Ethereum has been considered by many – including Forbes – as “the next Bitcoin”. It’s built off blockchain technology like Bitcoin. Still, Ethereum provides an extra layer of functionality such as automated smart contracts, which enable self-executing code without the user worrying about any third-party intervention. But, Is Ethereum a good investment?
Many of these smart contracts are powered by Ethereum’s cryptocurrency/token called “ether”. Ether is the money of the Ethereum network, and you can buy, sell, trade, and store ether in much the same way as Bitcoin.
What makes it so appealing to so many also explains its volatility when it comes to price. It changes fast, which means there’s a lot more room for growth! This is why so many people have been buying Ethereum over other cryptocurrencies because they believe that its value will rise faster than others due to demand, which has always driven the price up in the past.
What Is a Cryptocurrency?
What is a cryptocurrency?: The definition of what a “cryptocurrency” is can be interpreted in multiple ways. Essentially, it’s any form of digital currency that relies on encryption to transfer and store data securely.
It has been around for over ten years now, which means it’s still an evolving technology with lots more room for growth! Cryptography ensures the safety of unauthorized transactions by encrypting each parties’ personal information so no third party could ever know who you are or where you live if they don’t have access to our unique key code (called cryptography).
The idea of a decentralized network to power these transactions without taking fees from users makes cryptocurrencies so different. In other words, no company could ever have their own version of your encrypted key to track or control your money.
The basis of cryptocurrencies is to operate as an alternative for those looking for security and privacy when it comes to financial transactions and offers anonymity and independence from all known centralized institutions that we rely on currently (banks).
What Drives Ethereum’s Price?
Ethereum, in particular, has been a popular choice as an alternative to Bitcoin, the world’s first cryptocurrency that started it all. Bitcoin has a limited supply of 21 million coins, and many of these have already been mined.
There will only be fewer Ethereum coins available because its “supply” increases at a much slower rate due to the way it is created. So this makes investing in Ethereum more appealing than Bitcoin.
Is Ethereum a Good investment? Why invest?
Ethereum (unlike Bitcoin) doesn’t need mining like other cryptocurrencies such as Litecoin, Dash, or Monero. Ether is generated through different means. Many people will tell you that they invest in Ethereum over Bitcoin because it’s not publicly known yet how many there will be, and unlike Bitcoin, there is no hard cap for how many will be made.
Ethereum’s smart contracts are also used to power decentralized autonomous organizations (DAOs). DAO’s are organizations that manage themselves through code without any central control or leadership, allowing for complete transparency. This new technology makes Ethereum even more enticing for investors because it can operate outside of banks, outside of regulation, and outside of conventional investing norms.
What is Ethereum?
The cryptocurrency, Ethereum is an open-source and public blockchain platform that can codify, decentralize and secure any transaction. It also runs programming code known as smart contracts.
Ethereum has one of the most popular cryptocurrencies globally, with developers who are continuously improving their services such as security tokens or other infrastructures for decentralized apps (DApps) like IDEX, which operates under different rules than centralized banks exchanges currently do.
But, is Ethereum a good investment? What are its benefits as an investment?
The Benefits of Investing in Ethereum
There is a strong foundation and support for Ethereum. Its value (Ether) has also been steadily increasing over time, which is a good sign it will continue to do so in the future as more companies adopt it. It makes sense to invest in Ethereum if you believe that cryptocurrency is becoming more popular in the future.
Ethereum is making it easier to use cryptocurrency with its Ethereum Wallet, allowing you to store, send, and receive Ethers easily. The wallet also provides functionality for deploying smart contracts.
When investing in cryptocurrencies, consider what cryptography will be used, how the currency plans to secure its network, who runs the development team, and whether there is a real need for the currency.
All cryptocurrencies face tradeoffs between their transaction speeds and decentralization. Ethereum transactions are executed using smart contracts that run on the Ethereum Virtual Machine (EVM), an international network of public nodes that contain a replica of each node participating in a blockchain network. A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract.
Ethereum provides an internal Turing-complete scripting language that can encode advanced transaction types directly into its blockchain and has recently added support for decentralized applications (DApps). Ether transactions occur in seconds, but they can still take some time for confirmations on the blockchain since every node has to verify them.
Ethereum vs. Bitcoin
Many think that Ethereum will exceed Bitcoin’s value within five years. But, is Ethereum a good investment versus Bitcoin? One of the biggest differences between Ethereum and Bitcoin is that Ether transactions are much faster than Bitcoin, which allows it to be used in many different industries.
Ethereum has also earned investors a massive return on investment (ROI) over time, while Bitcoin prices have remained rather stable. As more companies adopt Ethereum into their technology, this could speed up its transaction speed further.
Ethereum is more useful than Bitcoin and has tech advantages over its better-known rival, Bitcoin. Ethereum provides a “virtual machine” that can execute peer-to-peer contracts using blockchain technology. Because of its decentralized nature, Ethereum has become a popular platform for many new applications that are currently being developed to take advantage of this technology’s benefits.
Five reasons why Ethereum might be superior to Bitcoin:
- Speed – While both offer quick processing times, transactions on Ethereum take just 16 seconds versus about 164 minutes for Bitcoin
- Scaleability – The number of transactions per second will theoretically increase from 11 to 100 with Ethereum
- Security – When it comes to security, Proof of Work (POW) is used by both protocols but the current implementation makes POW difficult and costly for miners – whereas on the other hand, POW is cheap and easy for verifiers (aka ‘miners’ with GPUs) in Ethereum.
- Smart contracts – Ethereum uses smart contracts while Bitcoin doesn’t directly support them; I think this is one of the most exciting features about Ethereum and it has many use cases like creating a fully decentralized exchange between any two currencies
- Privacy – Ethereum has plans for implementing Zcash’s technology which provides anonymity (see Zcash vs. Monero), while Bitcoin doesn’t currently provide this option
There are currently three main ways to get Ether: mining them, receiving them from another user, or purchasing them from an exchange. Once you have your currency stored in a secure wallet, you will then be able to use it in the future when making purchases on websites that accept cryptocurrency payments.
Ether mining requires setting up an Ethereum account and downloading an Ether client to your computer. You will then find information about your balance, view your coins, and check recent transactions. The next step is choosing which mining software you would like to use, whether Geth, Ethminer, or another program. Several factors determine how well you mine, including electricity costs, pool fees, etc. You’ll need to calculate this information to assess what kind of ROI (return on investment) you can expect when mining over time hashes / hashrate.
Purchasing Ethereum from an exchange through an app like Robinhood is by far the easiest way to invest in Ethereum. Is Ethereum a good investment?
How Do I buy Ethereum?
Ethereum is a digital currency that can be purchased with Bitcoin. The Ethereum network supports smart contracts, making it an attractive option for building applications that are not possible with Bitcoin. You can buy Ethereum on many exchanges including Coinbase, Robinhood, Unifimoney, and others.
Ethereum is currently available on the Robinhood platform. As the price of Ethereum goes up and down, it’s important to understand which factors can affect its value. This guide will explain how do investors buy Ethereum on Robinhood.
Ethereum is available only on one type of account: taxable brokerage accounts. You cannot trade or hold any cryptocurrencies directly in a custodial bank account, such as an individual retirement account (IRA) or 401(k). Taxable brokerage accounts include traditional Roth individual and joint investment accounts, SEP IRAs, and Keogh plans for self-employed taxpayers.
The process of buying Ethereum with Robinhood begins by opening the app and following these steps:
- Selecting “Investments” from the bottom menu;
- Tapping “More” under the buy and sell tab;
- Selecting “Cryptos” from this page.
Now you’re ready to buy Ethereum in transactions that total $500 or less per day, which amounts to a maximum of four Ethereum daily. Robinhood Crypto is designed for investors who are at least 18 years old. You can also track 14 other cryptocurrencies through the same app.
Ethereum’s value goes up and down in part because of its rapid growth when compared with other cryptocurrencies. The market changes fast, but it helps when you understand how investors buy Ethereum on Robinhood before placing an order through your phone.
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What do you think of Ethereum? Is Ethereum a good investment? Let us know in the comments below!