3 Facts About Ethereum That You Should Know

While the crypto market is still plunging, right now could be one of the most affordable times to invest.

Crypto prices are down significantly this year, which means now is the time to invest at a discount. The price of Ethereum (ETH 0.06%) is down more than 72% from its peak in late 2021. But there are a few things to know before you invest.

1. The Merge will make Ethereum far more energy efficient

Ethereum completed its latest update, The Merge, in mid-September. This update moved the network from the energy-intensive proof of work (PoW) mining protocol to the more efficient proof of stake (PoS).

Moving from PoW to PoS will change how transactions are verified. Also, under a PoS protocol, Ethereum will use around 99.95% less energy. This is a huge win for the blockchain, since one of critics’ primary complaints about crypto is its energy usage.

2. Ethereum still struggles with transaction times and gas fees

Unfortunately, The Merge will not solve two of Ethereum’s more pressing problems: slow transaction times and high fees.

Right now, Ethereum can only process around 14 transactions per second (TPS). That’s dismal compared to Cardano‘s approximately 250 TPSand Solana‘s reported 65,000 TPS. Slow transaction times result in more network congestion, which also drives up gas fees for users — and makes it more difficult for Ethereum to scale up.

The good news is that Ethereum developers are working on another update that will address these issues. However, that update isn’t expected to happen until at least 2023 or 2024, assuming there are no delays along the way.

3. More regulation could be on the horizon

As the crypto market grows, more lawmakers are beginning to look at regulating it. Because Ethereum is one of the largest networks in the crypto space, it’s more likely to be targeted by regulators as it continues to grow.

In fact, after The Merge was completed, the Securities and Exchange Commission (SEC) announced that cryptocurrencies using a PoS protocol — such as Ethereum — could be treated as securities and regulated as such.

In some ways, increased regulation could be a good thing. It might result in more investor protections, fewer scams, and less shady activity behind the scenes (such as crypto whales intentionally manipulating prices for profit).

But some crypto proponents argue that its decentralized nature doesn’t fit with traditional stock market regulations. Some also say that increased regulations could make it harder for smaller cryptocurrencies to get off the ground, essentially allowing the biggest players to monopolize the market.

To be clear, nothing has changed just yet. Lawmakers are still debating how exactly to classify cryptocurrency, and the argument over whether crypto is a security or not has been ongoing. But as Ethereum continues to gain more widespread acceptance, increased regulation could be inevitable.

Is now really the time to buy Ethereum?

Whether Ethereum is the right investment for you will depend on a couple of factors.

For one, consider how much risk you’re willing to take. Crypto is an inherently risky investment simply because it’s still speculative. Although Ethereum is one of the biggest and most popular networks in the crypto space, there are no guarantees that it will succeed over the long run.

Also, think about how much volatility you can handle. Even if Ethereum does thrive over the long term, it will likely be a bumpy road along the way.

If you know you’d lose sleep over crypto’s extreme volatility, it might not be the right investment for you. But if you’re willing to ride out the storm and hold your crypto for the long term, Ethereum could potentially be a lucrative investment.