Investing in Ethereum
Ethereum, the 2nd largest cryptocurrency in terms of market capitalization, has seen a great deal of attention from investors in recent weeks.
This week alone, users have flocked to Ethereum investment products, as evidenced
by an influx of more than $5 million into several offerings in the space including
Ethereum Classic and Ethereum investment trusts like Grayscale’s Ethereum Investment Trust (ETHX).
But why are so many investors interested in this nascent technology?
Is it just because it has been on an impressive run lately, or are there other factors behind the recent popularity?
What is Ethereum?
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference.
Ethereum is used to build decentralized applications (dapps) on its platform.
Decentralized apps don’t have a single point of failure and can’t be shut down by anyone.
Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality. It provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes.
The native cryptocurrency of the Ethereum network is called ether. It is used to pay for transaction fees and computational services on the Ethereum network. Ether can also be traded as a digital currency on some crypto exchanges under the code ETH.
Ethereum was created by Vitalik Buterin in 2013 when he was just 19 years old.
It’s currently one of the most popular cryptocurrencies with almost 25% market share among all cryptocurrencies.
The Bitcoin protocol creates 21 million coins each year but Ethereum creates 3 Ether per second, totaling 27 new coins every 14 seconds.
As more people start mining and investing, this will increase inflation to around 7% per year (about 1/4th that of Bitcoin).
The total supply is limited at 100 million Ether tokens with approximately 92 million already in circulation from pre-sale investors who purchased during 2014-2015 prior to launch.
What makes it valuable?
Cryptocurrencies are valuable because they’re digital, global, open, and secure. They’re also programmable, which means they can be used to build new applications and financial products. Ethereum is the second-largest cryptocurrency by market capitalization and has a strong community of developers building applications on its blockchain.
Ethereum is also proof-of-stake, which means it’s more energy-efficient than other cryptocurrencies. For these reasons, Ethereum is a good investment for those looking to invest in cryptocurrencies. It has the largest developer community out of any other coin, with high trading volume that keeps increasing every week.
One thing to note about Ethereum is that you need to store your ETH in wallets instead of an exchange; otherwise you run the risk of losing your coins if something happens with the exchange.
The three types of wallets are hardware wallets like Ledger Nano S and Trezor, paper wallets like MyEtherWallet or Jaxx Wallet (paper wallet generator), or software wallets like Exodus or Mist.
Hardware wallets are the most secure but the least user-friendly, while software wallets are the most user-friendly but less secure. Paper wallets offer a middle ground between security and convenience.
The reason why people might choose one over another depends on their personal preference – what they prioritize when using a currency wallet. When choosing where to buy Ethereum from, Coinbase is a great option as it’s regulated by US law, offers transparent fees, and isn’t known for fraud/scams like other exchanges such as Kraken or Bitfinex. Coinbase charges 3.99% for buying/selling ETH so make sure to factor this into your budget when investing in this cryptocurrency!
What are the risks?
Before you invest in any cryptocurrency, it’s important to understand the risks. Here are a few of the risks associated with investing in Ethereum:
1. Volatility – The price of Ethereum can be very volatile.
This means that it can go up or down a lot in value in a short period of time.
2. Hackers – Because Ethereum is stored on the blockchain, it is vulnerable to hacking.
If a hacker is able to gain access to your private key, they could steal your Ether.
3. Scams – There are many scams associated with Ethereum and other cryptocurrencies.
Be sure to do your research before investing in any coin.
4. Regulation – Cryptocurrencies are not currently regulated by any government or financial institution. Without regulation, there is no guarantee that you will be reimbursed if something goes wrong.
5. Lack of Liquidity – It may be difficult to buy or sell your Ether at times when the market is moving quickly due to low liquidity in the market.
6. High Risk Investments – Always remember that investments involving high risk also come with high rewards!
So while it’s important to understand the risks involved with Ethereum, don’t let them discourage you from making an investment.
For example, Bitcoin has experienced huge fluctuations in its price since its inception and yet many people have made a fortune off of their investment. Just keep this information in mind as you make your decision about whether or not to invest.
What’s next for cryptocurrencies?
Cryptocurrencies are still in their infancy, and while they have seen massive growth in recent years, there is still a lot of potential for growth.
One of the most promising cryptocurrencies is Ethereum. Ethereum has a lot of potential because it is more than just a currency.
It is also a platform that can be used to build decentralized applications.
This makes it an attractive investment for those who are looking to get involved in the cryptocurrency space.
There is a lot of opportunity with Ethereum as it grows and becomes more widely accepted by both businesses and individuals. When you invest in Ethereum, you are investing in the future of not only this currency but blockchain technology as well.
While many experts predict that Bitcoin will eventually dominate the market, Ethereum has proved itself to be worthy competition. If you want to start investing in cryptos but don’t know where to start, consider learning about Ethereum and other altcoins like Litecoin or Ripple before making your decision. And if you’re wondering how to buy these currencies, then keep reading! Buying cryptocurrency is different from buying stocks.
Stocks are bought using money while cryptocurrencies must first be purchased using another form of currency (e.g., U.S. dollars).
Once purchased, they can then be traded on various exchanges such as Coinbase, Kraken, and Poloniex. The most popular way to purchase cryptocurrency is through bitcoin mining pools or platforms like GDAX which allow users to trade directly with one another instead of through the company’s exchange
If you’re thinking about investing in cryptocurrency, you should definitely consider Ethereum. Here’s why
– It has a growing network of decentralized applications and use cases
– There are many different types of Ethereum investments for a variety of risk appetites
– The value is expected to rise significantly in the coming years as more people become aware of it.
– These tokens have a limited supply so their value will also increase with demand.
– Bitcoin was only worth $0.01 when it first started but now it’s worth around $6,700 as of today (December 12th).
It could take some time for Ethereum to reach that level but it could happen eventually if adoption continues at this rate.