Is Ethereum (ETH) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations

cryptocurrencies to invest in, and with so many to choose from, it can be difficult to make a decision. To make matters worse, it’s commonly said that 99 percent of cryptos are doomed to fail and will eventually become worthless and die off.

If this statement proves true, that leaves roughly 30 cryptocurrencies that might be worth investing in. Now the real question is, which of these cryptos are likely to survive and are worth investing in today?

Is it the top 30 coins listed on CoinMarketCap? The most popular cryptos discussed on crypto Twitter? The coins with the most advanced technology?

The truth is, nobody knows for sure which cryptos will succeed, but a good start to finding the ones that might is to identify cryptos succeeding right now.

One such crypto that appears to be doing quite well and is high up on everyone’s radar is Ethereum (ETH) – the second-largest cryptocurrency by market cap.

351665157-7d764debb93dd3e0e64cade1d3bfaddf002b10c876b242c2f25547d03ca4298c.jpeg

Ethereum is the world’s first general-purpose blockchain platform featuring a Turing-complete virtual machine, native programming language, and smart contract functionality.

It has established itself as a leading cryptocurrency and powerful decentralized blockchain-based platform that allows developers and programmers to create and deploy novel smart contracts and decentralized applications (dapps).

In many ways, Ethereum has already proved itself to the world and is already dominating the industry. It has experienced unprecedented growth across all areas including; market capitalization, price, network activity, developers, dapps, and more.

No other cryptocurrency has as much network activity, development, partnerships, and prospects as Ethereum, which is why ETH is the second most popular cryptocurrency right next to Bitcoin (BTC).

However, while Ethereum has proved to be a good investment in the past, is it still a good investment today?

In the following article, I delve into the current state of the cryptocurrency market and divulge whether Ethereum stands to perform well or if its time on top is coming to an end. We’ll take a look back at how far Ethereum has come, check-in on where it’s at now, and what the future holds for Ethereum.

By the time you’re finished reading, you’ll have a fundamental understanding of whether or not Ethereum (ETH) is a good investment right now and going forward.

Investing in Crypto - Is Now a Good Time?
Before we delve into Ethereum and whether or not it's a good investment, we must first determine if now is a good time to invest in any cryptocurrency at all.

Many people who are new to cryptocurrency, but on the sidelines think they have already missed the boat. They think that Bitcoin, Ethereum and other leading cryptos have already appreciated in value so much, that if they invest now, they don’t stand to gain much.

However, this couldn’t be farther from the truth. The crypto industry as a whole is still very much in its early days.

351665157-9a9a96ea7109288bd1f26911aab53b844b1a2fcb0201fe209c87f44c0d64f893.jpeg

• Source

Just think about it, who actually uses cryptocurrency and blockchain technology? Barely anyone, not even the people involved in this industry. The technology and infrastructure that supports crypto are still being built, and for now, cryptocurrencies are mainly speculative investments.

Bitcoin has only been around for 10 years and still hasn’t achieved widespread adoption. It’s appreciated in value, but study’s show that only around 6% of Americans own Bitcoin and this figure measured across the whole world is even less. Therefore it has so much more room to grow and Ethereum even more so.

Ethereum is just over 4 years old, being launched on July 30, 2015, and is just getting started in terms of network adoption. Many businesses and enterprises are already looking to Ethereum and experimenting with its technology, but very few have adopted it just yet.

Therefore, the cryptocurrency/blockchain space is still in its very early stage and the best crypto projects stand to gain immensely when a new wave of interest and adoption comes.

Additionally, as far as market cycles go, the crypto market may be near the beginning of a multi-year bull market. Many crypto analysts believe major cryptocurrencies have already reached a bottom in December 2018 and that we have since entered the next bull market cycle.

351665157-9aa71afad337b2cb1eb5e900b79ca535c8bebbd1d13d8df58ca9900cfc64e061.jpeg

If we are in fact entering a new bull market cycle and won’t see lower lows, the current prices Ethereum is at now are extremely attractive for long-term investors. After all, ETH is down 90% from its ATH and is up 80% from it’s low in December last year. Therefore, on a macro scale, ETH’s price action looks positive has a lot of upside potential.

A Brief History of Ethereum (ETH)
Ethereum was first conceived in 2013 by its founder Vitalik Buterin. One year later, Ethereum held its ICO, offering 2000 ETH for each 1 BTC. Another year later, the Ethereum blockchain launched on July 30, 2015, and has since undergone an immense amount of testing and development.

Ethereum was essentially created to bring a generic programmable layer to blockchain technology, which led to the creation of complex smart contracts and the development of novel dapps.

Prior to Ethereum, developers had to design and write extremely complex software in order to do the things Ethereum is capable of today. Therefore, Ethereum is not only innovative but it's revolutionary and forever changed the cryptocurrency and blockchain space.

Ethereum developed the ERC-20 token standard which led to a wave of new cryptocurrencies and decentralized fundraising through initial coin offerings (ICOs). Ethereum and its ERC-20 tokens brought in immense amounts of new capital to the cryptocurrency market and essentially kickstarted the bull market mania we experienced in 2017.

Ethereum's role in the last parabolic bull market led to a massive increase in the price of ETH. It went from just $8.00 in the beginning of 2017 to a peak of $1,400 on January 14, 2018.

351665157-26b055a01e71dd1c41a1a2898e84390e006229030f7058ff82fc3b6cacbe9866.jpeg

We all know what happened next… the bubble burst and Ethereum and the entire crypto market came cascading down, making lower highs and lower lows until it bottomed out in December 2018.

Ethereum’s low was reached on December 7 at $84.00. It then recovered somewhat and built a solid market structure around $150 and $180 before reaching its local high of $360 on June 26, 2019.

This price action from the low in December 2018 to its most recent peak in June 2019 transitioned ETH out of a bear market and into a bull market. However, since its peak in June, Ethereum and the rest of the crypto market has seemingly transitioned once again into another bear market, which we have now been in for nearly 6 months…

351665157-23e94ed1bb2996cffa43be1a28e7f4c453e8578faf65d6781f5e007785b57567.jpeg

Ethereum Today, Tomorrow, and Beyond
Before I delve into where Ethereum is from an adoption and development standpoint, let’s look at its recent price action.

351665157-2ce4783d1de39687b1f0abed4ad65a97e8f1e525ec9dba281a7289432d8cd7ad.jpeg

As of December 2019, ETH is currently trading at $146 and is in a clear downtrend. It’s most recent low was $135 on November 24, 2019, but there are not yet any clear signs of a reversal.

However, the good news is that ETH is still up 80% from its cycle low in December 2018 and is potentially building a bullish macrostructure for the years to come.

351665157-dc14d7b61f4c51389cf1ce8f1d64657b32fa32e99068b4a63bcf7562f3eb8c25.jpeg

As seen from the chart above, Ethereum’s price action is looking extremely bullish on a macro scale. Now, we must determine if Ethereum’s fundamentals support bullish price action for the long-term.

As previously mentioned, Ethereum was launched in 2015 and has since undergone many changes and loads of development.

The project follows four phases of development, the first being ‘Frontier’, the second ‘Homestead’, the third ‘Metropolis’, and the fourth ‘Serenity’ or ‘Ethereum 2.0’.

Currently, we are finishing up the Metropolis phase and beginning the transition into the fourth and tentatively final phase of Ethereum’s development, ETH 2.0 – which is the most ambitious upgrade yet and is supposed to improve nearly every aspect of the Ethereum network.

351665157-82312549086c205b0a1176c3d414caf0f7ebd2f27c3a58a60641fee71d03dbb5.png

ETH 2.0 will be broken down into 4 or 6 different phases with the first phase’s being, Phase 0 ‘Beacon Chain’, Phase 1 ‘Shard Chains’, and Phase 2 ‘State Execution’.

Phase 0 ‘Beacon Chain’ has already reached its final stage of testing and is aiming for a mainnet launch in early 2020. If Phase 0 does indeed launch in early 2020, we can expect Phase 1 and Phase 2 to come in 2020 and 2021 respectively.

Since Ethereum is just beginning to transition to ETH 2.0 and the price of ETH has dropped over 50% from its recent high, now might be a good time to invest in Ethereum as its future is looking very bright.

For instance, if ETH 2.0 is successful:

Ethereum’s current issues around scalability will be solved.
The Ethereum network will be far more efficient and environmentally sustainable with its transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
The speed and usability of the Ethereum Virtual Machine (EVM) will be increased significantly.
All in all, Ethereum has a clear roadmap that addresses all of its current issues and currently has roughly 800 monthly active developers building on the Ethereum blockchain.

The Ethereum ecosystem is experimenting and growing faster than any other blockchain or cryptocurrency project and the features and ideas being implemented in ETH 2.0, have already been talked about, researched, and actively developed and built for years.

Therefore, when ETH 2.0 is finally released, the Ethereum network is poised to be highly valuable and succeed for the long term. That is why investing in ETH now while it’s relatively low and in the beginning stage of ETH 2.0, might prove to be a very good investment.

Ethereum & Decentralized Finance (DeFi)
“DeFi is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries.” – www.defiprime.com

Putting Ethereum 2.0 and its significant improvements aside, Ethereum, as it stands today, is already quite a masterpiece.

Despite the network’s scaling woes, Ethereum’s DeFi landscape is playing out to be the most profound use case for decentralized blockchain technology. Over the last several months and since the beginning of 2018, decentralized finance has been making waves on Ethereum.

There are now a plethora of platforms and products built on Ethereum that are offering DeFi services such as lending protocols, security tokens, derivatives, exchanges, stablecoins, and more.

I mean, just look at the scope of Ethereum’s DeFi landscape:

351665157-432fc4951927a332a6989b11d1be6aa25eb1ca13a9b0daa3d6dbb6a5bfcb35f7.png

As seen from the image above, many of these projects including MakerDAO (MKR), Synthetix (SNX), Kyber Network (KNC), 0x (ZRX), Compound Finance and more are completely dominating the cryptocurrency space and they’re all built on Ethereum.

Also, the projects showcased in that image only scratch the surface. According to defiprime, there are at least 209 DeFi projects and 192 of them are built on Ethereum.

Another great image showcasing the importance of Ethereum and its role in DeFi is this:

351665157-4eecdd56e1cc1643ebaf9536fb25625391a985252e87362e966e46e38ef1da5f.png

As seen in the image, Ethereum is creating a new on-chain economy that supports an open financial system based on open protocols that are interoperable, programmable, and composable.

Therefore, the term decentralized finance (DeFi) can also be referred to as open finance and it’s clear that Ethereum is establishing itself as the protocol at the foundation for this new and open financial economy.

351665157-eb89bbd1fb20a2d9a9a1be654d5cd9c69a390bf59b53313217022bd3f2f3469e.png

To further illustrate the significance of Ethereum DeFi, you must look at its sheer size and growth. There is now over $600 million ETH locked in DeFi and this number is quickly approaching $700 million.

While you might not think $600 - $700 million is a lot if you consider the scope of traditional finance products, you should take note that just 2 years ago there was only $10 million worth of ETH locked in DeFi.

351665157-9dfc4025f8c9d02a556d2ec6bf52cefca3575f6e7e304a4a106e3ac802e527a7.png

Ethereum’s DeFi growth is going parabolic and this trend is expected to continue in 2020 as new and existing companies begin developing on top of borrowing and lending protocols to enhance efficiency and build new products.

All in all, the state of Ethereum’s open finance and DeFi landscape is the most important indicator to be bullish on ETH right now. As for Ethereum 2.0, we can get more excited about its development down the road, but for now, we don’t even need ETH 2.0. However, we know it’s coming, which just adds to ETH’s bullishness even more.

Ethereum’s Real-World Adoption
Out of the ridiculously large number of 4900+ cryptocurrencies out there, Ethereum is one of the few cryptos demonstrating how blockchain technology can achieve real-world adoption.

Since ETH’s inception in 2015, there have been over 2,700 dapps built on the Ethereum blockchain. Many of these dapps have since been abandoned, but many of them have also been widely adopted, specifically the open finance dapps.

351665157-763acbfcfe109effc0db51f5b16d51b77685541e6377295768009ef11c296095.jpeg

In addition to the healthy development and adoption of dapps, the Enterprise Ethereum Alliance (EEA) has the largest blockchain consortium with over 450 enterprise business members, including Microsoft, JPMorgan Chase, Santander, Accenture, ING, Intel, Cisco, and others.

Microsoft and Amazon already enable users to interact with the Ethereum protocol through their cloud computing blockchain-as-a-service (BaaS) platforms – i.e., Microsoft Azure and Amazon Managed Blockchain.

351665157-d4f17b5b35475bf90dc39d82acc4a8abe9fbef991b6c256c94272bb2714a8ea8.png

Also, a more recent development with Microsoft and Ethereum is that Microsoft created non-fungible tokens (NFTs) on the Ethereum blockchain for the popular Ethereum dapp “Azure Heroes”.

351665157-8712cf5636932ef5f26d899d91e55843f585578c3903c67e332fbcc5dad0a287.png

Another big development regarding real-world Ethereum adoption is with shoe manufacturer Nike, which will generate unique IDs and create ERC 721 tokens for certain shoes.

Even more enterprise adoption of Ethereum comes from JPMorgan with their permissioned version of Ethereum – Quorum blockchain, which is an enterprise-focused, open-source blockchain platform based on Ethereum.

351665157-73c1ec36f4ab545d72d93aa25f823dfa4cbcce43fde36ead3dc9c772c8c3af13.jpeg

As well, Enterprise adoption of Ethereum’s public blockchain is taking place with Big Four accounting firm, Ernst & Young (EY), who developed and released for free, a privacy tool for Ethereum’s public blockchain called Nightfall.

The list of Ethereum’s real-world adoption goes on and on, and it’s just getting started. Just wait until existing businesses in the real-world start building their own DeFi products on Ethereum… it’s going to be huge.

Ethereum Risks and Challenges
351665157-5f1df9242a7c4cc86739ad8721bec472cf733b306b127b38b4258b9b3cef6001.jpeg

While Ethereum’s macro price structure looks bullish and the project’s development and fundamentals are strong, there are still many risks involved with investing in ETH.

Perhaps the biggest risk of investing in ETH is the fact that the project is highly experimental, changes frequently, and has a lot of work and development to be done with its transition to ETH 2.0.

As well, not only does ETH 2.0 have a chance of breaking Ethereum entirely and failing to deliver on its promises, but even if it does work, it’s still uncertain as to when exactly it will be fully released.

Therefore, investors are taking on a lot of risks investing in ETH, but if everything goes according to plan, the payoff could be life-changing.

Another risk to investing in ETH is that a competitor with newer and better blockchain technology could overtake Ethereum’s market share.

Ethereum already has many competitors including EOS, Tron, Cardano, Hashgraph, Polkadot, Holochain, and more. All of which are striving to be better than Ethereum and offer different approaches to utilizing blockchain technologies.

If ETH 2.0 suffers from major setbacks or simply fails to improve Ethereum fast enough, a competitor could quickly rise to the top.

However, it’s important to note that Ethereum has the first-mover advantage, most developers, and some of the greatest minds in blockchain working tirelessly on the project.

It should also be mentioned that Ethereum is a blockchain protocol, and historically speaking, once a protocol becomes dominant, it rarely loses its dominance to newer protocols.

Take the Internet, for instance, the Internet protocol suite is TCP/IP which dates back to the 1970s. Newer Internet protocols have since sprung up but all the ones that are implemented are based on TCP/IP.

All in all, investing in any cryptocurrency comes with risk and you should never invest more than you can afford to lose.

Conclusion
Ethereum is the second most popular cryptocurrency and is the leading decentralized blockchain-based smart contract and dapp development platform. The project has experienced major growth over the years and continues to grow in many regards.

The cryptocurrency market may be at an opportune time for investment now as it appears to be building a bullish market structure. And if that’s the case, Ethereum stands to gain massively as it transitions to Ethereum 2.0 and Ethereum DeFi continues to grow.

While there are risks to investing in ETH right now, overall I would say Ethereum is a good investment. In fact, it’s probably one of the safer investments you can make in crypto as it’s already well-established and is an industry leader.

What do you think about Ethereum? Is ETH a good investment or is your money better off in BTC or some other crypto?

Let me know what you think in the comment section below.

Disclosure:
This post already exists at my publish0x profile,
https://www.publish0x.com/investments/is-ethereum-eth-a-good-investment-in-depth-analysis-and-near-xkrdnq