How to Invest in Ethereum
The crypto-world began with bitcoin, but today it is much more diverse. Some cryptocurrencies have become worthy competitors to the number one coin. First of all, we are talking about ether (Ethereum, ETH).
Today it is firmly in second place in terms of capitalization, but due to its functionality, it already has a wider audience. Those who want to join the Ethereum community need to know where to start.
Ethereum is an open platform that allows developers to develop and run decentralized applications. In simplified terms, Ethereum is a programmable bitcoin.
Ethereum allows participants to run decentralized blockchain applications called smart contracts. Smart contracts are highly secure and run with a perfect digital history, making them verifiable, reliable, and unstoppable.
Smart contracts can be programmed to eliminate any downtime, censorship, or fraud.
Smart contracts have been designed to implement the digitization of legal contracts. Smart contracts can store data information, facts, relationships, balances, and any other information needed for real contracts.
Ethereum blockchain and smart contracts form a common global supercomputer that can move value, represent property, transfer tokenized assets, and digitize many more complex financial applications. This allows developers to create markets, shared ledgers (ledgers), and digital organizations – all without intermediaries and kept intact.
Ethereum is its cryptocurrency, but many refer to the cryptocurrency by its platform name. Ethereum is a service token because its storage provides access to the services offered by the project, and in particular its decentralized operating system. The value of many cryptocurrencies is linked to the projects behind them, even if the project does not use its coin by default.
The Advantages of Ethereum Cryptocurrency
At the same time, all the advantages of the technology used by cryptocurrencies are preserved:
- A decentralised peer-to-peer network is not subject to centralised control, so the user is free to act.
- Due to blockchain technology, the network remains stable.
- Information in blocks cannot be lost, altered, deleted, etc., which ensures complete security of the user’s transactions.
- However, ether blocks have somewhat advanced functionality. It allowed the creation of smart contracts, which have the same properties as cryptocurrencies.
As a result, the Ethereum network became the basis for creating decentralised applications and financial services. It has provided users with a shift away from centralised control in many areas, allowing them to keep transactions secure and parties anonymous.
You can get Ethereum in several ways:
- By transferring to a wallet from other users, for example, as a gift from loved ones or as payment for goods or services.
- As a reward for mining. This will require quite productive and expensive equipment or renting the capacity at mining farms (cloud mining). The investment pays off slowly. With the current complexity of the network and the price of the coin – about six months. But the risks are minimal, and the income of the system can bring almost unlimited time (unless the cost of mining exceeds the remuneration). The risks when working with cloud services are higher, but with the right choice of provider, they can also be considered non-critical.
- Buying the required number of coins with real money. To do this, you can find a counter-party to the transaction through your efforts (the riskiest option, there is a great risk of running into fraudsters), conduct the transaction through online exchangers, or use the services of a cryptocurrency exchange. In the latter two cases, safety depends on the choice of site. Exchangers and exchanges with a good reputation and years of experience are almost as safe as their offline counterparts for transactions with real assets. The same services (crypto exchangers and exchangers) can be used to convert earned ethers into fiat currencies.
You should start working with any cryptocurrency if you know exactly why you need it and how you plan to make money from it. In this regard, Ethereum offers users the widest possible choice:
- Mining. (This is already known about).
- Steaming. In the Ethereum 2.0 network, it is the stackers that keep things running, confirm transactions, etc. The profitability depends on the size of the investment, and the ability to control a full network node.
- Trading. It does not differ from the same variant of earnings on the other financial markets – stock, currency, commodity, and futures. However, the risks are considerably higher because the volatility of ether exceeds the similar indicator of real assets many times.
- Development of decentralised applications and projects with the issuance of their tokens.
- Creation of Defi platforms (decentralised financial services). The list includes exchanges, exchanges, and payment systems.
- Creation of NFT tokens and all types of income from them – from selling to stacking.
- Liquidity provision, including participation in pools, lending, pharming, etc.
Some types of investments in ether require specific knowledge (for example, about NFT, their creation, and selling at auctions), but can bring considerable income with minimal risk.