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3 Things to Consider Before Investing in Ethereum

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Years after years, the cryptocurrencies market is exponentially growing and always more users all around the world are seduced by these new investment products.

These dematerialized currencies, which are not necessarily issued by a central bank, can be purchased wherever legislation permits. Nowadays, there are several thousand different crypto-currencies. Among them, Ether (ETH), powered by the Ethereum blockchain, is the second-largest currency in terms of market capitalization.

However, before investing in cryptocurrencies and especially in Ethereum, it is important to be aware about various characteristics of this currency and this way of investing.

How is Ether different from other investment products

The prerequisite of knowing Ether may seem obvious, however it is essential to know how this currency works and how it differs from others products, before considering the amount you wish to invest in it.

First of all, thanks to the Ethereum platform, Ether is completely decentralized which guarantees more security than other investment products, since this currency is not linked to a central bank. Therefore, it is not subject to the same conditions and developments as stocks for example. In times of inflation, holding this type of currency is particularly interesting because it allows investors to have an asset that is independent of the price of a particular currency or geopolitical situation.

In this way, Ether allows investors to access all transactions on the system. The platform on which transactions occur through crypto exchange provides also a high level of transparency as its code is open source. Thus, Ethereum investors can really be proactive to optimize the future of the platform.

Finally, this way of investing allows returns of investment that are generally much higher than ones generated with other investments.

What makes Ether different from other cryptocurrencies

Two main points make Ether different from other crypto investments. As the second-largest cryptocurrency in terms of market capitalization, Ether has a long-standing good reputation in the crypto world. Since 2015, the Ethereum blockchain has proven itself and is constantly evolving year after year – a guarantee of confidence for investors. Moreover, Ether does not simply use the blockchain technology to perform transactions. Indeed, the Ethereum network aims to help developers and investors to create new decentralized applications (dApps) through a large network based on the blockchain and smart contracts. Apart from this possibility, it is also possible with Ether to buy Non Fungible Tokens (NFT), which are music, art or even game digital assets that can be sold and collected by any investors.

Which risks and disadvantages brings Ethereum

Even if the Ether cryptocurrency offers many interesting advantages, it doesn’t mean that this type of investment doesn’t include some risks. For instance, the Ethereum platform implies more extended functions than other cryptocurrencies like Bitcoin. But a high number of features can expose the platform to more hacking attempts and failures. Therefore, it makes Ether more vulnerable.

In addition, the transaction fees charged on the Ethereum platform are among the highest in the cryptocurrency market. Investing in Ether and using Ethereum technology can become very expensive so that not everyone can not afford to trade on this platform – only people with high capital amounts. Even if they strengthen the platform security, these high fees are also counterproductive as they contribute to the emergence of new blockchains with lower costs.

Last but not least, another big point that should be considered before investing in Ethereum is its volatility nature. Like other cryptocurrencies (except stablecoins), the return on investment can vary greatly from month to month or year to year depending on the crypto investment, which can result in large financial losses. This is why it is essential to closely follow the market evolution.

Despite these three mixed points, investing in Ethereum remains very interesting in terms of capitalization and return on investment. This promising cryptocurrency, which has already increased by 929 % in one year, has not yet revealed its full potential.

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Kossi Adzo is the editor and author of Startup.info. He is software engineer. Innovation, Businesses and companies are his passion. He filled several patents in IT & Communication technologies. He manages the technical operations at Startup.info.

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