Fantom’s recent gains have captured the attention of cryptocurrency investors. Here’s what you should know before you buy it.
While the entire cryptocurrency market was in a tight spot until the end of the summer, Fantom (FTM) emerged as one of the big winners. Its price rallied throughout the entire month of August, reaching an all-time high of $1.93 on September 9, 2021. It has calmed down since then, but for those who believe in Phantom, this drop could be a good buying opportunity.
The excitement around Fantom comes in large part from its ability to be a better version of Ethereum (ETH), the second largest cryptocurrency. If Fantom is a cryptocurrency you’re considering adding to your wallet, this primer will cover what you need to know about it.
1. It is a blockchain platform with smart contract capabilities
To get started, it’s important to have an understanding of what Fantom does. Fantom is a blockchain platform capable of running smart contracts. These programs allow blockchain networks to perform more advanced transactions than simply sending cryptocurrency from one person to another.
There are several very common uses of smart contracts at the moment:
- They are useful in Decentralized Finance (DeFi), which are financial services that do not require a central governing body. Through smart contracts, developers can create decentralized applications (dApps) that power DeFi platforms.
- They are used to establish ownership of non-fungible tokens (NFTs). These are digital collectibles that can be traded, bought and sold.
Ethereum was the first cryptocurrency to offer smart contracts, and it is the platform on which most dApps are created. However, it has been experiencing congestion issues, which has resulted in outages of service and high transaction fees. For this reason, many alternatives have been developed to offer faster transaction processing at a lower cost.
2. It is available on many large cryptocurrency exchanges
Many types of cryptocurrency are hard to buy, especially smaller cryptocurrencies. Fortunately, this is not the case with Fantom. You can buy it from many of the largest cryptocurrency exchanges, including:
In addition, Fantom is available on many decentralized crypto exchanges. This type of exchange provides peer-to-peer cryptocurrency trading without an intermediary that facilitates transactions. Decentralized exchanges offering Fantom include Uniswap and Sushiswap.
3. Transactions on Fantom are inexpensive and almost instant
One of the main draws of Fantom is its efficient transaction processing. It can handle thousands of transactions per second, and transactions are settled within 1-2 seconds. Transaction fees are usually a fraction of a cent. In May, Fantom was reported to have passed 3 million transactions and was the fastest blockchain platform.
Fantom is no longer the only cryptocurrency offering these kinds of speeds, and it may not be the fastest blockchain platform anymore. It is said that Solana (SOL) can handle at least 50,000 transactions per second and also charges a fraction of a cent in fees. However, the Fantom’s performance is quite impressive.
4. Fantom token uses include staking, governance, network fees, and payments
Fantom Token is the platform’s original cryptocurrency. Here is the purpose of using it:
- the bet: Fantom uses a Proof of Stake model. Transactions are verified through nodes made up of people’s Fantom tokens. By setting encryption in this way, you are helping to secure the network and earn rewards.
- Verdict: Since Fantom is decentralized, token holders make decisions about its future. By keeping and storing Fantom, you can suggest and vote on changes.
- Network fee: Fees are paid on the Fantom network using their own cryptocurrency. These fees are charged for transactions, deployment of smart contracts, and creation of new networks.
- Payments: With fast transaction speeds and low fees, Fantom is a convenient way to transfer money to third parties.
5. It has strong competition in Ethereum and other smart contract platforms
Perhaps the hardest challenge for Fantom moving forward is the stiff competition. There are plenty of alternatives to Ethereum. Cardano (ADA) is the largest and has seen significant growth on its own this year. Solana mentioned above is another growing platform that offers lightning fast transactions.
There is also Ethereum itself, which is going through a series of upgrades to Ethereum 2.0. During these upgrades, it will transition to a Proof of Stake model such as the Fantom. These upgrades should improve transaction speed and lower fees.
Due to its transaction speeds and advanced smart contract platform that it offers, Fantom can be a solid investment in cryptocurrency. The price has fallen since its all-time high, and its market price is still much smaller than some of its major competitors. It is still conceivable that there is plenty of room for it to continue growing.
On the other hand, it is difficult to say which of these platforms, if any, will have the greatest long-term success. Make sure you think carefully about Fantom and the alternatives before deciding where to put your money.
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