You’ve probably already delved into the world of cryptocurrencies if you are reading about Ethereum. Next to Bitcoin, this cryptocurrency is one of the most stable and desired on the stock market. You can easily trade it around the globe. We are here to give you the Ethereum 101, from what it is, to tips on how to trade with it smartly. The basics and even more are waiting for you below!
Ethereum – how did it come to life?
Here is a fun fact: Ethereum is the name of the project, and the name of the cryptocurrency is Ether, not Ethereum. It all started with Vitalik Buterin, a programming prodigy fascinated with blockchain technology, especially with the way Bitcoin was created. He then decided to give it more options than just being a simple method of payment. He was sure that he could create a virtual space where people worldwide can develop applications based on the technology that blockchain uses. The main catch is that all of this should be decentralized. That is why we call these apps “dapps” (decentralized apps). This was the main reason for creating Ether or Ethereum. The project started in 2014, and it raised $18 million in a little more than a month when it went on to a crowd sale. By the end of July 2015, the platform finally came to life.
Bitcoin or Ethereum?
There is an excellent reason to invest your money in Ethereum, although Bitcoin may sound like the most significant comfortable investment (which it is not). While Bitcoin serves only as a payment protocol (and you can trade it on the stock market), Ethereum offers you a whole spectrum.
The Economy Within
From the beginning, Ethereum wants to create a decentralized supercomputer on a global scale, which will consist of nodes from all over the world. If we take this into account, in theory, it can sustain several microeconomies with ease, and this is the main value of this cryptocurrency. It is a decentralized supercomputer, which can rent out its resources to developers to create their applications.
So, what Is Ether?
It’s not unusual for people to think Ethereum is the name of the cryptocurrency itself. Ethereum is the name of the project, and the name of the currency is “Ether”. Ether’s most essential functions are payment, a store of value, a reward for the miners for their services, and staking.
What is fantastic is that, like any decentralized crypto, Ether doesn’t have a legitimate owner, so there is no government in control. The crypto market is open 24/7, meaning you can trade whenever and wherever you are. Ether also faces many rapid fluctuations in price, which means many opportunities for trading.
Ethereum Trading Strategies
Trading Ether can be in one of two categories: holding and active trading.
Holding is the purest form of strategy that traders use. As the word “holding” implies, it doesn’t require much effort, and it is a long-term strategy. The idea might already be familiar to you – you invest in stock from a good company and then hold it and wait to see when it’s going to grow, and when is the best time to sell. Only keeping it, as the value rises, makes you automatically more productive over time. And the transaction fees are low since you are not making frequent trades.
However, you should pay attention if you are holding Ether for too long. In the end, it is a cryptocurrency, and fluctuations are frequent. That’s why you need to be knowledgable before you start. You will develop a feeling for selling or buying over time if you are patient enough and know when is the best for you and your investment.
2. Active trading
Active traders can go deeper into the market because they have more knowledge and experience than holders. They use a lot of different software to analyze the current market situation and follow it daily. The goal for active traders is to buy low and sell high. This means you can benefit a lot as an active trader, assuming you have the skills and knowledge, and you are familiar with how the market itself works. If you are not ready to commit and plan out your strategy, it is better to stay in the “holding” lane.
So, how do you trade?
Now that you know how Ethereum works and how the basic trading strategies look, let’s see how you can buy at least a bit of this cryptocurrency. Thankfully, Ethereum is number two top-rated currency and is available in all the significant cryptomarkets. Before we talk about the crypto market, it’s worth mentioning P2P exchanges.
Peer-to-peer exchanges (P2P)
A peer-to-peer exchange simply gives you a more natural way to buy and sell cryptocurrencies directly. As we said, Ethereum is entirely decentralized, and you can do the trading through smart contracts if you have a trading account. Nowadays, you can do it via a trading company or even your bank if there is an option like that. Many third parties/trading companies have buyers and sellers around the world. The traders can trade between themselves by paying in cash or sending money through direct bank deposit or anything that the seller requests. Registration usually requires your email. This is something you should do after you do extensive research on a company that you want to trade with, or if a trading company has already contacted you, so you can avoid any fraudulent situations.
P2P or Stock exchange?
Many would agree that for people who want to experience the cryptocurrency world trading companies vary because there are many examples of fraud. We recommend checking the background of the company since you’d have the opportunity to talk to a professional, learn, and progress faster if you have a financial advisor and someone to guide you along the way. Until then, be sure to research on your own. Learn as much as you can, and check the stock market often. This can all give you insight into how everything functions. When you feel more comfortable, you can get into the cryptocurrency market, and start investing in your future.