My main concern with most cryptocurrencies is utility. In contrast to fiat currencies like the dollar or euro, many cryptos have little practical use. Yes, you can make purchases and transact in certain types of investments, but doing so is still often very clunky -- to the point where it's easier just to whip out a payment card and slap it down on the counter, or input your card digits on a website.
But there's one crypto I have in my portfolio that not only has a solid, practical use, but also serves as the native currency of a system that promises to continue blazing a trail through the forest of next-generation finance: Ethereum (ETH -2.88%). Here's why I believe in this popular altcoin (meaning anything other than Bitcoin).
What's 'Appening
One of the more exciting developments that has come out of cryptocurrency is the decentralized application (dApp), and the first public blockchain to offer this was Ethereum.
As their name implies, dApps are small programs disbursed across a wide network of computers that self-execute when certain conditions are met. The Ethereum blockchain gained early renown for being the platform of choice for many dApps, and it holds that distinction to this day.
Not all dApps are, or will be, useful, profitable, or attractive -- just like any collection of software. But already quite a few have been attached to the Ethereum blockchain, and as we push deeper into our cryptocurrency future some are sure to stand the test of time.
Image source: Getty Images.
Some caution is certainly warranted with Ethereum. The blockchain has gotten plenty of complaints for its speed, or lack thereof; it's been clocked at an average of 14 transactions per second (TPS) or so, although times of peak use see that figure drop notably.
That compares very unfavorably to numerous peers, particularly the 50,000 TPS that is the apparent speed limit of archrival Solana (SOL -7.39%), or even the 250 TPS of another would-be "Ethereum killer," Cardano (ADA -5.83%).
But I don't think Ethereum will be stuck in the slow lane much longer. One of its great advantages is that it has an army of developers that positively dwarfs the competition.
According to a January report published on industry website Cointelegraph citing research from Electric Capital, more than 18,400 monthly active open-source developers were working on blockchains at the time. Of these, about 4,000 were developing for the Ethereum blockchain. Solana, by comparison, had roughly a quarter that number.
Almost certainly quite a few of those Ethereum code jockeys are busy building Ethereum 2.0, which will switch the blockchain from the cumbersome legacy proof-of-work (PoW) system for validating transactions to a much speedier proof-of-stake (PoS) model, among other innovations.
Team Ethereum is well aware of the disadvantages of slow speed in the lightning-fast world of cryptocurrency, not to mention other issues with its blockchain (such as the cost of "gas," or user fees, versus the speed and low costs of the world's Solanas and other potential upstarts). As such, Ethereum developers will surely deploy their talents to address such problems in the big upgrade, which apparently is to be launched in the very near future.
Powering a positively practical purpose
While I like the frictionless financial future Bitcoin (BTC -3.61%) and its spawn promise us, a great many cryptocurrencies feel like clever engineering efforts in search of a use.
Ethereum doesn't have that problem; its use is clear, it's been demonstrated, and the blockchain is a leader in the dApp world. With its head start and an obvious ambition to improve its already compelling platform, I think it can maintain or even expand that leadership.
