If you are an investor in crypto, or you are thinking about joining the crypto world, chances are you have heard a great deal about Ethereum (ETH).
After Bitcoin it is the most valuable cryptocurrency. In the coming years ETH may very well skyrocket.
Some data estimates that by 2030 the currency may make it up to $50,000 — which is more than 10 times its price at the moment.
With that said, no one really knows for certain what ETH’s price will go up to in the coming years, however there are two reasons it may be destined for major growth in the future. Let’s look at them.
1. It’s a core part of decentralized finance.
A big reason ETH’s coin has the potential to raise its value is because the ETH blockchain has turned into a foundation of decentralized finance (DeFi).
DeFi apps that are being built make it possible for people to exchange assets without needing banks to handle the transactions. This technology could revolutionize many aspects in the financial world, and most developers are using ETH’s blockchain to build DeFi apps.
There are more than 3,000 of these ETH-based DeFi apps available as of now.
A main example of ETH’s ability to make new DeFi markets is the growing non-fungible token (NFT) market. Marketplaces built on ETH’s blockchain are buying and selling digital assets (like images and music).
The DeFi market’s estimated value is $100 billion as of now, which makes ETH’s blockchain technology a very valuable piece of this huge market.
2. Ethereum is about to get even better
A drawback to ETH’s blockchain is that it requires a lot of energy to process transactions. That is because all the info that’s recorded on the ETH blockchain (even transactions) occur by using a proof-of-work type of system.
Simply put, proof-of-work is a when a difficult problem must be solved before transactions can happen. This entire process takes up major computing power and also takes a lot of time to finish.
Some great news is that ETH is growing and by next year it will officially move to a proof-of-stake system that will use the holders of Ether tokens to validate transactions. This will make ETH more efficient, and also make transactions process faster.
Ethereum is showing that its blockchain has the potential to get better and adapt to new demands.
Keep this in mind
Investors should remember that the cryptocurrency market is very volatile. Even Ethereum’s token can have major price swings.
You should understand the potential risk of your investment before buying any cryptocurrency, even Ethereum.
Author: Blake Ambrose