Investing in Ethereum is a good alternative for people interested in disrupting innovations with high growth potential and cryptocurrencies in general, and be willing to accept the inherent high price volatility.
Investors in cryptocurrencies are advised to diversify it’s portfolio, and only invest money if they are able to afford capital losses in the case of short term price fall. Anyway, Ethereum is a promising technology in the long term.
What is Ethereum?
Ethereum is a decentralized public platform that can run applications based on a blockchain. Anyone can create applications for the Ethereum platform. Ethereum provides a cryptocurrency called Ether. Programs running on Ethereum can make automatic payments with Ether.
Ethereum is decentralized, open and safe. It’s decentralized because the Ethereum network has thousand of independent nodes distributed around the world. No one can control the network. It’s open, because anyone that has a computer or smartphone can participate: no need to open a bank account or credit card. It’s safe, because it’s based on the blockchain: Ether can be safely stored.
Ethereum has an embedded programming language. This feature allows Ethereum to execute transactions like smart contracts or derivative contracts, like contracts for difference. This is not possible in Bitcoin.
Ethereum is the second largest cryptocurrency, after Bitcoin. Ethereum market cap is growing very fast.
Ether as a cryptocurrency
Ether can also be used as a cryptocurrency, like Bitcoin. In fact, Ethereum transactions are faster and cheaper than Bitcoins. A transaction in Ethereum has a median fee of $2 USD whereas a median Bitcoin transaction has a fee of $16 USD. Ethereum block time (the time it needs to add a new block to the public blockchain) is 16 seconds. Bitcoin block time is 10 minutes.
Lower fees and fast transaction times, makes Ether a good alternative to Bitcoin as a mean of payment, or “digital cash”, besides the use of Ethereum as a “world computer”.
Growth of Ethereum
Ethereum Market Cap
Ethereum is growing very fast. It’s receiving a lot of attention from users, investors and companies. Ethereums market share and price has been growing steadily.
Price of Ether
The price of Ether is growing steadily, specially since February 2017: it’s price in February 2017 was near $12. In January 2018 it was $1400.
The future of Ethereum
Ethereum is a promising technology that can have important applications besides it’s use as a cryptocurrency. Smart contracts will be it’s main applications in the near future, but there can be many more. It’s such an innovative technology that it’s difficult to asses it’s reach. Ethereum is being tested by banks to execute transactions in a faster and safer way, but Ripple seems to be a better candidate for fast adoption by banks.
We believe that the rate of growth that we are seeing cannot be sustained over the long term, but Ethereum has still a lot of room to growth.
Some advantages of Ethereum are:
- Ethereum solves real problems and Bitcoin has already proven that blockchain based technologies are secure and reliable.
- It’s the second most important cryptocurrency and is growing faster that Bitcoin.
- It’s supported by a lot of big firms like Microsoft, Intel and JP Morgan. Business are investing a lot of money in the development of apps that will run on Ethereum, because they see a promising future in Ethereum.
- Ethereum has a strong team of talented developers.
What does it means to Invest in Ethereum?
For the street investor, investing in Ethereum means investing in Ether, the cryptocurrency that fuels the Ethereum Platform. If Ethereum keeps growing, the demand for Ether will grow accordingly and it’s price will rise.
How to invest in Ethereum
Storing Ether in a wallet
An Ethereum wallet is a way of accessing Ether. The simplest Ethereum wallet is a public address in the Ethereum network, and a private key that allows the owner to use the Ether in that wallet. This simple wallet can be printed in a paper and stored safely. https://www.myetherwallet.com/ can be used to generate such a paper wallet.
Another type of wallet is a software wallet, that is a computer program that can generate public addresses, private keys and also allows us to interact with the network to send Ether to other addresses (that is, spend the Ether). A popular software wallet is Exodus.
A hardware wallet is an external device with a small screen and buttons, that can also generate public addresses, private keys and also allows us to interact with the network to send Ether to other addresses. A hardware wallet is considered safer than a software wallet, because the device cannot be easily hacked. A popular hardware wallet is Ledger Nano S.
But in order to receive Ether in a wallet, you first need to buy it. There are 2 main ways of buying Ether:
- Using an instant service like Changelly.
- Using an exchange
Changelly receives payments in credit cards or cryptocurrencies and then sends the amount of Ether to an address that we provide.
Cryptocurrencies exchanges are services that receive deposits in FIAT currency (GBP, Dollars, Euros) and also cryptocurrencies, and allow us to buy and sell several cryptocurrencies. Exchanges can store the Ether for us, but, for safety reason, it’s recommended to withdraw those Ether to a wallet under our control. Popular cryptocurrency exchanges are Binance, Kraken, Coinbase, GDAX, Gatecoin, and Bitstamp.
eToro is a brokerage firm that has been operating for more than 10 years. It’s regulated in the UK and in the European Union. It’s considered safer than an exchange. eToro allows to invest in different types of instruments and markets, in addition to cryptocurrencies: stocks, currencies, raw materials, etc. Allowing the investor to diversify it’s portfolio in the same platform.
eToro also allows to invest in different cryptocurrencies: Bitcoin, Bitcoin Classic, DASH, Ripple, Litecoin and Ethereum Classic.
eToro doesn’t require downloading additional software (a wallet). Transactions in eToro are completed within seconds.