows bullish trends against the dollar. Recently, the ETH/USD rate has seemed to be stabilizing around $500-$600. As of June 29, the price sits at $407, demonstrating a significant slump.

Many experts point to the Ethereum bubble, though. In fact, investing in crypto is always going to present the risk of a bubble. Sounds scary, but to make money in business, one has to be willing to take the chance. In order not to fall prey to all the opinions, always do your research thoroughly. Whether it will come to burst or not is hardly up to us to determine.

However, when Ethereum hit the all-time high in 2017, the increase could have been accounted for. The rise was not from mere hype and buzz. It was triggered by advancements in the actual technology underlying Ethereum. With the further development of several revolutionary dApps or a ground-breaking ICO, the rise in Ether’s value seems inevitable. 

Challenges facing Ethereum

Ethereum now comes as the second largest cryptocurrency by market cap only after Bitcoin. However, currently there are hundreds of crypto innovations out there in the public. Some of these innovations within the cryptocurrency world borrow much from Ethereum’s functionality, while others introduce new solutions on top. Thus, the competition is a key issue for Ethereum. The main challengers aiming to replace Ethereum in the market are Stellar, EOS, and NEO. Certainly, as the cryptocurrency ecosystem advances, there will be more sources of concern.

Nonetheless, Ethereum is constantly improving its platform taking the feedback from the customers into account. They also have earned worldwide reputation and grabbed a considerable market share.

Conclusion

Ethereum is here to stay, that’s for sure. In as much as Ethereum presents the risk of a bubble, it presents an opportunity for great investment. Still, additional recommendations for any investor are always doing the research. Understand the market, learn about Ethereum and do analysis of the prices before you commit yourself to investing. Top it all, find out if the potential price movements are within your capacity to risk and go for the gains!

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