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Ethereum and This Top Value Stock Have 3 Surprising Similarities That Could Make Them Monster Buys for 2022

Ethereum and This Top Value Stock Have 3 Surprising Similarities That Could Make Them Monster Buys for 2022
Written by publisher team

What can crypto leader Ethereum (CRYPTO: ETH) The share of the primary consumer Procter & Gamble Company (NYSE: PG) Maybe you have in common? On the surface, nothing. But if you dig deeper you’ll find that they have a surprising number of similarities, despite being opposite pole investments.

And each one could be a great buy for 2022 and beyond.

Image source: Getty Images.

1. Similar market caps

As of the time of writing, Ethereum has a market capitalization of $385.1 billion compared to P&G’s $382.1 billion. But just two weeks ago, Ethereum was worth over $500 billion, surpassing $575 billion at an all-time high in September 2021.

Right now, though, the market views these assets as having roughly the same values, albeit for completely different reasons. The value of Ethereum derives from what investors hope it will grow into while the value of P&G comes from what it has built over its rich history, reputation, and confidence that it will continue to be a dominant member of its industry.

2. Long-term growth

Ethereum has the potential to disrupt traditional finance through an increasingly complex and large blockchain that supports a lot of practical applications in the crypto market. Ethereum supports major Decentralized Finance (DeFi) projects, including scaling solutions such as ribbed and smart contract networks such as chain link.

Ethereum is also the largest decentralized application (dApp) platform. Instead of being owned by an individual entity or company and running on central servers, the back-end code of dApps runs on a peer-to-peer network. In theory, dApps should be more secure, have better privacy, boost creativity, and run more smoothly than centralized apps. But in practice, the platform is still somewhat crowded, and scaling has been an issue. As the Ethereum network grows, it becomes difficult to update and maintain dApps. It’s hard to get into and modify code to address issues once a dApp is deployed. Furthermore, scaling a dedicated application to a smaller volume can be challenging and clogging the network.

The Ethereum 2.0 upgrade aims to help make scaling more secure and faster through a process known as hashing. Sharing is the process of separating multiple block chains from a single chain. For Ethereum, the plan is to create 64 new threads that will help speed up transaction times and reduce costs, improving dApp performance in the process. Scaling this scale has not been attempted before in the industry, so it is important to view Ethereum 2.0 as a potentially huge way to grow Ethereum’s influence, but also a risk that could compromise the integrity and security of the network.

In addition to being the largest DeFi and dApp blockchain by volume (greater than Bitcoin (CRYPTO: BTC) or SolanaEthereum is also the largest market for non-fungible tokens (NFT). In short, it is the best overall cryptocurrency when it comes to practical use cases and its potential to disrupt industries, while Bitcoin is arguably a better store of value and better inflation hedge than gold.

The value of P&G is much less abstract than that of Ethereum. Its value is the product of decades of revenue, dividends, and free cash flow growth that underpins increasing dividend payouts year after year. In fact, the consumer products giant has raised its payouts for 65 consecutive years, making it one of the longest-running members on the shortlist of dividend kings.

Aggregate demand for most P&G product categories remains fairly constant regardless of what the economy does, a feature common to most core consumer firms. This makes them pick investors during downturns because in periods when other types of companies are vulnerable to experiencing fairly severe downturns, P&G and its peers are more likely to see stagnant growth or small declines in earnings.

3. Generate passive income

Backed by cash and a track record of increases in payments over decades, P&G Dividends provide a reliable way to generate income without having to sell the underlying security. Likewise, many exchanges will pay users interest on their Ethereum. for example, Queen Piece It pays a return of 4.5% per annum (APY) if users choose to “participate” in their Ethereum. Staking means that users give up their trading privileges until the Ethereum 2.0 upgrade is complete. BlockFi offers a 5% APY for the first 1.5 Ether that a user buys and uploads to their platform. Celsius is offering an interest rate of 5.35% on up to 100 Ether tokens on its platform for each user.

Compared to P&G’s 2.2% return, Ethereum’s interest rate looks much more attractive. But investors should keep in mind that cryptocurrency exchanges usually reserve the right to change these interest rates at any moment. Moreover, the contents of interest-bearing cryptocurrency accounts are not as federally secured as funds held in traditional savings accounts at banks or credit unions.

Exchanges are willing to offer much higher interest rates on Ethereum than a traditional USD savings account would pay because the demand for capital and leverage in the crypto space is very high. Fortunately, the exchanges will pay the user an interest rate of 5% on Ethereum if they can lend it for 6% or 7% and collect the difference. So, while both P&G and Ethereum (on most exchanges) generate forms of passive income, P&G earnings are a safer bet.

Two unique purchases worth considering now

Ethereum and P&G explain why value is such a complex concept. Ostensibly opposing securities can be nearly equal in value even though their investment thesis attracts different people. Investors interested in growth may find Ethereum to be one of the best long-term buys out there, given that many of the trends that support it are still in their infancy. Value and income investors may want to buy Procter & Gamble for a reasonable price-to-earnings ratio of 28.9, record earnings, operating cash flow, and the ability to continue to grow during downturns.

Opening micro positions in both Ethereum and P&G is a reasonable option for those looking to balance their risks, capture the upside, and earn income.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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