This Crypto Has Turned $10,000 Into $1.85 Million in 5 Years

It's the second-largest cryptocurrency, and it has delivered remarkable gains over the last five years.

Cryptocurrency has gone through massive highs and soul-crushing lows, but one thing is certain. Investors who put their money in the right coins and gave them time to grow are very happy right now.

That's the case with people who put money in Ether, the native cryptocurrency on the Ethereum blockchain. A $10,000 purchase of Ether five years ago would now be worth $1.85 million, for a return of over 18,000%.

Turning $10,000 into nearly $2 million is life changing. With that much money, you could buy the car and home of your dreams, and still have enough left over for a large retirement nest egg. And some investors think that this could be just the beginning for Ether.

What are Ether and Ethereum?

Ether is the cryptocurrency with the second-largest market cap. The reason it has been so successful is because it's the cryptocurrency for Ethereum.

Ethereum essentially took the idea behind Bitcoin, using a blockchain for recording crypto transactions, and expanded on it. It allows people to build apps on the Ethereum blockchain, which is why it's considered programmable.

The Ethereum blockchain can also be used for smart contracts. A smart contract is a self-executing contract with the terms written into the code. This capability is one of Ethereum's biggest strengths, and it's why Mark Cuban loves Ethereum.

There are all kinds of potential uses for smart contracts, but here are few examples:

  • A smart contract could execute a payment for a supply shipment once there's delivery confirmation.
  • An insurance policy with a smart contract could pay out automatically if certain conditions are met.
  • Healthcare providers could use smart contracts for insurance billing. Smart contracts could pay the provider after it sends a receipt for the service.

Transaction fees on the Ethereum blockchain are paid in Ether. As the Ethereum blockchain becomes more widely used, it should increase the demand for Ether and push the price up.

Ether's price over the years

For buyers who have stuck with Ether, the cryptocurrency has been extremely profitable. Going back to the earlier example, Ether cost $12.33 on May 30, 2016. At that price, it was possible to buy just over 811 Ether for $10,000.

On May 30 of this year, Ether cost $2,278.29. Those 811 Ether would be worth $1.85 million at that price.

That's just one hypothetical. To see how Ether has grown, here are some of its highs and lows since it launched back in 2015:

  • Ether's earliest recorded price was $2.83 on Aug. 7, 2015. If you bought $10,000 worth on that date, you'd have about 3,500 Ether -- worth over $8 million now.
  • During the first major crypto boom, Ether peaked at over $1,300 in the middle of January 2018. This was followed by a steep decline, both for Ether and the entire crypto market.
  • By the end of 2018, Ether was worth less than $150.
  • While Ether started rising with the rest of the crypto market in 2020, it had its most exciting run in April and May of this year. It hit an all-time high of over $4,300 on May 12.

The current outlook on Ethereum

It's fun to look at how much a crypto investment years ago would be worth now. But if you're trying to decide whether to buy in, then the current outlook is what's important.

There are plenty of reasons to be optimistic about the future of Ethereum, as some are predicting that Ethereum could surpass Bitcoin. That includes analysts at Goldman Sachs, who, according to Forbes, said in a recent report that Ether "beats Bitcoin as a store of value" and that it has a high chance of overtaking Bitcoin. Here are a few reasons Ether could have room to grow:

  • About 80% of decentralized finance (DeFi) apps run on Ethereum. DeFi uses blockchain technology to replace services provided by traditional financial institutions, such as loans. For example, some DeFi apps let anyone borrow or lend crypto.
  • A new version of Ethereum, Eth2, is being rolled out through a set of interconnected upgrades. These upgrades aim to make Ethereum more secure and better for the environment -- and to make transactions faster and cheaper.
  • Most non-fungible tokens (NFTs) are on Ethereum. NFTs are digital collectibles, and we've seen a significant increase in NFT art sales this year.

Although Ether has a lot of potential, it's still a cryptocurrency, and cryptocurrencies are risky investments. In less than two weeks, its price swung from over $4,300 to under $1,800.

Before investing in Ether, financial stability is a must. Save up at least three to six months of living expenses in an emergency fund so you have extra cash if you need it. It's also recommended to have a retirement account where you make regular contributions. Crypto can work well as a small part of your investment portfolio, but it definitely shouldn't be your entire portfolio.

If you have a solid emergency fund and retirement account, then you may want to start buying Ether through one of the top cryptocurrency exchanges. Since it's volatile, only put in money you can afford to lose. That way, you're not in trouble if the value drops. You can ride it out and see if the price goes back up like it has in the past.

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Lyle Daly owns Bitcoin and Ethereum

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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