The cryptocurrency I could buy in 2022

The cryptocurrency I could buy in 2022 - ethereum decline networkI've been on the sidelines looking at cryptocurrencies for the past few years. One of the big drawbacks for me is that many cryptocurrencies seem to derive their value from advertising rather than actual utility.

However, the more I learn about the industry, the more my vision changes. This is mainly due to my growing understanding of Ethereum (CRYPTO: ETH). That's why it's the only cryptocurrency I could buy in 2022.

Ethereum 101

Ethereum is more than one type of cryptocurrency. It is a blockchain technology platform for digital money, payments and decentralized applications. The individual units, called ether, are the second-largest cryptocurrency by market value behind Bitcoin (CRYPTO: BTC).   

Vitalik Buterin, a 19-year-old developer at the time, proposed the Ethereum idea in 2013. He suggested expanding the blockchain technology behind Bitcoin to more uses than just transactions. The platform was launched two years later. 

Since then, Ethereum has become one of the dominant blockchain platforms due to its wide range of features. These include: 

  • Currency: Using a blockchain wallet, it is possible to send and receive ether to pay for goods and services.
  • Smart contracts: Digital contracts stored on the blockchain that are executed automatically when predetermined terms and conditions are reached. 
  • Digital apps (dApps): The Ethereum platform helps power the apps that allow users to play, invest, send money and more.
  • Non-fungible tokens (NFT): Many NFTs use Ethereum technology to allow creators to buy and sell these digital assets.
  • Decentralized Finance (DeFi): Ethereum eliminates the need for government-controlled central banks to regulate the currency. 

The pros and cons of Ethereum

I think Ethereum has several important competitive advantages over other cryptocurrencies. The first is its range of uses. It's not just another currency, it's a whole platform. As a result, it has become increasingly important in digital transactions. This allows it to derive some value from more than the supply and demand of Ether.

Another important advantage is its size and scale. It appears that new cryptocurrencies are entering the market all the time to serve various purposes, even as a joke. However, as the second largest cryptocurrency behind Bitcoin, Ethereum's size and scale has given it credibility in the market.  

This volatility makes it difficult to use Ether as a currency. You could sell an item for 1 ETH, thinking it was worth $ 4.000, and then see that value drop by $ 1.000 in a matter of weeks.

Another problem with Ethereum is the cost

Transaction costs, known as gas tariffs, can be very high due to network congestion resulting from its popularity. These fees also make it more difficult to use Ether as a currency, as they make transactions more expensive.   

Ethereum also uses a lot of computing power, causing it to consume a lot of energy. As carbon-emitting fossil fuels generate most of the world's electricity, it is contributing to climate change.

However, the platform is working to address these issues by moving to a new validation system. This update, Ethereum 2.0, is expected to happen later this year. It promises to reduce Ethereum's power consumption by 99,98% and to increase its transaction processing capacity from 30 per second up to 100.000 per second. It could also make smart contracts even more sophisticated. 

Ethereum stands out in the cryptocurrency market

I'm still undecided about getting into cryptocurrencies. There is a lot of hype and volatility, which doesn't suit my investing style. 

However, there is also a lot of promise, especially for the Ethereum platform. That's why that's what I could buy this year. I'm not ready yet, there is still a lot to learn. And I'd like to see version 2.0 roll out before I buy, as that would solve some of the platform's major problems.