Will Ethereum Give Rise To A New Trading Era?

While Ethereum is often pictured as the opponent of traditional finance, in reality, there’s no conflict between the two – rather than undermining the conventional finance sector, Ethereum is actually making it a lot better. It’s only a matter of time before the two systems become intertwined.

The cryptocurrency’s core value propositions, such as transparency, self-custody, and disintermediation, are all incredibly relevant to the financial sector and can fit within the regulatory frameworks. Ethereum has already started moving toward institutional adoption, and its unparalleled network decentralization will likely turn it into the primary settlement layer that facilitates financial transactions. Experts state that the cryptocurrency may reach $20,000 this year, which represents a significant increase from its actual price, making it a robust buy.

Ethereum is constantly improving

Ethereum is a well-known cryptocurrency which doesn’t only have its own token (namely ETH) but also a blockchain that hosts thousands of dApps. In the universe of NFTs and dApps, Ethereum is a leader and could transform the entertainment and business sectors down the road.

Now, Ethereum is far from being perfect (and no other cryptocurrency is), and there have been complaints about its intensive energy use, increased costs and slow transaction speed. However, Ethereum is already working on these problems by making continuous updates. It has already reduced energy use by switching to a PoS consensus mechanism, thus eliminating the strong computer power required to validate data blocks. As for now, Ethereum aims to cut costs and increase speed. Through future upgrades, the transaction costs could reach less than $0.001.

The cryptocurrency that offers trading neutrality

Ethereum doesn’t create an anonymized shadow economy – instead, it brings neutrality in a world of multipolarity. Having the role of an unbiased referee in the global financial system, this cryptocurrency has arrived just on time. Thanks to its consensus layer, Ethereum ensures that the stored data about transactions is incorruptible, spanning over 500,000 validators distributed over 10,000 physical nodes in many countries. This means Ethereum promises greater decentralization – not less, as some are concerned. It’s essential to make clear that Ethereum won’t replace traditional contracts or lawful authorities for resolving conflicts. Instead, it aims to prevent disputes from occurring.

Trustless smart contracts as a solution for the principal-agent problem

The collapse of the FTX and all the other unfortunate events that triggered the crypto winter aren’t so much about the failings of crypto than the shortcomings of traditional finance. Over-centralization and lax oversight were the main factors that worsened the principal-agent problem, and historically, regulation was the default approach to the issue. It is true that there’s a strong need for greater oversight. However, the solutions Ethereum provides are more foundational, having the potential to eliminate certain aspects of the principal-agent problem via distributed ledgers and trustless smart contracts.

With its scaling chains, Ethereum will soon be able to pervade traditional banking, setting up investors for a whole new era in trading. Smart contract technology allows for the creation of self-executing contracts, which can be used for various applications like real estate, insurance, and so on. Smart contracts are cheaper and more efficient because they eliminate the need for mediators, enabling the automation of contracts. They are the foundation of DApps, seen as potentially transformative and paving the way towards the Web3 ecosystem.

Through its blockchain technology, Ethereum enables the tokenization of assets like stocks, real estate, or bonds. This facilitates fractional ownership of an asset, creating opportunities for anyone to invest in what wasn’t once accessible to every investor. Tokenization brings more liquidity, validity and security to ownership, whether a real-world asset or digital data. DApps like decentralized exchanges can thus introduce a brand-new digital economy with incredible capacities by powering tokenized asset liquidity and trading activity.

Is it a good idea to buy the dip?

Ethereum’s PoS mechanism offers a big plus, allowing investors to stake their ETH holdings and earn passive income. This can attract new investors, including those who collect recurring payments, like dividends. But returning to the main question, is it right to purchase Ethereum on the dip or not? The answer is very personal, depending on everyone’s risk tolerance. Suppose you are a highly cautious individual; in this case, you may want to avoid crypto investing altogether. The industry is relatively new, and no one can predict what will happen in the next 5 or 10 years, so if you can’t tolerate uncertainty, it may be better to steer clear from the market.

However, if you are okay with handling risk, Ethereum is indeed a solid buy. It has already proven its capabilities so many times, attracting many users, so you can rest assured that Ethereum will likely lead the pack if crypto takes off. Ethereum may not be doing as great as it did in 2021 regarding its price, but that doesn’t mean things will be this way forever. Remember that prices are never set in stone when it comes to cryptocurrencies, and they can change unexpectedly overnight. So, there’s a good chance that things will turn out in the investor’s favor – obviously, this isn’t guaranteed, so it’s best to be prepared for both a positive and a less pleasant scenario. Overall, Ethereum is a solid long-term investment, so it may be worth buying the dip. Being supported by institutional investors, this cryptocurrency has a diverse and solid ecosystem. Moreover, its detailed road map points to significant future development, making it even more valuable.

Takeaway

It may still take a while until Ethereum reaches its fullest potential, but the building blocks already exist. There will likely be a proliferation of tokenized securities in the future, along with significant investment in ETH staking pools. Other focus areas will comprise streamlined user flows to comply with regulations and on-chain financial reporting. Protocols of Ethereum unable to adapt to the dynamic ecosystem will be removed effectively, and those that remain will successfully be integrated with the actual financial system.

This is only the beginning of Ethereum’s transformative impact on the traditional financial sector, so if you don’t want to miss out on this cryptocurrency’s evolution, keep an eye on the market.