Why Ethereum Is A Better Long-Term Crypto Investment

ethereum

Last Updated on September 6, 2022 by Ruddy Gunawan

At the time of this article’s publication, Ethereum (ETH) was the second largest cryptocurrency on the planet by market cap. In fact, it has been the second most popular crypto for a very long time, and only Bitcoin surpasses it. Almost all active crypto traders have traded Ethereum at least once in their lifetime. 

Even if you don’t have any ETH right now, you probably agree that Ethereum has one of the brightest prospects compared to most other alternatives when it comes to building dapps.

While some cryptocurrency traders and investors might disagree with this opinion, there are legit reasons why Ethereum might become the biggest and most actively-traded altcoin on the planet for the next ten years. 

Five Reasons Why Ethereum Is A Better Long-Term Crypto Investment:

TVL comparison between ETH and other chains
Source: Defi Llama - September 6, 2022

1) As you can see above, Ethereum has the most legitimate on-chain activities. Defillama reported Ethereum still has over $ 30 billion total value locked (TVL) at the time of this article’s publication, which is pretty impressive in the bear market. Way higher compared to its competitors.

2) Unlike BSC, Tron, Avalanche, and others, major Ethereum DeFi apps decided to build on the Ethereum chain because they believed in the future of Ethereum. Many other smart contract platforms had to incentivize the DeFi apps to build on them.

This shows you how the Ethereum Foundation doesn’t need to burn money to get people to build on them, unlike its competitors. In the long-term, this will be proven a crucial advantage.

3) Ethereum’s competitors rely on the narrative that Ethereum gas fees are too expensive and Ethereum average transactions are too slow. Ethereum has been trying to fix all these issues and will introduce sharding and other solutions in 2023 and beyond.

The competitors won’t be able to sell their blockchains with the same narrative any longer when Ethereum transactions eventually become much cheaper and faster.

4) Even in the case where Ethereum’s solutions won’t make Ethereum as cheap as its competitors, remember that we have layer-2 solutions on top of the Ethereum main chain.

Projects like Optimism and Arbitrum One will work synergistically with Ethereum’s sharding. These layer-2 solutions are already live and keep getting more popular.

5) And to compare Ethereum with the biggest cryptocurrency on the planet, Bitcoin, we can see why Ethereum is more relevant to modern requirements. For example, Ethereum Merge is causing Ethereum’s energy demand to drop significantly.

On the other hand, Bitcoin may be stuck with the Proof-of-Work consensus for a very long time, and that will cause trouble with many governments’ demand to be environmentally sustainable.

Major DeFi Apps On Ethereum vs. Alternative Smart Contract Platforms

ethereum vs. other chains

Let’s talk about the first three points mentioned above. There are many alternative smart contract platforms out there, such as Tron, Binance Chain (BSC), Avalanche, Solana, Cronos, Fantom, and others. 

Most of Ethereum’s competitors were able to sell their blockchain solutions to the crypto community by having this kind of narrative, “Ethereum is slow and expensive. My blockchain offers the same dapps, but we are much cheaper and faster”.

Nevertheless, it’s impossible for them to keep having the same narrative forever. Sooner or later, Ethereum core developers will be able to reduce Ethereum’s average gas transaction fees and increase Ethereum’s average transactions per second (TPS).

And as I mentioned in the fourth point above, even if Ethereum’s future sharding solution fails to help Ethereum to compete against its competitors, we will still have Ethereum’s layer-2 solutions that will work even better after Ethereum implements the sharding solution. 

Optimism, one of Ethereum’s most popular layer-2 solutions, has an average transaction fee of ~$0.05. You can imagine how Optimism, Arbitrum One, and other layer-2 solutions will be able to get even more popular as Ethereum itself becomes more widely used.

Last but not least, Ethereum’s major DeFi apps decided to build on Ethereum because they genuinely believe it’s the future. Many major DeFi apps on alternative blockchains were incentivized by the foundations of those blockchains. 

When it comes to financial management, Ethereum Foundation is in a prime position to save itself a lot of money, compared to all these other chains where they always need to spend money to lure developers and partners into building on their chains.

First-Mover Advantage Is A Real Advantage

first mover advantage

Just like how Bitcoin has been able to stay on the top of the food chain simply because it was the first cryptocurrency, Ethereum should be able to stay as the default platform to go to when it comes to dapp developments. Let’s be honest about one thing. The first-mover advantage is a real advantage. 

Yes, the one that starts something before everybody else doesn’t always win. That being said, Ethereum has become too mainstream at this point. Of course, we might see an alternative dapp platform to overtake Ethereum’s spot one day if Ethereum remains stagnant forever. However, this is not the case. Ethereum development progress is actually real.

Ethereum is like digital oil for dapp developments, while Bitcoin is like digital gold where the supply becomes more scarce as time goes by.

Does It Mean We Should Only Invest In ETH?

Well, I am not an Ethereum maximalist. Fortunately for altcoin traders, cryptocurrencies are far bigger than just fundamental battles. More often than not, a new hyped cryptocurrency shows up, and everybody pumps that new hyped cryptocurrency for a while. It has happened over and over again. 

That’s why despite the fact that I believe in Ethereum’s future, I do not recommend you to just invest and HODL Ethereum. You should still diversify to other projects that you believe might show some hype and potentially provide higher ROI than top coins like BTC and ETH.

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