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The Ultimate Cryptocurrency to Buy with $1,000
If you haven’t been monitoring the cryptocurrency market, you might be shocked to see many coins trading at or near all-time highs. After a brutal crypto winter, the market is once again preparing for a rise in typical cyclical fashion.
However, not all cryptocurrencies have benefited equally from the market resurgence. As it is, Ethereum (CRYPTO: ETH) remains more than 20% off its all-time high, presenting an attractive opportunity for investors. Here’s why Ethereum is the cryptocurrency I’m buying with $1,000 today.
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The undisputed leader of DeFi
One of the most important uses of cryptocurrencies is decentralized finance, or Challenge. It’s a booming industry, worth more than $95 billion today, that aims to recreate traditional financial services – such as lending, borrowing, trading and investing – in a decentralized manner.
Unlike traditional financial systems that rely on centralized institutions like banks or brokerages to facilitate transactions and manage assets, DeFi runs on blockchain networks like Ethereum and leverages smart contracts to automate processes and eliminate intermediaries.
While several blockchains make up the DeFi economy, Ethereum’s hold on the market remains firm. Around 60% of the total value of DeFi resides in Ethereum. The next closest competitor is Tronwith a measly 10%.
There are likely several reasons that could explain Ethereum’s disproportionate value. The most obvious is that it is the first blockchain to offer smart contract functionality, thus being the only option for developers and users in the early years of DeFi.
Additionally, Ethereum has established a strong track record of reliability over the past decade. As a result, it has become the go-to platform for developers looking to create new DeFi projects.
With the overwhelming majority of DeFi’s value tied to Ethereum, an opportunity presents itself. DeFi represents one of the most influential and disruptive uses of cryptocurrencies and will likely see its value increase over time. As such, Ethereum is the easiest way to gain exposure to the burgeoning potential of DeFi.
How Ethereum is widening the gap
Without diving into the data, discussions on message boards and across the internet would make it seem like competition in the DeFi space is greater than it actually is and that Ethereum’s dominance is under threat. Although the field is more crowded than it was a few years ago, these hopeful blockchains face an increasingly difficult task of trying to topple Ethereum, especially considering that It becomes more and more efficient from year to year.
The story continues
No blockchain is perfect. Ethereum has known limitations in the form of speed and high transaction fees when network traffic is congested. But its main developers are constantly looking for ways to improve its performance.
Every year or so, Ethereum receives an update. In the same way that your smartphone receives an operating system update, these upgrades introduce new features and optimizations.
One just happened and is a great example of how future upgrades could potentially widen the gap between Ethereum and its competitors and help it achieve its goal of becoming powerful enough to benefit to all humanity.
Launched on March 13, Dencun upgrade has unveiled new features that make fees on layer 2 blockchains built on Ethereum much cheaper. Naturally, there has been an explosion of layer 2 chains within the Ethereum ecosystem. This is likely just a sign of things to come, and it appears that all roads will eventually lead back to Ethereum, no matter how many new blockchains claim to be a “competitor”.
As crypto momentum continues to build and Ethereum’s price remains well below its all-time high, a lucrative opportunity presents itself. Its dominance over DeFi, a new upgrade, and the cyclical pattern of cryptocurrencies surpassing previous all-time highs make Ethereum a profitable investment at current prices.
Should you invest $1,000 in Ethereum right now?
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RJ Fulton has positions in Ethereum. The Motley Fool has positions in Ethereum and recommends it. The Motley Fool has a disclosure policy.
The Ultimate Cryptocurrency to Buy with $1,000 was originally published by The Motley Fool