Summary: Ethereum is much more than cryptocurrency, although it is often mistaken for its digital currency counterpart, Bitcoin. If you’re wondering if you should buy Ethereum, we’ve compiled some reference material to help you make the decision.
- Price$ 2,430.40
- Marketcap$ 282.38 B
So you want to hop in on the cryptocurrency craze?
Before you do, it would be best to thoroughly understand what you will be getting yourself into and what exactly you’re investing in; Ethereum, after all, differs greatly from its cryptocurrency counterpart, Bitcoin.
Below, we’ve put together a current guide to navigating the ins and outs of Ethereum. From a thorough understanding of Ethereum down to the hard-hitting question “should you invest,” we’ve answered all your questions.
Keep reading to find out whether or not buying Ethereum is right for you.
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What is Ethereum (ETH)?
Ethereum, while a form of cryptocurrency like Bitcoin, was not intended for that one use. Instead, Ethereum was designed as an open access, decentralized computing platform.
Ultimately, this means that anyone can use Ethereum for many applications and digital needs.
For example, you can think of Ethereum as an online bank. The only difference between the platform and an online bank? There’s no institution to go through.
Ethereum allows individuals to transfer money and complete payments without having to adhere to banking policies and limitations.
Ethereum also allows users to program applications with smart contracts. Like a traditional contract that outlines rules, regulations, limitations, periods, and more, a smart contract enacts the same components.
However, no party has to enforce the contract. The smart contract enacts any contract content automatically.
For instance, if you create a contract with an advertiser for their ads to run on your website for three months, the advertisements will come down from the website automatically at the contract’s completion.
You can also use Ethereum as a form of cryptocurrency similar to Bitcoin. It is available to purchase in stock and can be traded among individuals as owners see fit.
The only difference between Ethereum and Bitcoin concerning cryptocurrency definitions is that Bitcoin does not have programming capabilities or banking-like features.
Related: Invest in Ethereum in your IRA
Who Are the Founders of Ethereum?
Vitalik Buterin initially listed Etherum in the white pages back in 2013. However, the platform’s foundations involved Gavin Wood, Charles Hoskinson, Mihai Alisie, Amir Chetrit, Joseph Di Lorio, and later grew to include Joseph Lubin, Gavin Wood, and Jeffrey Wilcke.
After Buterin’s concept got picked up and began to form, he announced that he wanted to establish it as a non-profit, at which point Charles Hoskinson left the project.
How Much Ethereum is in Circulation?
One purpose of cryptocurrency is to eliminate inflation within the market, which is why there is a cap to the amount of Ethereum available. Even though it has a limitation, its value fluctuates.
Some days, if there’s a high demand, the price will jump, while other days, its price may lie relatively low.
For instance, in February of 2021, Ethereum prices skyrocketed to $1,700 even though it remains relatively stagnant at $100 most months. There is roughly $200 billion Ethereum in circulation.
How is Ethereum Network Secured?
The idea of an open-access platform doesn’t sound particularly secure, but Ethereum makes it nearly impossible for a third party to hack or interfere with the programming. It's security comes from its blockchain-backed foundations.
The blockchain has insurmountable computing power. After all, it interacts with all computers on its network because it is open-access.
With this feature, cryptographers and cybersecurity professionals from all over the globe have access to the program’s features. This function lets Ethereum secure every transaction from any interference.
However, this security reinforcement does not necessarily apply to individual applications based on Ethereum. If you program an app with Ethereum, you are responsible for implementing the best safety and security measures.
Ethereum will not enact those measures for you.
What is Ethereum’s Role as a Store of Value?
Much like any other asset on the market, you can buy Ethereum using standard currency forms. Unlike traditional money, either credit or physical, Ethereum’s value fluctuates depending on demand.
This fluctuation varies from month to month and even year to year.
Ethereum’s demand relates to its programmability. While there are other similar blockchain programs on the market, such as Bitcoin, Ethereum is the largest and most popular programmable platform because it offers something that physical currency cannot: conditions.
In the physical world, you can exchange money with anyone. For example, you can pay your friend for painting your fence.
With Ethereum, you can program your transaction to complete only when your friend completes the task rather than having to rely on their word or pay in advance. That’s where the value lies.
If you plan to purchase Ethereum, you must have an appropriate digital crypto wallet, a public key, and a private key--all of which will be provided to you upon purchase.
The public key is like a combination of a cash transferring app, like Venmo or CashApp, and an email account. The public key is where you can transfer your crypto holdings to other holders.
Just as you would use a password to access your email account, you will need a key to access your cryptocurrency holdings.
Your private key is your password, but unlike a password you might create for yourself, the private key is a secure, lengthy assortment of numbers and letters. This key will give you access to your public key.
Crypto Holdings Wallet
Just as the name implies, the crypto holdings wallet acts like a standard, physical wallet exactly. This platform is where you can view and manage your accumulated cryptocurrency and holdings.
You can find varying wallets available on your affiliated app store, but it might require some research beforehand to make sure you choose one that comes with your preferred features.
Ethereum vs. Top Coins
Should I Invest in Ethereum?
Cryptocurrencies, including Ethereum and Bitcoin, continue to gain traction. However, the concept and asset is highly volatile. As previously mentioned, Ethereum’s price went from $100 up to $1,700 in a single month and then dropped back down shortly after.
The unpredictable change in price is something you should take into consideration before investing.
Although considering Ethereum’s future alongside its complexities, it might make for a quality investment down the line. Unlike Bitcoin, Ethereum functions as an open access, decentralized platform where companies and individuals can trade cryptocurrency, program applications, and dictate smart contracts.
Given its versatility, Ethereum becomes more accessible to different markets and has the potential to become incredibly popular, potentially more so than Bitcoin.
Ethereum is not the only complex blockchain program out there, though. New platforms, similar to Ethereum's concept, continue to pop up. These variations are bound to reach equal success, putting a substantial amount of pressure on Ethereum to succeed and progress.
That said, you should take the competitors and their potential into consideration before investing too. You don’t want to invest in Ethereum only to have a competitor overpower the platform within the next few years.
Ultimately, you should invest in Ethereum if you’re looking to diversify your profile and engage with assets that might not be wildly successful right now but have the potential to in the future.
If you’re okay with a little bit of risk, Ethereum is a solid asset to acquire while it’s relatively affordable, reaches high profits from time to time, and has the potential to blow up soon.
Want to learn more about low-risk investments as a retiree? Click here to learn how to invest in Ethereum in your IRA.