In other words, it has applications outside the cryptocurrency world. Even if cryptocurrency itself doesn’t succeed over the long run, Ethereum could still be used in other ways.
In addition, one major criticism of cryptocurrency, specifically Bitcoin, is how energy-intensive it is. In fact, researchers from the University of Cambridge estimate that the Bitcoin mining process uses more electricity than the entire country of Sweden.
Ethereum, however, aims to be more environmentally friendly. Developers of the technology are currently working to shift how coins are mined to make the process more energy-efficient. This could give Ethereum an advantage over Bitcoin, especially among environmentally conscious investors.
Also, as the Ethereum network undergoes changes, some of the Ether coins could be destroyed in the process. This could actually be a good thing for investors, however, because a smaller supply of Ether could make it more valuable and drive up its price.
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Understanding the risks
Despite its flexibility and wide range of applications, there are still risks involved in investing in Ethereum and Ether.
For one, you’re almost guaranteed to experience significant volatility — especially if you invest directly in Ether. Cryptocurrency is a risky investment in general because it’s highly speculative at this point. Some experts also believe we’re in a crypto bubble and that digital currencies like Bitcoin and Ether are overvalued. If that’s the case, prices could plummet when the bubble bursts.