The Pros and Cons of investing in Ethereum

Cryptocurrency is a hot topic at the moment. But it can be confusing with so many different types of cryptocurrency available. Ethereum is making a name for itself and has become one of the most popular cryptocurrencies in recent times.

With so much hype around, you need to do your research and be fully aware of the pros and cons of investing in Ethereum before making any decision. For instance, there is uncertainty if Ethereum will remain popular over time or lose its position as one of the most widely used cryptocurrencies because it’s not based on Bitcoin’s algorithm. On the other hand there are lots of benefits for those considering  Ethereum. We’ve put the main pros and cons together to help you decide for yourself. 

Pros of Investing in Ethereum

Global transactions 

Ethereum allows for global transactions without the need for an intermediary. This means that it provides a low-cost and efficient way to send money across the world. It is capable of performing quick and secure global transactions. This means that people can conduct their business, transfer money/value with anyone on earth for just a fraction of what banks would charge. You can buy Ethereum on MoonPay as well which is a very easy and safe way to get more ETH. Those looking to do transfers in the UK should follow UK Ethereum price changes to inform themselves about the current state of things. This way you can avoid investing at a high price only to see the value drop soon after.

Also, Ethereum is working towards building a global, decentralized financial infrastructure that can handle all types of value exchanges. 

Ethereum is easier to mine than Bitcoin 

Generally, the younger a coin, the easier it is to mine. There are far more Ethereum miners compared to Bitcoin miners because of this important factor. This means that more people have a chance for a reward when they participate in Ethereum mining. The more miners there are producing an item, the higher its value becomes, which increases demand and price. Every transaction on Ethereum ‘s network costs some amount of Ethereum cryptocurrency called “gas” no matter how small or large it is. This keeps Etheriant from being abused by spammers on the Ethereum network. Also, more investors will be encouraged to invest in Ethereum if the barrier of entry is low. Another benefit of the ease of mining is that Ethereum mining is not as carbon-intensive and so less environmentally harmful than Bitcoin. 

Ethereum has a large support 

It is important to note that recently, big names like Microsoft and JP Morgan have begun supporting Ethereum with their products. This means that they will use Ethereum’s blockchain or develop blockchain-based on it. This will work to keep demand high for Ethereum and it will keep the price of Ethereum high and increase its value.

Furthermore, these companies will use Ethereum’s network to build their products and services. This is a huge advantage for Ethereum because it will become accessible and usable by the masses and more and more people would then invest in Ethereum. It also increases consumer confidence that Ethereum has a strong backing which makes it even easier for investors to support its value.

No downtime

The servers hosted by the system are not controlled by any single individual which ensures there is no downtime as it doesn’t need to be shut down for maintenance or updates to the system. This is a big benefit of Ethereum and it is one of the reasons why Ethereum’s community is increasing.

It is fast

Ethereum features a blockchain that can process transactions in seconds, when before it could take days for transactions to be processed. While the mainstream media has been focusing on ICOs lately, there are much more practical applications for this technology such as transferring money through a smart contract.

Ethereum has a strong development community 

It’s open-source which means that anyone can review the code, detect errors and provide suggestions to improve its functionality. This makes Ethereum stronger, more efficient, and secure. Ethereum has a flexible and decentralized nature which makes it ideal for long-term development and expansion. Additionally, Ethereum is characterized by its diversity in comparison to other emerging cryptocurrencies. This allows users to create their own functionalities and applications on its platform.

Cons of Investing in Ethereum

Number of transactions

If a lot of people are trying to transact at the same time, then you might have to wait for a few hours or even days before your Ethereum transaction gets processed. The faster the blockchain network, the better it is for both individual and business transactions.

Transactions cost money

You will be required to pay the network (miners) for mining your transaction. This means that you must make sure that your Ethereum is worth more than the amount of money you are about to spend on mining it. This is the above mentioned “gas” that you must spend to send Ethereum.

Some people may only want to invest in Ethereum, and not actually use it for transactions, so this cost does not apply. However many people feel that if something cannot be used in daily life, then what is the point of having it?

Hub centralization

There are several ‘miners’ in Ethereum, but there are certain hubs that have more computational power than others. This means that these people control everything about the network. Though they may not use this power to tamper with transactions or reroute funds, you never know if their intentions are pure. There are also chances that these hubs will shut down, causing the whole system to suffer.

Price volatility

You may be wondering why Ethereum is so expensive right now if it’s just used for transactions. This is because people are using it as an investment rather than a currency, though there are other decentralized currencies that work this way too (notably Bitcoin). The price of Ethereum is not stable, and it may be worth more or less just hours from now.

Number of tokens available

Ethereum is also unique in the sense that it does not have a limit to the number of tokens it can make. While this may seem like a good thing, the lack of an upper cap means that inflation will continue to go up and down over time. This is extremely troublesome for many investors because it makes Ethereum a much more volatile currency, and thus less appealing for investors.

Forking issues

Another problem with Ethereum is that there are problems when it comes to forking because there are no rules in place. This means that forking can occur whenever people who hold Ethereum disagree with how it’s being used, which can lead to a lot of instability within the network. It also means that Ethereum lacks a governing body, which ultimately makes it an unreliable place for investors to put their money in.

Now that you know both sides of investing in Ethereum, do you think that the pros outweigh the cons? Do you think it would be wise to invest some amount into Ethereum or are you better off investing elsewhere?