I believe that all cryptocurrencies, consisting of Ethereum’s (ETH-USD) ether, are exceptionally susceptible to substantial downturns. That’s since I believe that lots of federal governments, consisting of in Washington, are most likely to enact policies that will greatly reduce, if not totally hinder, making use of these instruments.

Source: Shutterstock However, I forecast that governments will most likely enable Ethereum to make it through and grow. And for that reason, I am convinced that ether is by far the best cryptocurrency to purchase.

Ethereum Is Useful and Non-threatening

According to Investopedia, “Ethereum is an open-source, blockchain-based, decentralized software platform,” which “makes it possible for [intricate computer system programs] to be built and run with no downtime, fraud, control or disturbance from a third party.”

Even more, the platform is “far less hackable than a cloud server” and can be utilized to implement a “smart agreement,” techradar reported. The latter arrangement, which includes computer coding, allows business to instantly carry out “predefined requirements,” such as sales discount rates.

On the other hand, the European Financial Investment Bank, the EU’s main lending institution, plans “to offer a two-year digital bond on the Ethereum blockchain,” in a transaction handled by, to name a few, Goldman Sachs (NYSE:GS), Benzinga recently reported. And finally, Microsoft (NASDAQ:MSFT) enables users of its Azure cloud service to utilize Ethereum.

Plainly, by offering companies and banks with an incredibly safe, easily utilized network, Ethereum is greatly helpful to them. And unlike the majority of cryptocurrencies, it’s not a threat to the revenues that banks make through fiat currency deals. The platform does not weaken governments’ abilities to manage the cash supply, trace transactions and levy taxes.

Therefore, I think Ethereum’s acceptance by banks and federal governments is a crucial reason that it’s utilized to a much greater extent by these institutions than other cryptocurrencies.

The Looming Cryptocurrency Crackdown

As I kept in mind in a previous column on Dogecoin (CCC: DOGE-USD), I anticipate governments to release a really hard crackdown on cryptocurrencies. Currently, by treating all cryptocurrency transactions as capital gains or losses, the Irs (Internal Revenue Service) has actually made it much less practical to use the instruments. Every deal including them must be reported to the agency.

On The Other Hand, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell have left the door wide open for an expansive crackdown. Specifically, in February, Yellen reportedly stated, “I don’t think that Bitcoin (CCC: BTC-USD) … is commonly used as a transaction mechanism. To the degree it is used I fear it’s often for illegal financing. It’s an exceptionally ineffective way of carrying out deals, and the amount of energy that’s consumed in processing those deals is staggering.”

For his part, Powell said cryptocurrencies are “highly unpredictable and for that reason not truly useful shops of worth and they’re not backed by anything,” He included, “It’s more a speculative possession that’s essentially a substitute for gold rather than for the dollar.”

These comments, which denigrate cryptocurrencies’ utility as currencies, recommend to me that the odds are high that Washington will, earlier rather than later, aim to ban their usage as currencies.

Alternatively, the U.S. federal government may enact regulations that would make it extremely difficult to utilize them to spend for items and services. After all, Yellen stated that Bitcoin is inefficient, enables a big quantity of misbehavior and harms the environment. On the other hand, Powell called cryptocurrencies “a speculative possession” that’s not a suitable replacement for the dollar.

But, provided Ethereum’s high energy for business and its apparent approval by banks and federal governments, I don’t expect the platform to be banned. For that reason, unlike many other cryptocurrencies, ether will most likely not disappear.

The Bottom Line on Ethereum

Ether would likely, nevertheless, take a big hit if (and probably when) the federal government makes it really tough or difficult to pay for goods and services with cryptocurrencies in “the real world,” i.e., outside of Ethereum.

For that reason, I advise that financiers avoid all cryptocurrencies, consisting of ether. However if you’re going to buy a cryptocurrency, Ethereum is the best one to own.

On the date of publication, Larry Ramer did not have (either straight or indirectly) any positions in the securities discussed in this post.

Larry has conducted research study and written posts on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest company paper, Globes. Among his extremely effective contrarian picks have actually been solar stocks, Roku, Plug Power, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.