How to Invest in Ethereum | Best Way to Invest in Ethereum
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Before making an Ethereum investment, it is good to familiarize yourself with what the “world computer” is, how it works, what its future looks like, and how to invest in Ethereum the right way.
While they can be helpful, bias and misinformation are everywhere online. Keeping up to date with the latest Ethereum and cryptocurrency news is a great idea, but don’t base your trades purely on external sources. For a start, when something has hit the news, it may generally be a time to sell, not buy (“buy in the rumor, sell in the news”). Fortunately, there are tools available to help make your price predictions. Then all you’ll need is the right exchange or brokerage to trade on!
What is Ethereum?
Ethereum is a decentralized, open-source blockchain much like Bitcoin. The big difference is Ethereum also has the capability of connecting third-party applications (“dApps”) to it, thus creating a blockchain “city” for financial services, games, social media, work, and more. Not only that, but Ethereum also has a currency and payment system. Ethereum’s payment network ensures privacy without any government control or censorship. Ethereum is truly global: there are no prerequisites to creating an account, including borrowing, lending, and saving features. Currently, Ethereum’s blockchain is used more than any other blockchain. Bitcoin still has the highest market cap, but Ethereum is only one place behind. Ethereum’s design has also inspired other cryptocurrencies, such as Neo. Neo is often referred to as the “Chinese Ethereum,” and it is one of Ethereum’s biggest competitors.
Ethereum’s whitepaper was released in 2013, followed by a yellow paper, an ICO (“initial coin offering” to raise funds), more testing, and finally, it was launched in 2015. Since it started, Ethereum has gone from strength to strength. After the pre-sale, Ether’s (Ethereum’s coin) price began at $0.75, and it is now worth in the region of $2000. Ethereum reached its all-time high of $4168.7 in May 2021. With the “London hard fork” about to be released, as part of the roadmap to the much-anticipated Ethereum 2.0, many investors are speculating about Ethereum’s price rocketing up once again and perhaps even overtaking Bitcoin on market cap. Ethereum does have its problems, however. Its “gas” (means of determining transaction fees), for example, is slanted in favor of significant transactions. The biggest problem for Ethereum (and many other cryptocurrencies) has been its lack of scalability, although Ethereum 2.0 promises to resolve this issue and many others.
How Does Ethereum Work?
Ethereum is a decentralized blockchain with smart-contract functionality. Let’s break this down. A “decentralized blockchain” is a network of computers (“nodes”) managing and maintaining a shared ledger of transaction information. Usually, a bank would store all financial information on a central server, but Ethereum’s blockchain puts control back into the hands of its users. To process transactions on its blockchain, Ethereum uses “miners.” Miners are users who dedicate some of their computational power to solving the ongoing puzzle created by new transaction requests on the blockchain. By comparing blockchain data between themselves, miners can authenticate transactions with a high degree of accuracy. In return, they are paid in Ethereum’s native currency (Ether).
In the world of Ethereum, “gas” means something completely different. Gas is the system of measurement to determine transaction fees. Think of it as a cab fare. The longer it takes your payment to get from point A to point B, the more expensive the fare will be (and the more gas required). OMG Network (formerly Omise Go) runs its transactions through Ethereum’s network, but it groups its transactions to reduce congestion on the network and use less gas, like sharing an Uber! There have been concerns about the amount of gas required as transaction times are slowing and getting more expensive. There is a lot of hope pinned on the solutions promised by Ethereum 2.0.
Smart contracts are famously what differentiates Ethereum from Bitcoin, but how do they work? A smart contract is simply a program that uses the Ethereum blockchain. These programs have no control over the blockchains themselves, meaning they are not a security threat for Ether holders. They have a separate address on the network, just like any user does. Other users may then choose to connect with the blockchain via these smart contracts. Smart contracts are self-contained, but they bring a huge amount of utility and uptake to Ethereum. Ethereum is known as a “primary layer” or “parent chain” and, by being the first to allow smart contracts, it may well take on a similar title over the rest of the cryptocurrency market. Ethereum has enormous potential, but there are also many problems it will need to resolve.
Ethereum Investing: Price Predictions
While you can never be certain about the outcome of any trade, there are some techniques you can use to help shift the odds in your favor when trading or investing in Ethereum. “Chart indicators” is the name for the collective group of price data analysis tools that help to elucidate patterns, trends, and other information related to Ethereum (or any asset you apply them to). The Bollinger Band indicator is a good tool for measuring volatility, for example. MACD (Moving Average Convergence Divergence) is an excellent indicator for spotting trends. The Volume indicator displays the amount of trading going on. There are thousands of indicators to choose from, but even just using three or four will give you much greater insight into likely price movements.
Using these tools, you won’t be so reliant on skimming through the internet for other people’s predictions. That being said, if your predictions are a million miles off the consensus amongst professional traders, you may want to check your (or their) working to explain the difference. In terms of an Ethereum investment, many experts are seriously bullish about its potential price tag in the future. Some see Ethereum’s price reaching as high as $150,000 within the next couple of years. It’s certainly possible. A more common prediction amongst pundits is Ethereum hitting $50,000 by 2025. The success or failure of Ethereum 2.0 will be an essential factor in determining how high Ethereum will fly by 2025. It’s looking rosy right now for Ethereum, but remember, cryptocurrency is a volatile market, and everything can change in the blink of an eye!
How to Invest in Ethereum?
If you’re ready to make an Ethereum investment, there are several ways of doing this. The easiest type of trade is to purchase Ether (ETH is its ticker name). There are many exchanges and trading platforms from which you fill your pockets with Ether. If you wish to hold Ether for a long time, the safest place to store it is in an offline wallet. You can download Ether wallets for free, then transfer the ETH onto an external hard drive or a USB stick. Other trading options are derivative bets. “CFDs” (“contracts for differences”) can be agreed upon with your broker to leverage more money on trades and increase potential gains. Finally, “short trades” can be set up to bet on an asset going down in value.
How to Trade Ethereum
Since Ethereum grew from a seed in Buterin’s brain to the second-biggest cryptocurrency in the world, Ether’s rise in value has been meteoric. Of course, in the cryptocurrency world, nothing is inevitable, and Ethereum has not been without its setbacks. In 2015, an anonymous hacker stole a staggering $50 million in Ether. The security and longevity of the project were understandably brought into question. The controversy led to a split in the Ethereum community and the platform forked into two blockchains: Ethereum (ETH) and Ethereum Classic (ETC).
Yet Ethereum more than survived – it thrived. The digital currency grew by 13,000% in 2017 alone – no wonder investors and traders have been flocking to this market honey.
Which begs the (potentially) million-dollar question: where to buy ETH?
If you are looking for Ether, pure and simple, you can either buy the coins from a cryptocurrency exchange or obtain them in a peer-to-peer exchange. An increasing number of centralized exchanges will let you swap fiat currency for Ether, so all you may need is your credit or debit card.
The complication comes in the question of storage. You can choose to keep your Ether coins in the same exchange where you bought them. This is the easy option, but it may not be the safest one. Even major cryptocurrency exchanges are not immune to hacking, and you could lose all your coins in a single cyber-attack.
At this point, you could choose to send your Ether to an offline wallet. This could be a physical hardware wallet where you store your cryptocurrency without internet access – an ultra-secure option. There are also web wallets or mobile applications for easy access to your crypto on the move. If you decide to store your ETH in a wallet, you will get a “seed phrase,” a type of password you need to access your assets. Tattoo this seed phrase on your brain (metaphorically, of course!). If you lose it, you lose your cryptocurrency too.
Where to make Your Ethereum Investment?
To get the most out of your trading career, we highly recommend our online brokerage, “TradeOr.” TradeOr has built an excellent reputation as a trustworthy brokerage with a fantastic overall user experience. Suppose you want to trade on other cryptocurrencies or in other markets. In that case, TradeOr has a vast range of options, with trading available on a long list of assets across the stock market, forex, commodities, indices, and cryptocurrency. There are many chart indicators available to all users and expenditure trackers, so you can throw away the calculator and let our platform do all the boring (but essential) maths for you. Our support team is exceptional, offering both technical and expert trading advice.
There is a real buzz around Ethereum. It has taken a different path to Bitcoin, mainly through its implementation of smart contracts. Ethereum’s popularity has grown hugely since its initial release in 2015. With Ethereum 2.0 just around the corner, many questions looming over will be answered, including scalability issues. It seems most pundits would be confident about a long-term Ethereum investment, with estimates on par with some of Bitcoin’s historic price breakouts. By learning to use chart indicators, you can check and create your forecasts. Next, how to invest in Ethereum? There are lots of options, but you can always simply buy Ether (ETH). Finally, choosing where to make your trades can be a bit of a minefield, but we can guarantee our trading platform, TradeOr, will give you an unparalleled experience. Put us to the test (for free) using one of our virtual money accounts!