Why do Investors Diversify Portfolios?
Crypto investing is a popular way for people to grow their wealth and achieve their financial goals. However, with so many investment options available, it can be challenging to decide where to invest your money. One approach that many investors take is diversifying their portfolios. In this article, we will explore Ethereum as a main investment asset as well as some alternative projects.
What is Ethereum & its Price
Ethereum is a decentralized blockchain platform that enables developers to build and deploy decentralized applications (dApps). It was founded in 2014 by Vitalik Buterin and has become one of the most popular cryptocurrencies in the world.
The platform allows for the creation of smart contracts, which are self-executing contracts with the terms of the agreement written directly into code. These contracts can be used for a variety of purposes, such as creating decentralized finance (DeFi) protocols, tokenizing assets, and creating decentralized applications.
As of May 11, 2023, the price of Ethereum is $1,867.14 USD, with a market cap of over $225 billion USD. Ethereum’s price is determined by supply and demand on cryptocurrency exchanges, where users can buy and sell ETH tokens.
Why Ethereum is Good as a Main Asset in the Portfolio?
Ethereum has become a popular investment option for many investors due to its potential for growth and its unique features as a decentralized blockchain platform. Here are some reasons why Ethereum can be a good addition to a diversified investment portfolio:
- Potential for long-term growth as a relatively new technology
- Diversification benefits due to low correlation with traditional asset classes
- Exposure to emerging trends, such as decentralized finance (DeFi) applications
- Easy access and liquidity through cryptocurrency exchanges
- Potential for significant returns on investment, although with high volatility
As of today, the Ethereum price usd is $1,875.04 USD, and the 24-hour trading volume is $7,109,939,962 USD. This price is updated in real-time, reflecting the current market demand for Ethereum. Over the past 24 hours, Ethereum has experienced a 1.19% increase in price.
According to CoinMarketCap, Ethereum is currently ranked as the second-largest cryptocurrency by market capitalization, with a live market cap of $225,600,478,192 USD. The circulating supply of Ethereum is 120,317,701 ETH coins.
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What are the Alternatives to ETH?
Solana (SOL) is a blockchain platform that was designed to provide a highly scalable and secure infrastructure for decentralized applications (dApps) and tokens. It was founded in 2017 by Anatoly Yakovenko, a former Qualcomm engineer, and is based on a novel proof-of-stake consensus mechanism called Proof of History (PoH).
Solana’s architecture is built to support high throughput and low transaction costs, making it a promising platform for DeFi applications and other use cases that require fast and affordable transactions. Its architecture also allows it to handle thousands of transactions per second, making it one of the fastest blockchain networks in existence.
Polkadot (DOT) is a blockchain platform that aims to enable interoperability between different blockchain networks. It was founded by Gavin Wood, one of the co-founders of Ethereum, and was launched in 2020.
Polkadot’s architecture is built on a sharded multichain network, which allows different blockchains to communicate with each other and share information in a secure and efficient manner. This interoperability enables developers to build decentralized applications (dApps) that can be used across multiple blockchain networks rather than being limited to a single network.
One of the key features of Polkadot is its ability to allow custom blockchain development, where developers can create their own blockchain with their own rules and functionality. These custom blockchains, known as para chains, can be connected to the Polkadot network and interact with other para chains and external blockchain networks.
Avalanche (AVAX) is a blockchain platform that was launched in 2020. It aims to provide a highly scalable and secure infrastructure for decentralized applications (dApps) and enterprise blockchain solutions. The platform was founded by Emin Gün Sirer, a computer science professor at Cornell University.
Avalanche’s architecture is built on a novel consensus mechanism called Avalanche-X, which enables high throughput, low latency, and low transaction fees. The platform is also designed to support the creation of custom subnets, which allows developers to build their own blockchain networks with their own rules and functionality.
One of the key features of Avalanche is its support for the Ethereum Virtual Machine (EVM), which enables developers to easily port their existing Ethereum dApps and smart contracts to the Avalanche network. This interoperability makes it easier for developers to build and deploy decentralized applications on the platform.
Which is the Best Token for dApps?
Comparing Solana (SOL), Avalanche (AVAX), Polkadot (DOT), and Ethereum (ETH), it’s difficult to say which is the “best” token for decentralized applications (dApps), as each platform has its own strengths and weaknesses. However, here are some key factors to consider when evaluating each platform for dApps:
- Scalability: One of the biggest challenges facing blockchain platforms is scalability, or the ability to process a large number of transactions quickly and efficiently. Solana and Avalanche are both known for their high scalability, with Solana claiming to be able to process up to 65,000 transactions per second and Avalanche claiming to be able to process up to 4,500 transactions per second. Ethereum and Polkadot are also working on scaling solutions, but currently have lower transaction throughput.
- Interoperability: The ability to interact with other blockchain platforms and networks is important for dApps, as it enables cross-chain communication and integration with other systems. Polkadot is known for its interoperability, as it allows developers to build their own custom blockchain networks and connect them to the Polkadot ecosystem.
- Tokenomics: The token economics of a platform can affect its adoption and utility for dApps. Ethereum and Binance Coin (BNB) have the most established tokenomics, with ETH being used for transaction fees and governance on the Ethereum network, and BNB being used for transaction fees, staking, and governance on the Binance platform. Solana, Avalanche, and Polkadot also have their own native tokens (SOL, AVAX, and DOT, respectively), which are used for transaction fees, staking, and governance on their respective platforms.
Overall, one of the most popular tokens for dApps is Ethereum’s native cryptocurrency, Ether (ETH). This is due to Ethereum’s dominance in the dApp space and the fact that many dApps are built on the Ethereum network using the Ethereum Virtual Machine (EVM). Ether is used for transaction fees, staking, and governance on the Ethereum network.
In conclusion, Ethereum has a well-established ecosystem and network effects, it also suffers from scalability and high transaction fees. Solana and Avalanche have emerged as promising alternatives due to their high throughput and low transaction fees, but they are relatively new and still need to establish their own ecosystems. Therefore, diversing your crypto portfolio while maintaining ETH might be the best choice in the long run.