If you asked me only a few years ago if I would ever seriously consider investing in Bitcoin or cryptocurrency, the answer likely would have been no. For many investors who are in the space today, the answer would likely be similar.
Ever since Bitcoin was launched in 2009, developers have been building off its revolutionary blockchain technology. This innovation will almost certainly be a major part of the future, which is why the cryptocurrency industry has so much growth potential.
Because Bitcoin was the first cryptocurrency launched, it will always be one of the most popular, naturally giving it value. However, newer technologies built on Bitcoin’s idea with improvements in the technology will always offer more potential.
There are thousands of cryptocurrencies in existence. So, it’s as important to research these investments as it is to research companies.
In my view, though, the top cryptocurrency for long-term investors, even better than Bitcoin is Ether, the native cryptocurrency of Ethereum.
Bitcoin is great, but Ethereum is better
Bitcoin is so revolutionary and has become so popular because of blockchain technology. Bitcoin gets a lot of credit, because it was the first cryptocurrency released. As you would expect, though, it has a lot of drawbacks.
This is not surprising, as it was a revolutionary and brand-new technology. It shouldn’t be surprising then that new blockchain technologies have been created with these drawbacks in mind.
This is why when you learn about the Ethereum blockchain and its incredible potential, you’ll realize it’s major long-term opportunity.
Bitcoin is just a single cryptocurrency that runs on its own blockchain. Ethereum, however, can handle monetary transactions but can also store computer codes, meaning you can run smart contracts on the network.
This is a major difference and precisely why Ethereum has so much long-term potential. These applications are powered by Ether, the native cryptocurrency of the Ethereum network.
That means the more applications and contracts on the network, the more ether will be in demand. This is why it’s the second-largest cryptocurrency by market cap, trailing only Bitcoin.
With a major growth in popularity over the last year, I’d expect these two coins to continue to grow in value for some time. Just recently, for example, Visa announced it would begin accepting cryptocurrency payments on the Ethereum blockchain.
This is just one of many examples of the potential of Ethereum. However, it’s also a sign of more mass adoption coming to the space. In the week since Visa made the announcement, the price of Ether is up by nearly 30%, showing just how positive an announcement this was.
How to invest in Ether
As is the case with Bitcoin, if you want to invest in Ether, there are two main ways to go about it. You can gain exposure to a fund that holds the cryptocurrency, getting direct exposure to its price. The other option would be to buy a company that mines Ether and is therefore leveraged to its price.
If you want exposure to the actual cryptocurrency, The Ether Fund (TSX:QETH.U) is a great choice. Each unit gives investors exposure to 0.018 of Ether. This will be ideal for many investors because it’s an extremely cheap and efficient way of buying the cryptocurrency.
Doing it yourself can be complicated and costly, whereas the fund charges a small management fee below 2%. Plus, you can buy The Ether Fund in your TFSA and save on all the major capital gains taxes.
HIVE is a miner, making it leveraged to the price of the cryptocurrencies it mines. This means as these coins rise in value, HIVE should see explosive growth. For example, over the last six months, Ether is up 355% compared to HIVE, which has gained nearly 1,400%.
It’s worth noting that HIVE has exposure to other popular cryptocurrencies as well, including Bitcoin. However, it’s still one of the best Canadian stocks if you’re bullish on Ether.
So, if you’re looking to make a long-term investment in the crypto industry, I’d strongly advise investors to look into the potential of Ethereum.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Daniel Da Costa owns shares of The Ether Fund. The Motley Fool owns shares of and recommends Visa.