Since the recent bull run across most cryptocurrencies many people are looking to enter the digital currency market. Deciding which cryptocurrency to buy and when to buy it can be confusing and time consuming to work out. We’re here to help you in answering the more prevalent question, “should I buy Ethereum?”. Here is everything you need to make an informed decision.
What Is Ethereum?
Starting with the basics, let’s cover what Ethereum is first. This cryptocurrency currently has the second highest market capitalization in the market of over 8,000. Etheruem sits between Bitcoin (which needs no introduction) and Tether. Tether is ironically a ERC-20 token, indicating that it was built on top of the Ethereum network. Ethereum’s market cap is 6x that of Tether, and just a quarter of Bitcoin’s.
So, what is Ethereum? Ethereum is a decentralized blockchain network that allows developers to build on top of and create their own networks. These are typically referred to as dapps (decentralized apps) and rely on the Ethereum network to function. The platform also facilitates the creation of smart contracts, which are digital agreements that execute once the predetermined criteria has been met. Ideal for creating innovative financial products, Ethereum is also used in sectors like gaming and gambling.
We mentioned earlier that Tether is built on the Ethereum network. Several top cryptocurrencies are too, as the platform allows for the creation of various different tokens. Referred to as “token standards”, developers can make use of many different options, such as ERC 20, ERC 721, ERC 223, ERC 777, ERC 1155, ERC 1337. Each token has a unique use case, for example ERC 20 can store value and be used for transactions while ERC 721 is non fungible and can be used to identify one of a kind pieces.
Reasons To Invest In Ethereum
Ethereum is currently being viewed by market insiders as having a large amount of growth potential. Industry heavyweight, Raoul Pal claims that the cryptocurrency is displaying similar patterns in growth to that of Bitcoin five years ago. A reason why many view Ethereum to be the future of finance is the fact that it currently checks three significant boxes when it comes to money:
- ETH is a capital asset (when staked)
- ETH is a consumable/transformable asset (when consumed ETH or used for gas)
- ETH can be both a store of value or collateral (for example, ETH held as a SoV or ETH used in DeFi)
The next significant factor proving the significance of Ethereum is the entire DeFi industry. Standing for decentralized finance, DeFi is the latest trend in the crypto world, and one pulling in billions. Just last year the industry grew 1,200% closing the year with a market value of $13 billion. The entire DeFi ecosystem is built on Ethereum, meaning that every transaction or action done in the DeFi world is conducted on the Ethereum network.
Last year was the year of institutional cryptocurrency investments, and Ethereum was not exempt from that. The platform saw large accumulations of its native currency from big corporations like IBM, JPMorgan Chase, Microsoft, Amazon, Reddit, and Walmart. In 2020, Grayscale Investments purchased 756,540 ETH alone. That equates to almost 40% of the ETH mined that year.
The platform is currently undergoing upgrades to move from a Proof of Work to a Proof of Stake consensus. While the mass public are unsure whether this is a good move, the committed leadership behind the project are certain that this is the right long term decision for the network and all its participants.
On 1 December 2020 the project rolled out their first of four phases that lead to the upgrade. Phase 0 was launched after the platform reached their target of staked ETH. In fact, investors were so eager to support the change that they far exceeded the minimum quantity of 524,288 ETH with 808,800 staked ETH by early December. This ETH will remain staked until the upgrade goes live, proving the commitment from the investors involved. It is estimated that early adopters can earn 17 – 20% yields in phase 0, decreasing with each phase to ultimately 4 – 6% when the upgrade goes live.
Should I Buy Ethereum?
While all signs seemingly indicate that Ethereum is only going up due to its wide span use cases, there are no guarantees and this is in no way financial advice. At Oobit you can go from cash to crypto within minutes. Get started with as little as $10 and Buy Ethereum, Bitcoin, USDT, XRP and more easily with a credit card, debit card, or bank account.
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