If you've had a look at Shiba Inu's performance last year (and you didn't invest in this cryptocurrency), you may have some regrets. It soared a whopping 45,000,000%. But here's the good news. The cryptocurrency market offers many players with solid growth prospects. And that growth could turn into an increase in value.
Of course, it will be difficult to match Shiba Inu's rapid increase. But that's OK. A cryptocurrency that gains steadily -- and maintains gains over the long term -- is always the best bet. Right now, I'm thinking of a market leader that has a major catalyst just ahead. So if you missed out on Shiba Inu, you might consider this cryptocurrency.
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The world's second-biggest player
I'm talking about Ethereum (ETH -0.03%). You might think: How could the world's second-biggest cryptocurrency offer much potential? It's true that it is easier for a player that trades at a fraction of a cent to multiply in value than a cryptocurrency trading for thousands of dollars. But that doesn't mean it's impossible. Bitcoin is the perfect example. It rose more than 120% in the first nine months of 2021, from about $32,000 to more than $60,000.
Now let's get back to why Ethereum offers growth potential. First, it's starting out in a strong position. The cryptocurrency is already a leader in the world of decentralized applications (dApps) and non-fungible tokens (NFTs). Developers have flocked to it to build dApps in the areas of finance, gaming, and technology. It also is the biggest blockchain by sales volume when it comes to NFTs, the website CryptoSlam! says. An NFT is a digital proof of ownership of items such as artwork or sports collectibles, for example. So it's clear the crypto has plenty of real-world utility.
Let's consider the upcoming catalyst for growth. Ethereum has already launched the first stages of an upgrade that will result in improved speed and efficiency on the network. Slow transaction speed and congestion along the network have been the token's biggest weaknesses. So if the full upgrade is successful, it could be big.
Ethereum is in the process of switching from a proof of work to a proof of stake validation process. This complete transition is set to happen in the first half of this year. Proof of work involves complex computations, and this takes time and loads of energy consumption. Proof of stake eliminates that process. But there's more to Ethereum's upgrade than just this switch.
From 30 transactions per second to 100,000
The final phase of the upgrade involves the introduction of shard chains. This is an important step because it spreads the workload across more than 60 chains. And this relieves congestion on the main network. As for the improvement in speed, it's dramatic. Instead of processing about 30 transactions per second as it does today, Ethereum may process as many as 100,000.
If the upgrade rollout goes smoothly, Ethereum could benefit from short-term gains. But more importantly, this upgrade could set it up for lasting long-term gains. Here's why: Users already like Ethereum. And once its biggest weakness is out of the way, they'll probably like it even more.
I don't expect Ethereum to mirror Shiba Inu's performance. But because of its established leadership and an upgrade that could reinforce that leadership, it still could climb enough to make it a cryptocurrency winner.
