Since its public launch in July 2015, Ethereum (CRYPTO:ETH) has generated a monster return of 106,000%, absolutely crushing the broader stock market. The volatile nature of digital assets might scare some people away, but the possibility of life-changing returns means that astute investors shouldn’t ignore the huge potential of this new industry. Whether you decide to invest in cryptocurrencies is totally up to you, but it’s probably worthwhile to take the time to understand the opportunity.
With such a crazy historical return, you’re probably thinking that it’s too late to buy Ethereum, which carries a $335 billion market cap. I believe that perspective is flawed. Here’s why.
Ethereum is a programmable blockchain
One of the advantages Ethereum has over the world’s most valuable cryptocurrency, Bitcoin, is that it enables the use of smart contracts. This functionality allows transactions to be completed between two unknown parties based on self-executing computer code. Trust and intermediaries such as banks, brokers and lawyers are not necessary.
With this kind of programmability, Ethereum has become the top blockchain when it comes to decentralized applications (dApps). Ranging from decentralized finance (DeFI) and gaming to social media and non-fungible tokens (NFT), Ethereum is the most popular platform because of its first-mover advantage. According to State of the Dapps, there are 2,925 total dApps running on the network, with $214 million in transaction volume over the past 24 hours (as of Feb. 18).
Of all the blockchain projects out there, Ethereum has the most monthly active developers working on it, with 4,000. As a result, it’s clearly proving that cryptocurrencies can offer real utility to the world and aren’t just a speculative asset.
Planning for speed and scalability
However, with greater interest in Ethereum’s network, higher demand has resulted in expensive transaction, or “gas,” fees. Because Ethereum can only process about 14 transactions per second (TPS), a single transaction has cost between $20 and $50 over the past few months. For Ethereum to go mainstream and be used frequently, it needs to become faster and cheaper.
Ethereum is in the process of upgrading from its current proof-of-work system to a proof-of-stake</…….