VSchoices, choices, so many choices. There are currently thousands of cryptocurrencies on the market. The number depends on who you ask.
You can use metaverse cryptos. Or you can choose stable coins indexed to fiat currencies. There are some well-established tokens with huge and tiny market caps that supporters hope will explode. Of all, however, here’s why Ethereum (CRYPTO: ETH) is my pick as the best cryptocurrency to buy right now.
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An undeniable momentum
Ethereum was first launched in July 2015, and it has seen undeniably strong momentum since.
Over the past six and a half years, the price of Ethereum’s native Ether token has climbed more than 121,000%. As such, an initial investment of $ 1,000 at the time would now be worth well over $ 1.2 million.
Thanks to this phenomenal growth, Ethereum now boasts a market cap of over $ 400 billion. This makes it the second largest cryptocurrency in the world based on market capitalization, behind only Bitcoin.
But Ethereum offers a lot more capacity than Bitcoin. Its blockchain is designed to support smart contracts. These contracts are automatically enforceable and do not require the buyer and seller to interact personally. They make non-fungible tokens (NFT) and a wide range of decentralized applications (dApps) possible.
Ethereum’s ecosystem consisted of nearly 2,900 projects at the end of 2021. That’s roughly twice as many as the top three so-called ‘Ethereum killer’ cryptocurrencies – Solana, Cardano, and Peas – had combined. Over 40 of the top 100 market capitalization-based cryptocurrencies are built using Ethereum’s ERC-20 compatibility standard.
New and improved
Granted, Ethereum has its flaws. Its blockchain is slow, with the capacity to process only between 15 and 45 transactions per second. Ethereum also encountered scalability issues. Additionally, Ethereum transaction fees can be outrageous.
These drawbacks have led some developers to switch to other blockchains. Solana, Cardano, Polkadot and avalanche These are just a few of the cryptocurrencies that have stolen some of Ethereum’s thunder.
However, a new and improved version of Ethereum is on the way. Upgrading from Ethereum 2.0 will go a long way in resolving the current issues. For example, it should support up to 100,000 transactions per second. The blockchain will be much more scalable. And the transaction fees will be reduced.
The first phase of this upgrade has already been completed. The second phase is scheduled for this year, with the final phase scheduled for 2023. With the promise of a better, faster, and cheaper architecture, I think Ethereum should gain even more ground over the remainder of this decade. .
Due to its widespread use and high functionality, I think Ethereum is less risky than most other cryptocurrencies. However, that doesn’t mean that it doesn’t face certain risks.
One of those risks is that the planned Ethereum 2.0 upgrade may be delayed. The timeline for the final phase of the upgrade has already slipped. It is also possible that there are technical issues resulting from the upgrade.
I think, however, that the biggest risk of all for Ethereum (and other cryptocurrencies) is that the market may shift to a “risk-free” environment. In this scenario, investors will become much more risk averse and move their money to more stable assets.
There are signs that a risk mentality is already gaining momentum. Cryptocurrencies, in general, have fallen in recent weeks.
Yet Ethereum appears to be the strongest cryptocurrency to buy and hold for the long term. Its current strengths combined with ongoing improvements could make it formidable.
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* Returns of the portfolio advisor as of December 16, 2021
Keith Speights has no position in the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.