Is Ethereum a Good Investment?

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Contributor, Benzinga
November 25, 2024

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As one of the leading cryptocurrencies in terms of market capitalization and technological advancements, Ethereum has established itself as a leading blockchain platform with strong utility and potential for growth. But with the volatile nature of the cryptocurrency market, many investors are left wondering, is Ethereum a good investment?

In this guide, we will delve into the factors that make Ethereum an attractive investment option, as well as the potential pitfalls to look out for. Whether you are a seasoned investor or a curious beginner, gaining insights into Ethereum's investment potential can help you navigate the complexities of the digital currency market.

Understanding Ethereum: An Overview

Ethereum is not a cryptocurrency — it’s a global computer for running decentralized apps (dApps). Ether (ETH) is the cryptocurrency that powers the Ethereum network, and it's the required form of payment for running your app or processing your transaction on the highly-desired Ethereum blockchain. 

While Bitcoin is really good as a store of value, it doesn't support smart contracts like Ethereum does. Arguably, Ethereum is equally capable as a store of value. This being said, many prefer bitcoin to store value because of its hard-capped supply. While both the supply of Bitcoin and Ether are increasing, there will never be more than 21 million bitcoin in circulation. With Ethereum 2.0 and EIP-1559 however, Ether may become deflationary, that is, the supply of the token will actually decrease with time.

Ether has been competing with Bitcoin for the top spot as the largest cryptocurrency by market capitalization since its release in 2015 and came close to overtaking Bitcoin in February 2018. Both of these coins have hit new all-time highs since then, and there appears to be more room for both to grow in 2024. Some experts predict Ethereum will "flip" Bitcoin this market cycle to become the dominant cryptocurrency in the industry.

How Ethereum Has Performed Since Launch & in 2024

Ethereum has had a volatile price history since its launch in 2015. In its early days, Ethereum was trading at just a few dollars per coin. However, during the cryptocurrency boom of late 2017, Ethereum reached a high price of over $1,400. In Nov. 16, 2021, it reached an all-time high of $4,891.70. Since then, Ethereum's price has fluctuated significantly, driven by factors such as market speculation, technological developments, regulatory news and overall market sentiment.

How Did Ethereum Perform in 2023?

In 2023, Ethereum performed exceptionally well, experiencing significant growth in its value and market capitalization. The implementation of Ethereum 2.0 brought about scalability improvements and lower transaction fees, making the platform more efficient and attractive to investors and developers. The rise of decentralized finance (DeFi) applications also boosted Ethereum's performance, as more projects were built on its blockchain. Overall, Ethereum solidified its position as a leading smart contract platform and continued to show strong growth potential.

How Much is Ethereum Right Now?

As of Jul. 18, 2024, Ethereum (ETH) is priced at $3,406.85

Ethereum Price Prediction

Price predictions are not always accurate, but a Ethereum price forecast can highlight potential investment opportunities. Benzinga has compiled important information regarding ETH future prices to address questions about whether Ethereum will rise in value. Discover ETH price forecasts here.

Where to Buy Ethereum

Decided you want in on the Ethereum action? Listed below are a handful of exchanges where you can purchase Ether. If you're new to crypto, jump to our guide on How to Buy Ethereum or compare exchanges with the Best Cryptocurrency Exchanges guide.

Advantages of Ethereum

The overwhelming performance of Ethereum has attracted traditional and institutional investors alike. Ethereum and other cryptocurrencies provide you with the following advantages over traditional investments that point to Ethereum being a good investment:

Smart Contracts

Ethereum allows for the development of smart contracts, which are contracts that automatically execute themselves based on the code written within them. This makes transactions automated and trustworthy, eliminating the need for middlemen, which lowers costs and improves efficiency.

Decentralization

Ethereum functions on a decentralized network of nodes, improving security and minimizing the chances of a single point of failure. This decentralization helps protect against censorship and fraud, contributing to a more open and equitable ecosystem.

Wide Adoption

Ethereum is a popular blockchain platform with a significant and engaged developer community, resulting, among other things,in ongoing enhancements, valuable resources for developers, and many decentralized applications (dApps) developed on its platform.

Interoperability

Ethereum's platform enables the creation of tokens and decentralized applications (dApps) that can effectively communicate with each other. This ability to interact promotes innovation and supports the development of intricate systems, including decentralized finance (DeFi) and non-fungible tokens (NFTs).

Robust Security

The Ethereum network is highly secure thanks to its proof-of-work and upcoming proof-of-stake consensus mechanisms. This makes it challenging for attackers to disrupt the network, which helps users trust the safety of their transactions and assets.

Tokenization

Ethereum facilitates the tokenization of physical assets, such as real estate, art, or securities, allowing them to be represented as digital tokens on the blockchain. This enhances liquidity and provides more investment opportunities.

Community and Ecosystem

Ethereum has an active community of developers, users, and investors that encourages teamwork and innovation. Its ecosystem is backed by multiple projects, tools, and marketplaces that improve its usefulness and promote the adoption of blockchain technology.

Disadvantages of Ethereum

Ethereum may play a part in the future of monetary exchange and global computing systems, but it is equally important that you are aware of the concerns surrounding cryptocurrency investing. However, a few are certainly overblown (or will be fixed soon) and mistakenly make some investors think that Ethereum is a bad investment.

Scalability Issues

Ethereum experiences scalability issues, particularly during high-demand periods when the network may get congested. This leads to slower transaction times and increased gas fees, reducing the platform's efficiency for users.

High Transaction Fees

Gas fees on the Ethereum network tend to increase during busy periods, which can make smaller transactions less appealing and limit the platform's usability for regular users.

Complexity of Use

The Ethereum ecosystem can be intricate for newcomers, as it includes various tools, wallets, and decentralized applications (dApps) that may require a significant amount of learning. This complexity can hinder adoption by non-technical users.

Regulatory Concerns

Ethereum, similar to other cryptocurrencies, experiences uncertainty due to government regulatory decisions worldwide. Changes in regulations can affect the value of Ether and its usability for different applications.

Security Vulnerabilities

The Ethereum network is mostly secure, but vulnerabilities in smart contracts can create risks. Issues in the code may lead to hacks or exploits that can cause major financial losses.

Transition to Proof of Stake (PoS)

Ethereum is moving from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism, which raises concerns about possible bugs and implementation challenges. The long-term effects of this change on network security and decentralization are yet to be determined.

Environmental Concerns

The transition to Proof of Stake (PoW) intends to lower energy usage, but Ethereum's previous Proof of Work system has faced criticism for its environmental effects. Furthermore, ongoing worries about the sustainability of blockchain technologies can influence public views and acceptance.

Ethereum Trading Signals

IntoTheBlock provides a fantastic suite of fundamental and technical trading signals to help you make your own informed decision on whether Ethereum is a good investment or not.

How to Store Ethereum Safely

So, is Ethereum a good investment? It can be if you do your research, manage your coins properly and keep an eye on the market. Crypto investing is not as simple as calling a broker and buying or selling. You are actively involved in the process, and that means you need a wallet. Cryptocurrency wallets are a fundamental part of the ecosystem, giving you the ability to easily send and receive money.

There are two types of wallets: software and hardware. MetaMask and Exodus Wallet are typically the best route to go for software wallets, and the Ledger Nano X is the best hardware wallet.

BZ

Pro Tip:

If you lose access to your wallet’s private key, whatever cryptocurrency was associated with the wallet is now lost forever. The best way to prevent this, is to handle your private key and seed phrase with extreme care. A forgotten seed phrase can remove currency from circulation forever. A memorized seed phrase can carry billions of dollars across borders with 0 physical evidence.

Ethereum NFTs

A key driver for Ethereum's blockchain is the rise of NFTs. Almost every high-value NFT is secured by Ethereum's blockchain, including CryptoPunks, Bored Ape Yacht Club, and Art Blocks. Many new users on Ethereum were drawn to its network to invest in NFTs, so if NFTs continue to breach into the mainstream, it's likely Ethereum will continue to gain adoption. While other platforms like Solana and Avalanche have NFTs, the market for non-fungible tokens on these blockchains is magnitudes smaller than that of Ethereum.

Disclaimer: Do not take out a loan to invest in cryptocurrencies like Ethereum. Do not purchase them with credit. Do not do anything that could endanger you or jeopardize your financial future. If you aren’t sure how much risk you are capable of handling, consult a financial advisor who is trained for this.

Ethereum vs. Other Investment Options

Bitcoin and Ethereum have completely different use cases. Bitcoin acts as a store of value, similarly to gold. Ether acts as a store of value too, while the Ethereum Virtual Machine enables a host of innovative applications such as DeFi, NFTs and the metaverse.

The Ethereum Virtual Machine allows coders to write programs called “smart contracts.” Ethereum smart contracts can automate thousands of financial products and are the building blocks of NFTs. These smart contracts enable full-fledged applications like decentralized exchanges (DEXs) and automated market makers (AMMs).

While very basic smart contracts are technically possible on Bitcoin's blockchain, Ethereum's custom programming language and huge team of developers make it the likely long-term settlement layer. Bitcoin's blockchain acts as a decentralized ledger for processing payments. Ethereum is a ledger with a full computer attached, allowing much, much more than just processing payments.

As far as which of the two is a better investment, it's impossible to say for sure. It’s likely that both Bitcoin and Ethereum will stand the test of time and coexist peacefully in the future. Bitcoin is ahead now but Ethereum seems to be the clear winner in terms of utility though it is generally more volatile. At the end of the day, your investment decisions must be made by you (or an investment advisor). The best thing you can do is to educate yourself as much as possible before risking any of your hard-earned money, and never invest money you aren’t willing to lose entirely. You don't want to end up on the front page of Wall Street Bets, after all. 

Should You Invest in Ethereum?

Investing in Ethereum can be a risky but potentially rewarding venture. As one of the largest and most established cryptocurrencies, Ethereum has a strong community and a wide range of use cases beyond just digital currency. Its smart contract functionality has enabled the development of decentralized applications and other blockchain innovations. However, like any investment, there are risks involved, including market volatility and regulatory uncertainties. It's important to do thorough research and understand your risk tolerance before deciding to invest in Ethereum.

Frequently Asked Questions

Q

Does Ethereum have a future?

A

Ethereum has a positive outlook as it undergoes upgrades such as Ethereum 2.0, designed to enhance scalability, security, and sustainability. Its robust developer community and increasing use for decentralized applications and smart contracts support its long-term potential.

Q

Is it worth it to invest in ETH?

A

Investing in ETH may be beneficial given its potential for long-term growth and its involvement in the growing decentralized finance (DeFi) ecosystem. However, as with any investment, it comes with risks, so it’s important to conduct thorough research and evaluate your financial circumstances before investing.

 

Q

How much will Ethereum be worth in 2025?

A

Predicting the exact value of Ethereum in 2025 is challenging because of the fluctuating nature of cryptocurrency markets and numerous influencing factors. Many analysts believe that Ethereum might experience substantial growth as blockchain technology becomes more widely adopted, though accurate figures are uncertain.

***Information is not intended for U.S. users

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