Is Ethereum A Safe Investment?
Ethereum may be reaching for the moon again. You don’t want to miss out, but you’re still wondering: is Ethereum safe, and is Ethereum good investment?
After all, there have been many issues brought up over the years: security, volatility scalability, and new cryptocurrencies willing to be “Ethereum killers.”
With all those in mind -- is it safe to buy Ethereum?
Security of Ethereum - History and Present
The largest security threat to Ethereum occurred in May 2016. It was called the DAO hack. Millions of dollars of ETH were stolen from the DAODAO
Decentralized Autonomous Organization. An organization governed by smart contracts founded to allocate funds to cryptocurrency projects.
The repair involved a hard forkFork (Hard)
A change in a cryptocurrency’s software that makes it incompatible with the original version. For example, any block size increase in the Bitcoin protocol constitutes a hard fork.
Note, however, that this DAO hack did not corrupt or impact the Ethereum blockchainBlockchain
A digital, distributed ledger which contains data for all the transactions that have ever taken place using a given cryptocurrency.
These days, Ethereum is safe - probably one of the safest cryptocurrencies.
Volatility of Ethereum
As with the cryptocurrency market as a whole, Ethereum is quite volatile. Volatility is due to basic economic factors: high variations of supply and demand.
Ethereum was the first platform to offer smart contractsSmart Contracts
Agreements between two parties that self-execute when their terms are met and automatically cancel when their terms are not met.
When these ICOs began cashing out of their ETH to pay for their business expenses, a large supply was created. As a result, the price fell.
As the market capMarket Cap
The total value of a cryptocurrency. Calculated by multiplying a coin’s price by its total supply.
Scalability of Ethereum
Ethereum’s goal is to become a world computer. Unfortunately, they are having trouble reaching their goal.
Indeed, Ethereum has faced scalability challenges, and their network was crippled during the 2017 boom -- when so many people wanted to use it.
Nevertheless, they’re working on solutions. Vitalik Buterin, the founder and CEO of Ethereum, announced they will release Ethereum 2.0.
We don’t know for sure if Ethereum 2.0 will work -- but if it does, well, Vitalik Buterin, recently announced that the future launch of Ethereum 2.0 will be “1,000x more scalable” and “cut energy costs by 99%”.
Ethereum’s Competition
Speculation is about making sure your investment has a competitive advantage over similar investments. Does Ethereum have and maintain its competitive advantage?
Since Ethereum’s debut in 2015, many “Ethereum killers” have popped up. Cardano, Cosmos ... One of the biggest contenders is EOS.
According to Hackernoon, “EOS developers expect that the platform will at least handle 1000 transactions per second upon launch. In contrast, Ethereum can currently handle around 15 transactions per second.”
If these competitors deliver on their promises, Ethereum might be in trouble. But so far, they haven’t. Plus, Ethereum will launch Ethereum 2.0 to stay ahead of the game.
So, is Ethereum a Safe Investment?
EOS and other competitors may be better than ETH. Or they may not be. The future will tell us.
But since lots of bright, talented minds are learning and developing on it, Ethereum is a safe investment -- when compared with other cryptocurrencies -- and remains one of the best cryptocurrencies to buy in the future.