Having made the quantum leap to invest in crypto, an even more important question comes up for new investors: which is the best crypto to invest in?
Before we answer this question, you should keep in mind that cryptocurrency investment and trading is a matter of personal choice. Our recommendation is only meant for education purposes; you should do your own research and make up your own mind about this.
The reason why we have to say this is because of the volatility that cryptocurrencies are capable of. Bitcoin climbed to over $64,000 in April 2021, but then halved in value in less than a month.
There are currently all kinds of speculations going on. Some say BTC will hit $100,000 by the end of 2021, while others say Ethereum’s market cap will overtake Bitcoin (the flippening). Even the best forecasts cannot tell future performance, but there is one crypto that is incredibly promising.
Ethereum is probably the best crypto to invest in 2021.
What You Should Know About Ethereum
Ethereum is the second-largest crypto by volume, second only to Bitcoin. It is the brainchild of Russian-Canadian prodigy Vitalik Buterin, created when he was only 19 together with a team of developers.
In concept, Ethereum is a decentralised blockchain platform where other blockchain apps (called decentralised apps or Dapps) can run. This is important, because it gives the ethereum token a utility value.
While Bitcoin is known as the gold of cryptocurrency, Ethereum is more of electricity or oil that powers other decentralised projects.
Vitalik himself compared Ethereum to a smartphone on which a wide variety of applications can run, while Bitcoin is like a pocket calculator with only one function. BTC was designed for the express function of being a digital currency and not much else.
If you aren’t familiar with Ethereum as a platform and how the ether token works, we recommend reviewing our article: What is Ethereum?
Value of Ether: Transactional Vs. Utility
The Ethereum blockchain has dual value. As a platform, Ethereum is the foundation on which decentralised apps run. We’re already seeing an explosion of Non-Fungible Tokens (NFTs) built and sold on the platform. Decentralised exchanges like Uniswap also run on Ethereum.
Ethereum’s native cryptocurrency, ether, also holds massive transactional value. The apps which run on the platform have to pay gas fees, which have to be paid in ether. Users on the platform can also send money directly to each other’s wallets.
As a cryptocurrency, ether currently handles about 15 transactions a second and goes through the process of mining to be added into a block. Ethereum relies on the same Proof of Work protocols used in Bitcoin, although that is changing.
This unique symbiosis gives Ethereum unique opportunities, which is why it has found almost universal usage only 6 years after its inception.
Uses of Ethereum
Vitalik created Ethereum as a platform to have unlimited opportunities. From basic transactions involving money to more complex functions, the smart contracts that power the network mean that it could be adapted for anything.
- Digital assets such as NFTs are tokenised using Ethereum, and no one can modify or copy/paste the ownership record of such a token. This makes such assets as NFTs highly collectible and valuable.
- Decentralised Finance is a form of blockchain-based finance using decentralised institutions such as exchanges, brokerages, and banks. A DEX such as Uniswap or SushiSwap is a good example.
- Enterprise Ethereum is used by organisations willing to tap into blockchain technology without developing it from scratch. It works a little differently, being permissioned and private. Organisations using this solution include J.P. Morgan, Microsoft, Samsung Group, and Mastercard.
- Decentralised Autonomous Organisations (DAOs) are blockchain-based organisations whose rules of operation are hardcoded in smart contracts. They can be used for crowdfunding, social media, among other community-based uses.
- Voting, and other uses where unique identity and record immutability is required.
With such major, impactful use cases, Ethereum has already gained root as a practical and economically viable project.
However, there are more direct reasons why we are bullish on Ethereum this year, and here are three of them.
3 Arguments for Ethereum
NFTs and Digital Assets
Mark Cuban is on record saying that he is bullish on ethereum. “Ethereum has a huge advantage over Bitcoin,” he said during an interview, and he used NFTs as a major reason to justify his prediction.
The biggest reason why NFTs are such a big deal for Ethereum is that they are built on the platform. Thanks to its native ERC-20 tokens, it is very easy to create and tokenise digital assets including photos, GIFs, videos, music, and much more and make money selling them.
NFTs have enormous potential, and not just because they are selling for millions of dollars. They are a new way for artists, celebrities, and even organisations to cash in on unique digital assets. We could have movies, music, and other media released and paid for in an NFT model to curb piracy in the future, for example.
By all indications, NFTs should drive the value and market cap of Ethereum through the roof and could be a major cause of the flippening.
Ethereum 2.0 and Migration to Proof of Stake
The Ethereum blockchain is migrating to a new protocol, and has been doing so since December 2020. The new blockchain, or Ethereum 2.0, will rely on a Proof of Stake consensus system (PoS) as opposed to Proof of Work (PoW).
The immediate implications are that Ethereum will no longer be mined, which would make Ethereum much more environmentally friendly. Given that Bitcoin has been receiving a lot of backlash because of its environmental impact, this could be a major boost for Ethereum.
Secondly, Ethereum 2.0 will increase the rate of transactions possible on the network to millions daily. While Bitcoin has a similar plan to increase transaction speed through upgrades such as Segwit and the Lightning network, Ethereum 2.0 could beat it to the chase.
Other advantages that Ethereum 2.0 could offer include improved scalability, ease pressure on the Ethereum network, and potentially make the chain more secure.
Decentralisation is Becoming Mainstream
Goldman Sachs recently made news when they made crypto an investment option for its clients. The investment giant also predicted that ETH could eventually overtake BTC based on its use of smart contracts.
Indeed, smart contracts are what makes Ethereum so valuable. Organisations around the world are able to take the enterprise version of Ethereum and customise it to their own needs. Thousands of decentralised apps are currently running on the platform, not to mention DeFi institutions and DAOs.
This growth potential is what gives Ethereum the best chance to eclipse Bitcoin. Even if that doesn’t happen, ether could become more stable and more reliable than Bitcoin in the long run.
Conclusion
There are numerous projects and cryptos you can choose to invest in right now, but the most promising of these is Ethereum. Currently priced at over $3,000, some people believe it has the potential to reach $100,000.
In light of this potential and the pending switch to PoS consensus, it makes a lot of sense to adopt a buy-and-hold strategy for ether this year. Don’t take our word for it, and certainly don’t take it as investment advice, but keep your eye on ether. It could blow your mind away.
FAQs
Is Ethereum better than Bitcoin?
No, Ethereum and Bitcoin may be similar as cryptocurrencies, but they are very different in how they work. Bitcoin is like a store of gold or a functioning digital currency, while Ethereum is a project that seeks to decentralise everything and make tonnes of money while at it. Both will probably coexist peacefully for years to come.
Which is the best crypto project to invest in 2021?
If you want to speculate, there are some promising altcoins such as Stellar (XLM), Cardano (ADA), Tron (TRX), and Ripple (XRP) that you can look at. However, among stablecoins, ether remains the most promising of the lot.
Are NFTs the future of digital assets?
It is still too early to say that NFTs will replace streaming or anything like that. However, the future for digital collectibles is bright, especially since Q1 of 2021 saw over $2 billion in total sales of NFTs. It may not be practical to invest millions in single pieces of digital art, but you can buy tokens related to your area of interest such as basketball and see them grow.
Is Ethereum 2.0 a good investment?
A lot of experts believe that Ethereum 2.0 could be the future for the blockchain by improving transaction speeds, increasing scalability, and making it environmentally-friendly. However, others are cautious, warning about unforeseen security challenges. The transition has already began, though, so it shouldn’t be long before we see major changes.
Can Ethereum reach 100k?
Possibly, but this is all conjecture at this point. If the network upgrades to Ethereum 2.0 are successful and the current pace of developments continue on the platform, the value of ether could possibly exceed 50k or even 100k in the next three years.
Where can I buy Tether?
Tether can be purchased on most cryptocurrency exchanges that enable you to pair it with other cryptocurrencies. While Tether does not genuinely “pair” with other cryptocurrencies because it is a stablecoin tethered to the US dollar, it remains a popular option to buy crypto as a method of being liquid in the markets. Crypto exchanges like CoinSpot allow you to effortlessly convert your Tether into Bitcoin (BTC), as well as other popular cryptocurrencies. You can read our CoinSpot review to know more about its features and the fee structure when you trade Tether and other coins/tokens on this exchange.