Ethereum is the name of a decentralized computer network that uses the cryptocurrency Ether as its mode of payment. Ether has become the second-most popular cryptocurrency, right behind Bitcoin. It is generally used to either buy and hold, hoping it will go up in value; or to sell short, and hope it loses value. Thus, the major attraction of Ether is the ability to make money from its fluctuations, rather than as a way to simply buy crypto online.
It is a legitimate cryptocurrency, and you can buy Ethereum on various exchanges. Ethereum trading has become very popular in the last few years and is likely to become more so in the future.
- Similar to Bitcoin but has many more uses
- Proven to have value over time
- Can be a great investment
- More complex than Bitcoin
- Value swings greatly from highs to lose and can cost you money if you are not careful
History Of Ethereum
Vitalik Buterin, a Russian-Canadian programmer, came up with the idea for Ether and Ethereum trading back in 2013. He liked Bitcoin but thought that he could expand on the idea and make it better.
It all started with the idea of creating an interconnected supercomputer run by millions of people on their desktops and laptops. The currency that would be used would be Ether. He would allow various companies to perform Ethereum trading.
Ethereum went public as a company in 2014 and raised $18 million in roughly a month and a half. The Ethereum platform and Ether, the currency, went live on July 30th, 2015. Since then the urge to buy Ethereum has gone global, and Ethereum trading takes place every day.
Buterin is now in the process of letting users build the supercomputer he envisioned. Developers can rent resources on the system and pay for them with Ether. That is mostly why people buy Ethereum.
People use virtual contracts called dApps, which release or collect Ether when certain conditions have been met. If Buterin was right, then in the future there should be a huge supercomputer used by millions of programmers with all of them performing Ethereum trading back and forth. At that point, Ethereum trading and the urge to buy Ethereum should be nearly universal.
Development Of Ethereum
The development of Ethereum is driven by computer programmers who do not want to be held back by the likes of random software companies, Microsoft – or even nation-states. They want to have the ability to share resources and pay for them with the universal currency, Ether.
Since its development Ether has gone up and down in price, and this fluctuation is largely due to people who are not programmers. Instead, they are speculators – simply speculating on the value of the cryptocurrency. How to move beyond the speculation stage and provide a stable pricing system for Ether is one of the challenges of Ethereum trading.
Major Facts About Ethereum
Unlike Bitcoin, there is no maximum possible supply of Ether. That makes Ethereum trading a little bit riskier than Bitcoin. Ethereum trading is therefore for more long-term thinking investors.
Ether is simply the currency used by people who want to rent resources on the general Ethereum supercomputer, and it is made by a user solving various algorithms. They then turn those solutions into blocks. When Ether is successfully mined, the miner gets a small percentage of those blocks for themselves. The entire process is then verified by Ethereum itself.
This creates a near-infinite amount of Ether that can be created. It is currently uncertain exactly how much Ether is out there, because it is constantly being cloud mined. This has led the currency a lot less stable than Bitcoin. That said, Ether is complex enough so that not too much of it should be around at any given time. For that reason, it has retained value.
Ethereum is generally used between programmers. Someone sets up an in-demand feature on the supercomputer. Another programmer needs access to this feature to complete the code they are writing. At that point, they set up a mini program. That program promises to deliver Ether to the person who built the feature from the account of the person renting the feature as soon as the transaction is done. Ether is generally not used to buy products and services on the internet the way Bitcoin is. It is an exchange method used by programmers themselves.
This means that the average person buying Ether is not using it for any transactions at all. Instead, they are speculating on whether or not Ether will go up or down in price. If they are opening a long position, then they sell when the price goes up. If they are opening a short position, they sell when the price goes down.
Because Ether is based on the supercomputer, its buying and selling trends are much more complex than Bitcoin. Programmers write extensive programs that determine when Ether is released to another programmer and under exactly what conditions, which makes Ether itself the driving force behind the supercomputer. As the supercomputer grows ever bigger and has more features, then more and more people will be using Ether. This means that the price should both rise and stabilize at the same time.
The security on Ethereum is top rate. There have been no instances of anyone hacking the chain or of any counterfeit Ether being released, and no Ethereum trading scams. The computer programs guarding Ether are top of the line and fully protected by encryption technology. The hole in the usability of Ether is in the fact that most people who buy Ether don’t intend to ever use the currency. This makes Ethereum trading very volatile and does not provide the stability that programmers would like.
How To Trade Ethereum
LocalCryptos is one of the best Ethereum trading sites. But it is not a trading platform itself – it is a peer to peer network. In other words, it matches people who want to sell Ether with people who want to buy it.
The rate on LocalCryptos at which Ether will be traded is determined by the buyer and the seller. This means that the sale price may not reflect what the current actual value of Ether is. Buyers and sellers do not have to reveal their names, as they are identified only by an email address. This essentially removes all governmental oversight from the equation. Contact between buyers and sellers is mainly built on trust. LocalCryptos then keeps a small percentage of each transaction.
The peer to peer nature can help move the value of Ether up and down on the exchange rate. While LocalCryptos is a great way to trade Ether, many traders are put off by the peer to peer nature of the transactions. Those people want another way to trade Ether that is more publicly regulated, so they will want to use Kraken. This San Francisco based company trades in multiple cryptocurrencies and traditional currencies.
You transfer money into your account. Then you can buy Ether, Bitcoin, dollars, euro, yen, or whatever currency you’d like. The amount you pay for the currency is directly tied to the current reported value. In that way, it is merely an international exchange center. Because the current value of all currencies is available on the site this is the place to go for people who are put off by peer to peer networks.
To make your purchase, you simply ask them to give you your preferred amount of Ether and they pull the cost of that out of your account in the currency you specified, and then replace it with Ether. The transaction should be completed in a matter of seconds and you will generally be very happy with the outcome. Beyond that, unlike LocalCryptos you are not dependent on someone selling Ether for the price you want to pay.
Both of these exchanges are great for buying and selling Ether as a speculative currency. With the first currency exchange, you set the Ethereum price and hope that someone is willing to match it. With the second company, that company sets the price and then you decide if that is the right price for you to pay or not.
Future Outlook Of Ethereum
Any Ethereum prediction is based on the concept of it becoming a stable currency used by the people who write programs for the giant supercomputer and people who need access to those programs. In an ideal world, that would make the price of Ether stable. People would buy Ethereum and Ethereum trading would become normal. That has not come into place yet.
As it is, the value of Ether goes up and down every day. There are periods when it goes up in price for weeks and periods when it greatly loses its value. This is due to currency speculators placing orders on the currency. For Ether to last, it has to move beyond the speculation stage and into a more stable stage. It is unclear when that will happen, so it would be impossible to make an Ethereum price prediction.
That said, there are a lot of cryptocurrencies out there. Ether has risen to the number two position just behind Bitcoin. That means that serious investors have put a lot of faith into the currency.
Reputation Of Ethereum
Ethereum trading reviews have been seen as positive by the people who use it as a currency. Programmers who want to rent access to the supercomputer are very much in favor of using Ether to pay their rental fees. The people who have come up with these trading applications are very happy to accept Ether. There is a huge amount of trust between these two parties. Whether that trust will continue if Ether is ever used for things beyond Ethereum is up for grabs. For now, for what it is, all of the users like using it. That is probably why it retains value over time.
While we are not investment advisors at all, we have a generally positive view of Ethereum and its local currency, Ether. The company has generated value for the currency and its application of being used for payment for processes on the supercomputer seems rock solid.
The one disadvantage to buying and selling Ether is not knowing exactly how much of it there is in the world at a given time. That said, it seems complex enough to mine that we doubt the market will be flooded with Ether anytime soon.
From an investment standpoint, whether you want to get into Ether depends on your capacity for risk. The price can vary widely week to week and month to month. That’s because its value is completely fueled by speculation. There has been no baseline value set for Ether at this point. You could make a good deal of money or lose a good deal of money. Still, we suspect that if you held onto Ether for the long term you would probably do ok.