Anyone who has ever ventured into the cryptocurrency market has heard about Ethereum (ETH).
This term can actually be used to describe two things:
- Ethereum network, an open-source software platform
- cryptocurrency built on that same network that’s officially called Ether
In this article, we are going to talk about both of these to give you a better grasp on what exactly Ethereum is and how you can invest in it.
If you’re one of the many people who are interested in this cryptocurrency, keep reading to find out everything about it and learn how to buy Ethereum.
What is Ethereum (ETH)?
Ethereum is the second-largest cryptocurrency platform, right after Bitcoin. It’s an open-source distributed blockchain network that shares some key features with Bitcoin, but it also has some differences, such as the PoW consensus mechanism.
Despite many people thinking Ethereum is a cryptocurrency, it’s actually the platform in which Ether, the actual cryptocurrency, functions. Just like Bitcoin, Ether can be invested in, even though it’s worth much less if we just look at its monetary value.
Technically, you can trade anything using ETH just like with any other cryptocurrency, but what sets Ethereum apart is its computing language that allows smart contracts to exist. This means that ETH currency can be exchanged automatically if certain conditions are met.
Should you invest in Ethereum?
Even though Ethereum hasn’t been around for very long, a lot of people have already invested in it and made a sizable profit from those investments. When it was launched in 2014, early adopters were able to purchase Ether for only one dollar.
As with a lot of investments, there is no definitive answer whether or not you should put in your money into something that might or might not be profitable. However, judging by Ethereum’s history, this is a safe investment that will most likely be profitable.
When Ethereum reached its all-time high price in 2018, investors made over $1,400 per unit of this cryptocurrency. While a lot of people sold their Ethereum during this price peak, many investors are still holding out, believing that Ethereum’s best days are still yet to come.
While the monetary value of the cryptocurrency has dropped significantly since its peak, currently standing at $188, most crypto investors and financial analysts believe this figure will rise. The most conservative estimates say it will reach $320 per ETH, but some predict it could be over $11,000.
If you’re wondering whether Ethereum is a safe investment, you need to realize that every type of investment involves at least some kind of risk. Ethereum is still vulnerable to stock market performances just like any other cryptocurrency.
However, that shouldn’t stop you from investing and becoming a successful crypto trader.
ETH vs. BTC – which one should you invest in?
Most people who want to invest in a cryptocurrency ask this question, wondering what the difference between the two is. Bitcoin is the original cryptocurrency and currently worth more than Ethereum, but it actually has limited capacities and functions.
While Bitcoin has seen more success in the past, there’s no reason to believe Ethereum won’t surpass it in the future, as this cryptocurrency has a lot of potential. It’s impossible to say which one is a better investment, but it’s safe to say that both can be extremely profitable.
That being said, it’s also important to mention their differences:
- Price. Potential investors need to think about how much money they’re willing to invest in their cryptocurrency, as there is a large difference between the price of ETH and BTC. As we already mentioned, Ethereum’s current price is $424, while one Bitcoin costs over $11,000 at the moment.
- Functionalities. Bitcoin behaves somewhat as a precious metal and is nothing more than digital money exchanged between people. As we already mentioned, Ethereum allows for smart contracts enabled by Ethereum’s blockchain technology.
- Coin limit. There is actually a limited supply of Bitcoin in the world, which is 21 million, and once all of them have been mined, that’s the end of the supply. As approximately 18.5 million have already been mined, future investors could have an issue with a lack of Bitcoin. Ethereum, on the other hand, doesn’t have a coin limit.
- Block time. Block time is a measure of time it takes to create a new block in a blockchain network and to validate the existence of a new batch of cryptocurrency. The block time for Bitcoin is 10 minutes, while that time for Ethereum is only 12 seconds.
How to invest in ETH
If you’re new to investing in cryptocurrencies, there’s no need to worry because it’s actually a simple process. You need to purchase ETH and have your own crypto wallet where you will store it. These wallets are usually offered by good crypto exchanges and you can use them to store all of your crypto coins.
Here’s what you need to do to invest in Ethereum:
- Choose a cryptocurrency exchange and register an account.
- Buy Ethereum via credit/debit card, a bank transfer, or by exchanging a different cryptocurrency.
- The platform you chose will exchange the funds you uploaded to Ethereum.
- The Ethereum will appear in your crypto wallet from where you can monitor it.
- Keep up with market trends and the price of Ethereum.
- Sell or exchange your Ethereum when you’re ready to make a profit.
What kind of investment strategy should you have?
Before you decide to invest in Ethereum, you need to decide if you want it to be a short-term or a long-term investment.
If you want to have a long-term investment and hold on to your Ethereum for years, you’ll have a good chance of making a huge profit when blockchain technology becomes more mainstream. Ethereum’s popularity will surely rise as time goes by and more people realize the benefits of smart contracts.
If you opt for a short-term investment, you will be able to trade Ethereum on the market for a profit, ideally by buying low and selling high. This way, you will be able to observe first-hand how Ethereum behaves on the market and predict what kind of long-term value it will reach.
If you really want to take full advantage of Ethereum, it may be best to make both short-term and long-term investments.
If you’re having any doubts about whether or not you should invest in Ethereum, the answer is a resounding yes. As blockchain technology becomes more mainstream, more and more people are investing in ETH, and you should probably hurry up and invest before its price skyrockets.