While most investors have focused on Bitcoin (BTC), many tend to overlook the potential that Ethereum or ETH has.

With a market capitalization of $481.8 billion, ETH is the second-most popular cryptocurrency in the world. Created by computer programmer Vitalik Buterin in 2015, ETH does so much more than act as a store of value.

Most investors are usually confused by the terms Ethereum and Ether. To clarify, Ether is the name of the cryptocurrency while Ethereum is the blockchain network that Ether is built on.

ETH stands out from BTC because of the flexible and open-ended nature of its network - Ethereum. Ethereum has been used as the basis for smart contracts and data storage amongst others.

And that’s just scratching the surface of what ETH can really do.

Unlike Dogecoin and Bitcoin, Ethereum’s rise has been backed by solid fundamentals and not speculation on social media.

With the market remaining relatively unstable since the May 2021 crypto crash, many are exploring the possibility of buying into the dip in prices.

So if you’re got your eye on Ethereum, let’s take a look and see if it’s worth investing in Ethereum in 2021.

1. Regulatory concerns

Regulatory concerns are the bane of any crypto investor.

As cryptos are entirely unregulated and decentralized, governments have been naturally apprehensive with regards to its adoption.

Because of this, government crackdowns and any attempts at regulating the market will send prices crashing.

For example, recent announcements by regulators in China banning cryptocurrency payments sent prices spiralling downwards as investors exited the market en-masse.

While worrisome, this could in fact be a reason to invest in ETH. Unlike other cryptocurrencies, Ethereum is able to function as more than just a medium of exchange. As was mentioned earlier, the Ethereum blockchain has a whole host of potential uses that are yet to be explored.

Thus making it worthwhile to start investing in some ETH tokens.

2. Rising inflation

In the wake of the COVID-19 pandemic, governments were forced to inject record amounts of cash into their economy. All of this excess liquidity has resulted in prices slowly but steadily rising.

This is known as inflation and if left unchecked will erode the buying power of our money. Unlike fiat currencies such as the USD, Ethereum and other cryptocurrencies are technically inflation-proof.

That’s because there is a limited supply of cryptocurrencies and once the limit has been reached - no new tokens can be introduced.

Hence preventing an oversupply of cryptocurrencies in the system and allowing investors to hedge the value of their cash assets.

3. Liquidity

As any savvy investor will tell you, it’s important that you have a selection of liquid assets. This allows you to quickly convert your assets into ready cash in an emergency.

Increased interest in Ethereum as an investment has made it one of the more liquid cryptocurrencies after Bitcoin. It can be easily traded on any number of crypto exchanges around the world making it a good liquid investment.

4. Market volatility

The volatility associated with cryptocurrencies is something of a two-edged sword for investors. On one hand, extreme volatility can and has led to fortunes being made or lost literally overnight.

But if you’re able to buy into the dip and ride the market wave, you also stand to earn possibly millions in just a few minutes.

Because of this, crypto’s volatility has both attracted and frightened potential investors. At the end of the day, it all depends on your risk appetite as an investor.

Making use of stop-loss orders and staying on top of market conditions are all vital if you want to survive the crypto market.

Closing Thoughts

Ethereum like any other cryptocurrency is not without its fair share of risks. You can find some of the best Ethereum wallets here.

However, the rewards are still worthwhile for those who dare. Before investing, start by assessing your risk appetite and only invest in what you can afford to lose.