The cryptocurrency world becomes bigger and bigger with each day passing, which makes investors worldwide wonder if this could one day become the future of global currency.
With so many currencies available nowadays, you may find it challenging to decide on the right one. The truth is that you have to do thorough research before choosing your currency and, implicitly, the platform where you want to begin your trading adventure. But if you are willing enough to inform yourself and take the risk, you can start with Ethereum, the second-largest cryptocurrency by volume. Its various uses provide new investors with a much larger hang of things than the oldest publicly traded cryptocurrency, Bitcoin.
This “programmable Bitcoin”, as Ethereum is often called, has rapidly become known. It is acclaimed that it allows investors or any other participant to run the so-called smart contracts, which are, in fact, decentralized blockchain applications. This gives investors the certainty that these applications are secured, trusted, and aligned with the best digital history.
What is Ethereum?
Ethereum can be defined as a software platform running on a blockchain, but before clarifying what Ethereum is all about, we need to make it clear what cryptocurrency is. You cannot start trading Bitcoin, Ethereum, or any other cryptocurrency if you do not understand this concept. So, a cryptocurrency is a monetary system or medium of exchange based on cryptography technology. This digital asset allows for secured transactions and validated transfers and controls the number of additional units. Cryptocurrencies are security tokens like Bitcoin (BTC) or utility tokens like Golem (GLM). These cryptocurrencies are deposited in an electronic wallet, either online or offline. You can also physically deposit your crypto coins in hardware.
Invented in 2015 by Vitalik Buterin, Ethereum is a blockchain network where you can buy and trade ether (ETH), the platform’s associated cryptocurrency. You can buy ETH as an investment, but you can also use it to develop new applications like payment platforms or lending applications. Peer-to-peer lending, for example, has a real moment on Ethereum these days, as it allows participants to borrow money from one another, and banks have nothing to do with it.
Ethereum vs. ether
Ethereum and ether are often used one instead of the other, but a clear distinction between the two has to be made: Ethereum, as we already mentioned, is the blockchain network, while ether is its native currency. To develop new tokens on Ethereum, participants need to pay a fee to the platform, which is made in ether. This fee is often called “gas”, which is pretty accurate; to make use of the system, you must “fuel” it. However, this gas fee represents a real issue for developers and is also one of the most significant impediments to Ethereum’s possible growth. With Ethereum 2.0, there is hope that this problem will be solved.
The two concepts are interlinked together so that you cannot invest in Ethereum if you do not buy ether. Many investors chose to buy and hold their ether coins, expecting their value to enhance over time.
How ether’s market works
Ether, unlike Bitcoin, is not created to serve as a global currency, and it is mainly used for transactions and developments on the Ethereum platform. Ethereum developed under other circumstances than Bitcoin, so it is hard to predict how it will look in the future. But it is presently sustained by many of the same exchanges and infrastructure that has expanded upon Bitcoin, so a market’s growth is not excluded.
How to buy Ethereum
Now that you are familiar with the concept of Ethereum, you may want more details on how to buy it. Well, here are some of the most important steps to take when buying Ethereum:
Given that Ethereum is the world’s second circulated cryptocurrency, you have some variants to choose from when it comes to the buying process. Not for nothing have we told you that you need to do research; your decision will influence the options available for storage and payment. You can buy Ethereum from an online stockbroker and benefit from the feasibility of transforming your crypto into cash and vice versa. But before choosing this method, ensure your brokerage allows you to move the digital currency in and out of the account to avoid your electronic coins being stuck in a particular place. If you are looking for a user-friendly experience and also have some knowledge about crypto, you can use a centralized crypto exchange. These exchanges are some of the safest and function as middlemen in the purchasing and selling of electronic currencies. And there are, of course, decentralized exchanges (DEXs), which are the truest methods to sell digital currencies since there is no third party involved. Whatever your option, ensure you check Ethereum price USD or any other currency you want the transaction in and balance your options.
Now you have to decide how to pay. Depending on your possibilities, you can choose to pay either with crypto coins or with US dollars. Fiat currency refers to buying crypto with US dollars, while cryptocurrency implies crypto-to-crypto trading. If you are thinking about paying with other electronic currencies, consider constantly changing their values.
The last step is choosing your storage method, which the selected exchange can influence. You already know that cryptocurrencies are stored in electronic wallets, but even these wallets take several forms. Thus, you can choose between on-platform storage and non-custodial wallets (“hot” and “cold” wallets). Depending on your specific preferences and needs, choose a wallet that best aligns with your options.
Are you comfortable with Ethereum’s volatility?
Whether you are a crypto beginner or an enthusiast trader, you must know that it is an unstable asset. Cryptocurrencies are still new to the world, so they need more time to settle. Ethereum’s value may increase and decline, so you need to pay special attention to those moments when it is growing so that you can make your money back and, if you are lucky, make gains.