How To Invest In Ethereum: The Complete Guide for Beginners


June 27, 2018

How To Invest In Ethereum: The Complete Guide for Beginners

Ethereum is the second most popular cryptocurrency with a market cap of over $74 billion. It has been popular with investors since the launch of the platform in 2015. Some of the reasons for the popularity of Ethereum include the growing adoption base and the versatility of this solution which can be adapted to many uses. The price of Ethereum has quickly outpaced the competition and firmly took the second place among cryptocurrencies, topped only by the most popular Bitcoin which is also more than six years older than Ethereum — this gives the oldest coin certain technological and adoption advantage.

Rise to Popularity

After a successful fundraising campaign in 2014, the token Ether was valued at $2.89 per token. Just six months later in 2015 its value grew five-fold and reached $10. Thanks to the increasing transaction speed and a growing list of global companies who saw potential in this solution, the coin quickly increased in value reaching $300. After major corporations such as Samsung and Toyota began developing solutions on Ethereum meaning that they recognized the benefits of this technology, the value of Ethereum has reached the maximum of $1315 in early 2018. Investment experts predict that Ether price can topple that of Bitcoin by the end of 2018 and stabilize at the mark of $1000 by 2019.

Invest in Ethereum or Bitcoin?

While both coins are mined to empower blockchain transactions, there are many differences between them. One fundamental distinction is that the supply of Bitcoin is finite, with the last coin to be mined once 2140, and the yearly supply is limited, too. Ethers have infinite supply as new versions (hard forks) can regularly be introduced. Transaction speed is another difference, and not in Bitcoin’s favor. Transaction on Bitcoin can be verified in 10 minutes and on Ethereum only 15 seconds. For financial applications, this is a dramatic difference. From the mining, perspective Bitcoin is also less attractive because it requires significant power consumption and advanced mining units.

When investing in Ethereum (ETH) as a currency, you must agree that you are not buying a share of Ethereum corporate and tokens are not shares. You are simply paying for tokens with your euros or dollars. You are not entitled to dividends. Your revenue will depend on the growth of popularity of the coin and that people in the future would be willing to pay you more for the tokens leaving you with some amount of your profits.

How to Start Investing in Ethereum

The easiest and least complicated method to invest in Ethereum is by purchasing the tokens. There are a lot of established companies, mainly in the USA and Canada, who are involved in the business of buying and selling both ETH and ECH.

If you are familiar with stocks, bonds, or Forex exchanges, then you will understand crypto-trading easily. There are crypto- brokers like e-social trading and other solutions that you can choose from. These platforms provide you with Ether-fiat or fiat-Ether currency pairs, example ETH-USD means trading Ethereum for US dollars. Keep your eyes on the price changes to find the perfect pair according to price changes. Platforms provide price among other indicators to give you proper trading tips.

Coinbase is one of the most established cryptocurrency trading platforms. It provides its clients with ETH at an estimated mark up of 1% over the existing market price. An attractive feature is a sign-up bonus and the ability to explore other types of a good investment such as Litecoin. Residents of the United States have the option to sync their Coinbase wallets with their bank accounts. As a result, future payment transfers are made more easily, while some banks can impose restrictions on cryptocurrency purchases. Another benefit of using a Cryptocoin platform is that it provides a digital wallet for your investment.

Coinbase also gives you the option of automatic cryptocurrency purchases. For instance, if you’re interested in purchasing $50 in the coin of your choice at the beginning of each month, Coinbase allows you to make an order to auto-buy your coins for that amount. You would have to familiarize yourself with the terms and conditions before you start using this service. If you have subscribed to an automatic coin purchase service, then you will not be able to control the price at which the ETH is bought every month.

Note that Coinbase does not function as an exchange meaning that you buy and sell the coins directly from the company. Since Coinbase has to source the coins from other buyers, you may face delays or disruptions when placing orders during fast market moves. Other cons of using an exchange are that they are often facing hacker attacks and the inability to trade at prices that you set yourself.

BitStamp gives you all benefits of using conventional bitcoin exchanges. Cryptocurrency acts as an intermediary which allows you to trade with other users and not the company itself. Here the liquidity is higher and you always have a good chance to find someone who is willing to trade with you. There is an initial fee of 0.5% which can be reduced if you regularly trade high volumes of currencies. The price of ETH changes daily depending on the market conditions. Here you directly input the amount you want from your bank and click “buy’, then sit back and watch as your investment increases according to the price change. This process takes place on many exchanges platforms available today, with the ability to trade between many different fiat currencies (USD, EUR, GBP) and different crypto coins (Bitcoin, Ethereum, Litecoin, etc.).

Digital Wallets: How to Choose

Another important consideration is storage of your investment. One option is to store it on the exchange where you buy them. However, you will have to be careful in selecting the exchange. The popularity of digital currencies has resulted in many scam exchanges popping up. Take the time to do your due diligence so you can avoid the common fraud when the scammer disappears in thin air with the contents of all digital wallets. Your private keys should always be in your own property.

Another option you have with cryptocurrencies is that you can store them yourself for the long term. One of the safest options for storing your investment is hardware wallets. The best hardware wallets allow you to store Ethereum and several other digital currencies as well.

The Importance of Investing in Blockchain Technology

From a business perspective, blockchain technology can improve business processes and significantly lower costs. It will also allow businesses to offer more benefits of service to customers. For instance, financial institutions could use blockchain technology to improve processes for things such as settlements and insurance which makes Ethereum a good investment.

Ethereum is a high-risk investment, but it has a good potential for success. Unlike many other coins, including Bitcoin, real-life businesses use Ethereum in their development. For you as an investor, this is a solid promise of a win.