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The ultimate cryptocurrency to buy with $1,000
If you haven’t been keeping an eye on the cryptocurrency market, you may 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 bull run in typical cyclical style.
However, not all cryptocurrencies have benefited equally from the market recovery. As well as, Ethereum (CRYPTO:ETH) remains more than 20% off its all-time high, presenting an attractive opportunity for investors. This is why Ethereum is the cryptocurrency I buy today with $1,000.
Image source: Getty Images.
The undisputed leader of DeFi
One of the most important uses of cryptocurrencies is decentralized finance, or DeFi. It is a growing industry now worth over $95 billion that aims to recreate traditional financial services – such as lending, borrowing, trading and investing – in a decentralized way.
Unlike traditional financial systems that rely on centralized institutions like banks or intermediaries to facilitate transactions and manage assets, DeFi operates 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 stranglehold on the market remains firm. Around 60% of the total value of DeFi calls Ethereum. The next closest competitor is Tronwith a paltry 10%.
There are probably several reasons that could explain the disproportionate value of Ethereum. Most noticeably, it was the first blockchain to offer smart contract functionality, thus becoming the only option for developers and users in the early years of DeFi.
Furthermore, Ethereum has established a strong track record of reliability over the past decade. As a result, it has emerged as the go-to platform for developers looking to create new DeFi projects.
With the vast majority of DeFi value tied to Ethereum, an opportunity presents itself. DeFi represents one of the most influential and disruptive uses for cryptocurrencies and will likely see its value increase over time. As such, Ethereum is the easiest way to gain exposure to the growing potential of DeFi.
How Ethereum is widening the gap
Without delving into the data, the chatter on discussion forums and the Internet would appear that competition in the DeFi space is greater than it actually is and that Ethereum’s dominance is under threat. While the field is more crowded than it was a few years ago, these blockchain hopefuls are facing the increasingly difficult task of trying to unseat Ethereum, especially when you consider that it is becoming more and more capable every year.
The story continues
No blockchain is perfect. Ethereum has experienced limitations in the form of speeds and high transaction fees when network traffic is congested. But its core developers are constantly looking for ways to improve its performance.
Every year or so, Ethereum receives an update. The same way your smartphone receives an operating system update, these updates introduce new features and optimizations.
One of these just happened, and it’s a great example of how future upgrades have the potential to widen the gap that separates Ethereum from its competitors and help it achieve its goal of becoming powerful enough to benefit all of humanity.
Launched on March 13, the Dencún update unveiled new features that made fees on layer 2 blockchains built on Ethereum much cheaper. Naturally, there has been an explosion in layer 2 chains within the Ethereum ecosystem. It’s probably just a sign of things to come, and it seems like all roads will eventually lead back to Ethereum, no matter how many new blockchains claim to be a “competitor.”
With cryptocurrency momentum continuing to grow and Ethereum’s price still well below its all-time high, a lucrative opportunity looms. Its dominance over DeFi, a new update, and the cyclical pattern of cryptocurrencies surpassing previous all-time highs make Ethereum a worthy investment at today’s 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 and recommends Ethereum. The Motley Fool has a disclosure policy.
The ultimate cryptocurrency to buy with $1,000 was originally published by The Motley Fool