Cryptocurrencies have been around for a while now, but it’s really been the last twelve to eighteen months where we’ve seen crypto become mainstream – especially in Australia. Now, every man and his dog (or should that be doge?) is talking about cryptocurrencies (or grimacing as others do), even if they haven’t ever bought or transacted with one.
Much of that can be chalked down to the bizarre economic conditions we find ourselves in. The Spicy Cough is still wreaking havoc on Australia thanks to our very slow vaccine rollout, and it’s been a slim year for many Aussies.
Despite this, the Australian property market continues to go from strength to insane strength, and interest rates remain historically low. At the same time, the stock markets – particularly US markets – are as unpredictable and overheated as ever. No wonder investing in crypto’s become so big, then.
While taking a punt on ‘shitcoins’ has become increasingly popular (and increasingly risky, as we recently discovered the hard way), the granddaddy of all cryptocurrencies – Bitcoin – is widely considered the go-to coin to invest in, especially for newcomers to crypto.
But should Bitcoin be the first port of call for crypto investors? There’s a growing argument that Ethereum, the world’s second-most popular cryptocurrency, is the way of the future.
But what is Ethereum? Strictly speaking, Ethereum is the name of the blockchain, and Ether is its native cryptocurrency. Generally speaking, people just use the name Ethereum to refer to Ether. First proposed in 2013 by Russian-Canadian programmer Vitalik Buterin, Ethereum went live on 30 July 2015, six years after Bitcoin first went live.
The biggest difference between the two is that Ethereum is a software platform which is powered by Ether, whereas Bitcoin is purely a currency/store of value. As Investopedia relates, “Ether was intended to complement rather than compete with bitcoin, but it has nonetheless emerged as a competitor on cryptocurrency exchanges.”
Buterin’s motivation behind creating Ethereum was his belief that Bitcoin and blockchain technology could be useful for more than just money. In 2021, the Ethereum blockchain powers everything from enterprise software to banking ledgers and, perhaps most topically, non-fungible tokens (NFTs).
Ethereum’s not just a better horse to back because it has more applications than Bitcoin. One of the biggest problems with cryptocurrencies is that they’re not very good for the planet – but Ethereum has a solution on the horizon.
Mining, storing and transacting with cryptocurrencies consumes an enormous amount of electricity, and the reality is that the vast majority of electricity generated globally comes from non-renewable sources. According to Digiconomist, a single Bitcoin transaction has the same carbon footprint as 1,140,542 Visa transactions or 85,767 hours of watching YouTube.
“Ethereum, however, is making moves to make the technology more energy-efficient,” The Motley Fool’s Katie Brockman relates.
“Ethereum 2.0 is an updated version of the blockchain that’s set to roll out later this year or early next year, and it claims to use 99.95% less energy than the current technology. When Ethereum becomes more energy-efficient, it could acquire a competitive advantage in the crypto industry and a leg up over Bitcoin.”
Another big advantage of Ethereum is that it’s not as easily manipulated as Bitcoin or other cryptocurrencies, James Whelan, Investment Manager at VFS Group in Sydney tells DMARGE.
“Elon Musk’s tweets are moving the market… if one guy’s Twitter account can shift an entire market, you probably don’t want to invest in that market… It’s frequent flyer points on crack.”
“If you want to be in the crypto market, and you want to be in a less manipulated market and you want to be in a market that isn’t constantly attempted to be shut down by by governments, I’d probably look at Ethereum.”
A quick reality check is needed, however. Ethereum, like Bitcoin and all cryptocurrencies, is still a highly volatile and unpredictable investment opportunity, now more than ever. Forbes‘ Billy Bambrough relates that Ethereum (and Bitcoin) could be “in danger” thanks to China’s crackdown on crypto miners, which is compelled many Chinese miners to dump their coins.
But if you believe in the future of cryptocurrency and blockchain technology – or you’re just looking to invest in something other than Bitcoin or Dogecoin – Ethereum might just be what you’re looking for.