When you ask anyone about a cryptocurrency at the forefront of their minds, it would definitely be Bitcoin — this is not unearned esteem. In addition to being the most well-known and well-liked cryptocurrency, Bitcoin is frequently used as a comparison standard for any other cryptocurrencies. And the market agrees — the market valuation of Bitcoin has always made it appear far stronger than its competitors.
With more and more cryptocurrencies released every day, it becomes harder to know which ones are worth holding onto as a long-term investment. However saturated the market is, Ethereum has always taken a back seat to Bitcoin so far but experts are optimistic about its future. Our article will give you the context you will need to enable you to make your own informed choice about Ethereum investment.
Ethereum and Proof-of-Stake
Enter, Ethereum! As always second place to Bitcoin, could it even be a possibility that Ethereum can be a powerful contender and be a better alternative for long-term investment?
In light of Ethereum’s proposed transition from the proof-of-work system to the proof-of-stake system, aptly termed the Merge, it is time to rethink your crypto choices. In a proof-of-work system, all blocks are issued by miners that spend to acquire and carry out the Ethereum mining programme.
The downside of the process is that it is incredibly wasteful of electricity which is required to run the programme and thus, Ethereum is infamous for being pricey and sluggish. Inversely, the proof-of-stake allows validators who invest ETH to verify network activity and are in charge of keeping the network safe, which will in turn reduce power usage and become a much more efficient network.
In everyday terms, it indicates that Ethereum is about to be powered by greater hardware that will enable processes on the Ethereum blockchain to be performed much more quickly, affordably, and effectively. It will also be much more gentle on the environment as less energy is consumed to perform Ethereum procedures. Bitcoin, on the other hand, will still be stuck with its energy-guzzling, slow-moving proof-of-work mining process.
According to certain reports, anticipation around the Merge slated for the later end of this year has fuelled the July cryptocurrency rise. Consequently, with the new system, mining, as in the act of cracking cryptographic riddles is no longer necessary, rendering miners and further investments in mining equipment useless.
Ethereum Has Use in the Real-World
So now we get to the next justification for why Ethereum is a superior long-term investment than Bitcoin. Simply said, Ethereum is far more practical in everyday life than Bitcoin can be. At the very tip of the Ethereum blockchain, programmers have built mechanisms for non-fungible tokens (NFTs), smart contracts, and decentralised financing (Defi).
In contrast to Bitcoin, Ethereum has a full active ecosystem surrounding it. Even if Bitcoin has more fame and eyes on it, with a constant cycle of Internet personalities talking about it, Ethereum has more programmers, business owners, and IT specialists who are developing practical applications.
Bitcoin can be held onto as a durable store of your wealth in the hopes that its value will rise from digital shortages, or it can be used as a monetary substitute for purchases. Bitcoin, however, is far more constrained in this way than Ethereum because of its underpinning technical infrastructure.
Everchanging Investment Landscape
This brings us to the last justification for why Ethereum is a superior long-term venture to Bitcoin. The entire Bitcoin investment strategy is beginning to unravel. The main defence for owning Bitcoin over the long run-up to the market crash this year was that it had no correlation to conventional assets like equities.
To put it in another way, Bitcoin should continue to exist and remain steady even if the stock market as a whole crashed. It would function like gold in a digital sense, having inherent worth even when its traditional counterparts were falling apart all around it. It only made logical that shareholders would want to retain Bitcoin throughout any catastrophe or slump as more investors started to conceive of Bitcoin virtual gold. But what transpired during the most recent market slump? Similar to many other cryptocurrencies, bitcoin also plummeted (although not as much as some others which suffered greater losses).
As a result, the belief and appeal of Bitcoin as virtual gold, are immune from beginning to wear off. Parallelly, Ether will become a deflating commodity as a consequence of Merge’s switch to a proof-of-stake system, adding to its appeal as a potential inflationary hedge. Additionally, a rising quantity of Ether will essentially be locked away and inaccessible for trade as a result of the way staking operates. As a result, the price of Ether will logically increase based only on the law of supply and demand.
Essentially, the one way to make money on Ethereum has changed. As a result of Ethereum’s switch to a staking system, elaborate mining equipment risks becoming obsolete, so we recommend that it is time to invest elsewhere. Users may now invest their Ether to receive staking incentives rather than mining it.
A threshold of 32 units of Ether is needed to stake Ethereum via operating one’s personal Ethereum validator. Or if you would like to invest less, you can utilise a staking platform and stake any quantity of ether. Ether staking is already available on several cryptocurrency exchanges, including Coinbase and Binance. But for those looking to earn some additional cash and want to hold onto your underutilised GPU computing power, there are still other options. But because proof-of-stake has arrived and Ether staking is now accessible, staking is unquestionably the more convenient, less resource-intensive, and forward-oriented way to earn Ether.
Additionally, an increasing number of well-known businesses from all over the world are developing atop Ethereum technology. Simply said, huge institutions are choosing Ethereum as their preferred blockchain because of its capacity to expand and versatility. Ethereum has been termed ‘virtual oil’ compared to Bitcoin, which is a ‘virtual god’ and will ultimately be more valuable due to its more useful applications.