6 Reasons to Invest in Ethereum (And 3 Not To)

Everyone remembers the crypto craze during the winter of 2017. Investors definitely remember the massive “bubble pop” that followed the next month and the subsequent year. Almost every coin saw a massive rise in popularity, largely due to the success of Bitcoin. However, as the market corrected and those who didn’t really understand blockchain and cryptocurrencies started selling off like crazy, many coins lost value completely. Now more than two years later we see that a lot of the important coins are still around and their usage is just as important as ever. One of these popular and highly influential blockchains and networks is Ethereum. 

So what are the 6 Reasons to Invest in Ethereum (And 3 Not To) There are many reasons to invest in Ethereum and some not to take the plunge. These reasons include:

Reasons to Invest:

  1. Smart contracts are the future
  2. Still a solid investment
  3. Tokenization of assets is inevitable
  4. Improves documented aspects of society
  5. It allows for free speech and lack of censorship
  6. Diversification of assets

Reasons not to Invest:

  1. First but not last
  2. Still a volatile investment
  3. No way to regain lost assets, information, or property

Read below to find out details on what Ethereum is, why you should invest in this potentially massive digital token, and a few reasons on why you might be a little weary. We will also go over how to keep your ether secure. Be sure to check out our current opinion on litecoin as well for an alternative crypto investment.

Is It Worth It to Invest in Ethereum?

After the crazy few months that crypto experienced back in December 2017 and the ultimate crash that followed the next year, many skeptics and doubters emerged claiming that blockchain technology and digital tokens are a scam. However, two years later, we can say with great certainty that this is not the case.

The practical and theoretical applications of blockchain and various crypto networks and blockchains are still very much in play. Of course, like with any major technological advancement there was an onslaught of:

  • Scams
  • Pyramid schemes
  • Failed attempts

However, as the smoke cleared what remained were, for the most part, legitimate blockchains.

Among the oldest and most prominent digital blockchain networks is Ethereum. Apart from being a useful development platform, Ethereum also uses an underlying cryptocurrency, ether, to power its network. This brings an investment component into the equation.

To an extent Ethereum is a great investment. It has a number of practical uses, theoretical applications in the future, and it stands as a solid digital asset for investors due to both its popularity and potential mass appeal.

Here are the six reasons you should invest in Ethereum:

  1. Ethereum allows for the use of smart contracts in countless industries
  2. The blockchain remains a strong investment despite the coin market crash
  3. Physical assets can be tokenized through Ethereum
  4. Many of the documents we deal with can be stored and transferred via Ethereum
  5. Ethereum promotes free speech and stops censorship of information
  6. Having a diversified token portfolio is a sound financial plan

There are of course a number of other reasons you may want to invest in Ethereum from both a technology and financial standpoint but for the most part these will give you a firm grasp on what to look out for at the very least.

6 Reasons Why You Should Invest in Ethereum

Let’s go into more depth on whether it’s worth investing in Ethereum as well as what you can do to keep your Ether secure. First, the six reasons to invest in Ethereum.

1. Ethereum Is the Future of Contracts and Inter-party Agreements

Blockchain and digital frameworks are an incredible innovation that have potentially endless uses in society which include:

  • Financial sector
  • Healthcare
  • Creative output

Bitcoin was the first cryptocurrency to emerge with the goal to revolutionize the currency of the world with fast and virtually free instant international money transfers.

In 2013 a young Russian named Vitalik Buterin proposed Ethereum. It was inspired by Bitcoin and the potential of the crypto framework. The new blockchain offered 2000 ether for each bitcoin contributed during its initial crowd sale. Two years later the blockchain launched. However, unlike its predecessor Ethereum was not aiming to shift the currency industry. This blockchain focused on contracts.

The network was built to run applications and introduced the notion of smart contracts. In the past, contracts between two parties were over-sought by a third bureaucratic entity that would take a number of days, weeks, or even months to make sure all aspects of a contract were met before initiating closure.

Smart contracts eliminate the need for a third party. Contracts and agreements between parties were automatically executed when terms were met and canceled when they were not. These are essentially intelligent computer protocols that verify and facilitate information and enforce the necessary action once variables are met or not met.

Because smart contracts live on blockchain there is no need for a credible third party to perform a transaction. Moreover, smart contracts are trackable and cannot be reversed.

Consider things like buying:

  • Homes
  • Businesses
  • Artworks
  • Any assets
  • Luxury cars

Whatever it may be, all of these industries can rely on Ethereum. There is no need to go through international law or the headache of bureaucracy to secure assets. There are various other applications including in the health care industry which we will go over later and the energy sector. For instance, if one country produces an excess amount of solar energy, it can immediately sell its excess to a neighboring nation if its system is running on Ethereum.

This is why Ether remains the second most popular network and almost surpassed Bitcoin in 2017, making it an excellent long-term investment.

2. Ethereum Is Still a Strong Investment

Purely from a financial standpoint, Ether is still a valid buy. The crypto “bubble” has already popped and just like the dot-com crash, where over 1.7 trillion dollars of wealth was hyped out in a matter of days, everyone took a hit. Still there were many strong companies that continued to survive and grow. They include:

  • Amazon
  • Google
  • Apple 

The fact that Ethereum remains a strong number two, is a testament to its validity.

3. Assets Can Be Tokenized Through Ethereum

This point stems in part from the first reason why ether is a great investment but it’s important to regard tokenization as a separate factor altogether.

While it is just an assumption, many experts believe that the transition into blockchain is inevitable. This is something we are starting to see with a number of countries around the world including Venezuela. If you consider that your nation may use up to 10% of its GDP off of blockchain technology then this makes a case of crypto being a solid investment, especially a big name like Ether.

Experts say that measurable and physical assets can be tokenized. Tokenization would essentially mean that you can own pieces of assets around the world through Ethereum. So

  • Artworks
  • Mortgages
  • And car leases

could be tokenized, meaning that you would own digital art, parts of famous artworks, and pieces of single-family housing anywhere in the world!

This would really make investing easy for anyone with a little cash on hand willing to invest in Ethereum. Similarly, tokenization is possible for other assets like documents and paperwork which we will go over below.

4. Tokenization of Documents and Systems

Apart from assets being tokenized you could also potentially store data and information via blockchain technology.  Ethereum is specifically built to handle this.

Think about it

  • Birth certificates
  • Medical history
  • Health care information and insurance
  • Licenses
  • Passports
  • And other important documents 

could all be tokenized. You would be able to prove your identity through the Ethereum blockchain and not a piece of paper. Doctors could easily view your health care information without you having to fill out a number of forms every time you visit the clinic or hospital.

There could also be tokenization of entire systems namely the voting system. There would be no more confusion with votes, counting would be instant, and more people could easily participate in the system. You would just have a vote within the blockchain.

In 2018, the state of West Virginia tested the first blockchain voting system, although it was conducted on a private blockchain. It was deemed a success, but critics point to the lack of confirmable data and verifiable tracking. Future voting systems will need to be publicly verifiable and transparent, characteristics an ethereum token system could provide.

Ethereum is the future of tokenization.

5. Ethereum Stops Censorship of Information

Ethereum will potentially secure free speech around the world. Everyone is aware of Wikileaks and how the website has revealed a number of controversies and political secrets around the world. With that, a number of powerful and wealthy individuals and governments have attempted to shut down the website and censor its content.

Similarly, content on social media can be deleted or censored by community members or the hosting website itself.

Information stored on the Ethereum blockchain cannot be shut down by any nation or person because it is completely decentralized. This is in part why many governments around the world are fearful of the technology. The decentralized network means no accountability, but it also means that 

  • Data
  • Information
  • Smart contracts 

cannot be censored, demonetized, or removed. This is a place where free speech can exist as part of a decentralized community.

6. Keep Your Portfolio Diversified

When buying Ethereum you are essentially buying an asset that can increase in value. But you are also buying into the value that the asset brings to the table. Just like buying into 

  • Stocks
  • Bonds
  • Real estate properties

Blockchain is unique in that each network has its unique value-proposition. When you buy into bitcoin you are buying into an asset that can increase in value, but you are also buying into the idea that this will be the future of currency around the world.

Similarly, with Ethereum, the asset itself is valuable but you are buying into the potential of 

  • Smart contracts
  • Information storage
  • Asset/system tokenization

So, having a diversified portfolio is super important. There are various blockchain frameworks out there with a solid proposition like the Bitcoin. However, relying solely on one, even Ether, is foolish.

Most investors don’t recommend you store all your eggs in one basket, so not only are investors diversifying from traditional assets into crypto, but many recommend diversifying within blockchain as well. So, if you own other digital tokens, then you may want to consider Ether as well which stands as a strong and potentially massive blockchain.

3 Reasons Not to Invest in Ethereum

That pretty much covers it for why you should buy Ether. There are several theories and other cases for the digital token but those are the main points you should focus on. Still every coin, even a crypto coin has two sides. So, here are the three reasons why you might be leary of Ethereum.

  1. Ethereum introduced the use of blockchain for smart contracts but they aren’t alone anymore
  2. Despite the bubble having crashed digital tokens are still a volatile and risky investment
  3. Hackers are still a big threat and if you lose your Ethereum private keys you can’t regain your assets or documents

1. Ethereum Is Not Alone

Like any investment, Ethereum has its risks. One of the challenges it must overcome is the fierce competition.

Ethereum was revolutionary and the founder, Vitalik Buterin, was a true pioneer but the digital token is now facing some massive competition. This is the old first but not last story and with more and more research and brain power being put into blockchain technologies, a better Ethereum is all but inevitable.

There are a few competitors that challenge almost all tokens, like Cosmos, but we won’t go into those as the technology is a bit complicated and we are looking specifically at Ethereum and smart contracts. That being said EOS is challenging Ethereum with regards to scalability. The technology is still being developed but once perfected it is said to perform at least 1000 transactions per second. Ethereum can handle a little over 15 per second.

Essentially, it becomes a question of which token will outperform which when it comes to the execution of smart contracts. Investors may be hesitant to pull the trigger with Ether.

Still, Ethereum is prepared to face the competition and Ethereum 2.0 or Serenity has been in the making for the past 2 years now. Serenity would be 1000 times faster than the current Ethereum blockchain according to Vitalik. This is a bonus reason why you may still want to invest in Ether. Still not a lot is known about Serenity. However, it’s expected that Ethereum owners will be given a parallel amount in the new token.

2. Ethereum Is Still Super Volatile

Anyone interested in crypto investing, even from a distance, has heard countless tails of people taking out second mortgages and selling their assets to go all in on bitcoin and other tokens. Unfortunately, they also lost everything after the large crash two years ago.

The crazy gains and subsequent losses in the crypto market have left many skeptical. While the dust has mostly cleared and the potential for blockchain technology is virtually endless, tokens like Ethereum remain a highly volatile investment, more so than tech stocks like Tesla.

So low risk and low reward investors may want to be cautious. Even high-risk investors are cautious because newer technologies are emerging daily that could make tokens like Ethereum obsolete.

3. Once You Lose Ether You Lose It for Good

The biggest concern with regards to long term blockchain and crypto investing has been the loss of information and assets. While better security systems have been put into place, there have been several instances in the past where hackers have been able to 

  • Steal currencies
  • Tokens
  • Information

This is a concern that traditional investors have especially because the assets are not insured or protected by a bank or the government for instance. Still hacking and fraud happens in every industry, the real concern is that you’ll lose your information.

If you lose track of your security key and Ether wallet, there is no way to regain your

  • Information, 
  • Assets
  • Data. 

This may be good news to some investors because the less people sell by having no access to their ether, the less the price will fall. But it also wards off potential crypto investors.

Trezor One crypto hardware wallet can store ether and tokens
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How to Keep Your Ether Secure

To keep your Ether secure, follow these three points:

  1. Enable 2 Factor Authentication. In this instance hackers will need both your password and access to your phone or USK key.
  2. Use offline storage. Using a hardware or paper wallet thieves would have to have physical access to you in order to steal your Ether.
  3. Use reputable platforms for purchases and sales like the popular and secure Coinbase. 

These are great steps you can take against hackers. Still you should know that no network is perfectly secure from theft.

So the question remains, is Ethereum a good investment? For the most part yes! We are still in the early stages of the crypto revolution and the smoke has cleared which means that long term investors in solid tokens like Ethereum will only benefit. There are a few drawbacks, but no investment is full proof. 

tac

TC first began coding on TRS-80’s in high school in 1979. He has been around since the early days where you had to create a function if you wanted your computer to do something. From there to Atari, Commodore, Apple, and PC, he’s written code for them all. Trained in medicine rather than tech, he kept up with the tech world by writing the occasional utility to help with medical training. He also got involved in tech investing early, and managed to avoid the boom/bust cycle in the 90’s because he recognized that many companies didn’t serve a product that consumers needed. Now he applies this background, training and investing approach to cryptocurrency. He shares his thoughts here while providing educational resources for beginner to intermediate cryptocurrency investors and users.

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