Ether, the cryptocurrency that powers the Ethereum blockchain network, is the second most valuable cryptocurrency in the world.
While Bitcoin was revolutionary in creating the whole cryptocurrency industry, Ether was arguably even more revolutionary when it launched, with many improvements on Bitcoin’s technology, including the ability to run smart contracts.
It’s this major innovation that has set Ether far apart from any other of the thousands of cryptocurrencies that have been launched over the last decade.
However, like Bitcoin, because Ether was also launched early, it too has drawbacks. And these are drawbacks that many competitors are taking advantage of in an attempt to steal market share from Ether.
Even this week, JP Morgan strategists suggested that Ether should be worth roughly 55% less than it is today.
So, here’s what you need to know if you own Ether, have exposure to it, or have thought about going long sometime soon.
The competition facing Ethereum
One of the biggest issues Ether has is high transaction fees. When the network gets busy, “gas,” as it’s referred to in the industry, can become quite expensive.
This can often make some transactions pointless. For example, if you have a token worth $50 on an exchange, but it’s going to cost you $75 to send it to your wallet, it’s clearly not worth it.
It’s this main issue that has spurred a tonne of innovation and a tonne of other blockchain networks to offer the same services Ether offers, but with gas prices that are far cheaper.
Can Ether survive the increasing competition?
Nobody can predict the future, but there are several reasons why Ether should be able to withstand the competition.
Firstly, Ether continues to be upgraded. Most recently, it went through the Ethereum London hard fork. These upgrades to the blockchain network are aimed at resolving a lot of these major issues.
In addition, Ethereum is already extremely popular, not just for uses but also for developers. And if these developers, who can make more on Ethereum’s network than almost anywhere else, are reluctant to switch blockchain networks, then Ethereum will likely continue to be the most dominant blockchain network for some time.
So, while I do expect other blockchain networks to gain popularity, I don’t necessarily expect Ether to lose value. There is potential for more blockchain networks to gain popularity as the industry continues to expand, without Ether necessarily losing any of its value.
Nevertheless, if you want exposure to cryptocurrencies but are still concerned about Ether’s potential, Galaxy Digital Holdings (TSX:GLXY) is one of the best stocks you can buy today.
A top crypto stock to buy today
Galaxy Digital Holdings is a leading company in the cryptocurrency industry and my personal favourite investment in the space.
While it will certainly get a boost from major rallies in Ether and Bitcoin, unlike many other cryptocurrencies, it won’t lose a tonne of value if they decline in price.
This is because Galaxy has built an incredible business with several segments aimed at being a massive financial services powerhouse in the cryptocurrency industry.
Not only does the company have several segments, which help it to mitigate risk, but it also exposes investors to more opportunities for growth.
While the company has an asset management division, a trading segment, and even investment banking services, the most opportune segment it has is its principal investments division.
Galaxy identifies early and high-potential investments in up-and-coming cryptocurrency and blockchain technology. It can then invest in these projects early, exposing itself to the potential for major growth, as the industry continues to gain popularity.
So, if you’re bullish on cryptocurrency but worried about the long-term potential of the top cryptos like Bitcoin and Ether, Galaxy Digital might just be the perfect investment for you.