Should You (or Anyone) Buy Ergo?

Here are some key factors to consider before buying Ergo.

Ergo (ERG) is a relatively little-known cryptocurrency, which is surprising, considering it's been around for a while and has a solid team behind it. It is a programmable blockchain with advanced smart contract capabilities that are ideally suited to the decentralized finance (DeFi) industry.

Up to now, it seems to have prioritized technical development over marketing. However, the coin has still seen a significant price increase this year, and has been listed on two additional cryptocurrency exchanges.

What does Ergo do?

The best way to understand Ergo is that it has designed smarter smart contracts. Smart contracts are tiny pieces of code that sit on the blockchain and make it programmable. They offer a way to develop applications and other cryptocurrencies that run on blockchain databases.

But it is an evolving technology, and some smart contracts work better than others. For example, Ergo's coding script can specify how money can be spent. It will be able to handle complex contracts in a more secure way than many of its competitors.

It has a lot of applications in DeFi, such as stablecoins. Ergo's also developing its own decentralized exchange (DEX), where users can swap coins without involving a middleman.

Should you buy it?

Ergo's price has risen dramatically so far this year, but that's not necessarily a good reason to buy it. You need to evaluate whether you think it is a good long-term prospect. Here are some questions to consider before you buy Ergo.

What do you think of Ergo's team?

When you research a cryptocurrency, the management team is a good place to start. Ergo has a solid team with a good deal of blockchain experience. Both of its co-founders, Alexander Chepurnoy and Dmitry Meshkov, have previously worked on a number of cryptocurrency projects.

Do you understand what problems Ergo wants to solve?

This can be a difficult question with digital currencies, as you may need a good level of technical knowledge to see what sets a coin apart. In Ergo's case, it says its system allows it to do things that other smart contract platforms cannot. For example, it can maintain privacy without compromising security.

It also offers developers a way to avoid the unpredictable gas (transaction) fees found on other platforms like Ethereum (ETH). Ergo has a lot of resources online. Take the time to read them, learn about the things it wants to do, and decide if you think it will deliver.

Are you investing money you can afford to lose?

It's a good idea to make sure you're up to date on your retirement savings and emergency fund contributions before you buy crypto. Nobody wants to be in a position where they can't pay the rent, or retire at the age they'd planned because they took too many risks with crypto investments.

All cryptocurrency investments are risky, but smaller coins carry more risk of failure, so be cautious. Cryptocurrency should only ever make up a small percentage of your overall investment portfolio.

Have you looked at the competitive environment?

There are two markets to investigate when it comes to Ergo: DeFi and programmable cryptocurrencies.

Ethereum leads the programmable blockchain market by a long way. It was the first crypto to introduce smart contracts, and almost 3,000 applications are built on its system. However, its network is congested, and the way it works now is not very sustainable. It won't finalize a major upgrade to address those issues until at least 2022.

See how Ergo compares with the other players -- including Cardano (ADA), Polkadot (DOT), EOS (EOS), and Neo (NEO). Each one has its own pros and cons, but it's valuable to view Ergo in the context of its competitors.

The DeFi environment is booming, and there are a host of decentralized finance applications working to transform the way we bank. However, there's also talk of increased DeFi regulation, as authorities want to stop bank-like agencies operating without customer protection.

Are you comfortable with buying from a smaller cryptocurrency exchange?

Ergo is not available from most top U.S. cryptocurrency exchanges, so you need to buy from a smaller exchange or a decentralized trading platform. This can be slightly riskier and also more expensive, as you may need to pay gas fees for the trade.

The bottom line

Developing extraordinary technology is one thing, and it looks as if Ergo could have a lot of real-world applications. But the big challenge for the Ergo team is engagement.

Here are just a few of the obstacles ahead:

• Get more developers to use its ecosystem.
• Finish its decentralized exchange and get people to use it.
• Get ERG listed on more cryptocurrency exchanges.
• Build partnerships with other DeFi projects.

Ergo does have a community and engagement team, but they have their work cut out to ensure Ergo shines in a crowded marketplace.