As crypto prices sink to new lows, it can be a daunting time to invest. Nobody knows for certain when the market will bottom out or how long it might take to recover, and there are no guarantees that crypto will recover at all.
That said, now is also one of the best times to invest. Prices are lower than they've been in months, making it one of the most affordable opportunities to buy. Also, if prices eventually rebound, you could stand to make a lot of money by investing now.
Choosing the right investments, though, is key. While there are never any guarantees that any cryptocurrency will succeed over time, there's one that I'm stocking up on right now: Ethereum (ETH 3.46%).
Could Ethereum be a lucrative investment?
Ethereum's biggest strength is its blockchain network and its ability to host decentralized applications (dApps). These dApps range from non-fungible token (NFT) marketplaces to decentralized finance (DeFi) projects to metaverse applications.
If any of these areas see growth over time, Ethereum will benefit from it. Also, because Ethereum is the most popular network for dApps, it has the most potential for growth if NFTs, DeFi, or the metaverse succeed.
Currently, Ethereum is the second most popular cryptocurrency behind Bitcoin, with a market cap of around $135 billion. For context, Solana and Cardano -- two of Ethereum's biggest competitors -- have market caps of roughly $12 billion and $14 billion, respectively.
Where Ethereum falls short
Although Ethereum is the biggest and strongest decentralized network, it has its flaws, too -- primarily when it comes to its speed.
Right now, Ethereum can handle only around 14 transactions per second. Not only does that limit the number of transactions on the network, but it also creates extremely high transaction costs for users. As a result, many users and developers have flocked to smaller, faster networks like Solana.
The good news is that Ethereum developers are working on an update to solve this problem. This upgrade will move Ethereum from a proof of work (PoW) protocol to a proof of stake (PoS) system, which could help the network reach speeds of up to 100,000 transactions per second.
When, exactly, that update will be completed is unclear. So far, the rollout has been plagued by delays. The latest phase of the update, called "The Merge," should happen sometime in 2022, and the final phase is planned for 2023 or 2024.
While Ethereum's upgrade is a positive move for the network, anything could happen between now and when it's completed. Newer cryptocurrencies are being developed by the day, and there's a lot of time for competitors to gain traction in the market.
Is Ethereum a good investment?
Despite its imperfections, Ethereum is one of the stronger cryptocurrencies out there. It's also heavily discounted right now, with its price down roughly 77% from its peak in November. If you've been waiting for a chance to invest, now could be your opportunity.
Before you buy, though, consider your tolerance for risk. There are no guarantees that Ethereum (or any cryptocurrency) will thrive over time, so there's always a chance you could lose your investment. Be sure, then, that you're only investing money you can comfortably afford to lose.
While nobody knows what the future holds for crypto, Ethereum may have what it takes to stick around for the long haul. If you're willing to take on more risk for the chance of seeing potentially lucrative returns, it could be the right investment for you.