We’ve already discussed ETH’s potential as a store of value. We’ve also discussed its potential as a less susceptible store of value to hackers. Now let’s look at how this new cryptocurrency will affect ETH’s price in the coming year. If you’re a long-term investor, you should invest in ETH as it’s a good store of value.
ETH is a store of value
Ethereum (ETH) is a form of digital money similar to Bitcoin. It lets you control your funds with a wallet and encrypts all transactions with the help of proven cryptography. This means that your money is as secure as if you had handed it over in cash. Ethereum has thousands of tokens and developers are constantly building new ones. This means that there are many new uses for this currency.
Although ETH is not a “store of value,” it is very valuable and should keep on growing in the long-term. The growth of the DeFi ecosystem is beneficial to both Bitcoin and Ether. This is because this ecosystem is a vital part of the Bitcoin and Ethereum networks.
Institutional investors are increasingly seeing Bitcoin and ETH as a store of value, and continue to take positions in the cryptocurrencies. Some even describe them as a hedge against inflation. Coinbase recently published a report examining its institutional clients and found that they valued the evolving role of Bitcoin and Ether as store of value.
Ether may be a better store of value than Bitcoin, due to its deflationary characteristics. The EIP-1559 protocol burns 50% of newly minted ETH each day, which makes it less inflationary than Bitcoin. In addition, ETH has a limited supply, making it a better store of value.
It’s a volatile asset
One of the best ways to gauge volatility in any asset is to look at its standard deviation. The standard deviation of a 30-day window of daily returns is a good indicator of volatility. However, you can get a better idea of volatility by looking at the volatility of a 60-day window. This can be especially helpful in determining the volatility of a currency like Ethereum. In addition to the standard deviation, volatility can also be measured by the implied volatility of the asset.
Since the crypto industry is still relatively new, volatility is bound to be high. A single speculator may be able to affect the entire market, which can cause investors to become nervous. The crypto market is still small compared to traditional currencies like gold, but even a small group holding a large amount of a crypto coin can crash the market.
Moreover, the volatility of a cryptocurrency is a great source of profit for high-risk investors. Volatility means that the price of the asset will rise and fall rapidly. If you know how to trade it well, you can profit from this situation. Most emerging cryptocurrencies are primed for volatility once their presales are over, and newly listed coins see a rapid rise in value immediately after being listed.
Although Bitcoin and Litecoin are considered highly volatile, Ethereum is relatively new and has not yet reached its peak. Consequently, the prices of ETH and other cryptocurrencies will fluctuate wildly. As a result, volatility may continue into 2022.
It’s less vulnerable to hackers
Ethereum cryptocurrency is less vulnerable to hackers than many people believe. The Ethereum blockchain has hundreds of thousands of smart contracts that control wallets, tokens, and applications. These smart contracts can be hacked to steal funds. Researchers devised a new approach to finding vulnerabilities in these contracts. They identified 34,200 smart contracts that were susceptible to hacking. Of these, 3,000 had vulnerabilities that hackers could exploit to steal around $6 million in ether.
A major flaw in the Ethereum blockchain caused the DAO attack. The DAO, a decentralized autonomous organization launched on the Ethereum blockchain, had raised $150 million USD through a token sale. The Ethereum network was then hacked due to vulnerabilities in the codebase, and a hard fork was required to restore the funds. The Ethereum network was split into Ethereum Classic.
Some crypto exchanges have implemented measures to protect themselves. One example is the implementation of hardware wallets. These wallets can be used to protect the cryptocurrency from hackers. Some exchanges have also adopted bug bounty programs. The rise of hashrate marketplaces has also increased the risk of hackers attacking exchanges. Because of this, exchanges must adopt more stringent security policies to prevent a 51% attack.
Ethereum’s decentralized structure makes it less vulnerable to hackers. A common attack vector is obtaining private keys from the cloud. This makes hardware wallets the best choice for protecting the private keys. Hardware wallets also provide offline storage. In addition to security, Ethereum transactions are irreversible, which means that a hacker can’t steal the private keys or drain the Ethereum account.