A Complete, Comprehensive Overview of Ethereum
For better or worse, Ethereum often gets compared to Bitcoin (BTC). If you’re knowledgeable about Bitcoin but less familiar with its closest competitor, Ethereum, you must know that Ethereum has the potential to become the most dominant player on the cryptocurrency market. Ethereum‘s corporate strength puts it on a par with well-known enterprises, including Bank of America ((NYSE:(BA))C) and PayPal Holdings (NASDAQ:PYPL), which has a market capitalization of about $350 billion.
Ethereum is a groundbreaking open-source blockchain technology that supports decentralized financial services, tokenized assets, decentralized applications (dApps), and smart contracts in addition to regular commercial transactions.
This article covers everything you could want to know about Ethereum.
What is Ethereum?
Ethereum is a blockchain platform that supports its digital currency, programming language, Solidity, and Ethereum or Ether (ETH). Its native currency, Ether (ETH), is the second-largest cryptocurrency by market capitalization, having achieved this position for several years.
Ethereum is a decentralized public ledger for recording and verifying transactions as a blockchain network. Users of the platform can develop, publish, sell, and use programs on it, and they may utilize its Ether currency as payment. “DApps” are the decentralized applications running on the network.
How Can You Buy/Sell Ethereum?
How Can You Buy Ethereum?
If you want to invest in Ethereum, or more specifically Ether, you will need a cryptocurrency wallet linked to an exchange. Ethereum is not available on any major U.S. stock exchange. You cannot buy Ethereum using your online discount broker. It must be converted into your cryptocurrency wallet.
It is vital to remember that Ether (ETH) is a currency, not security. You do not buy shares of Ether the same way you would ETFs or stocks. Instead, you are swapping your dollars for Ether tokens. There are no payouts or dividends available either. Your chance of getting more money for your tokens is if someone else on the Internet pays you more for them than you paid for the Ether in the first place.
How Can You Sell Ethereum?
Once you have acquired ETH, selling it is precisely the same as buying it. You simply create a sell order on an exchange like Binance. It is crucial to remember that you do not have to cash out Ethereum and receive funds in return.
On many exchanges, you can sell ETH and get USD or different cryptocurrencies. You may be able to trade ETH for USDT, USDC, or BTC on some platforms.
How can I invest in Ethereum-adjacent stocks and funds?
Investors who want to take advantage of the rising popularity of Ethereum technology and Ether coins have various options for putting their money to work. The most direct and obvious choice is to acquire Ether itself, but its value is tremendously volatile.
If you’re a retail investor, you can reduce your risk somewhat by buying shares in managed funds that hold Ether and have the value of your holdings linked to it. If you don’t want to take risks, you may buy shares in firms with a significant Ethereum technology exposure.
Here are some best ways to buy into Ethereum without actually acquiring the cryptocurrency directly:
Grayscale Ethereum Trust
The Grayscale Ethereum Trust is a managed fund that allows investors to gain immediate exposure to Ether in their brokerage accounts by investing in a secure and regulated investment vehicle. Each share is backed by a particular amount of Ether tokens (on the order of 0.01 Ether tokens per share).
The fund is based on an Ethereum smart contract that pays out a monthly distribution in Ether tokens (around 0.01 Ether per share). Grayscale Ethereum Trust charges a 2.5% management fee on top of the fund’s share price; it is typically lower than the value of Ether each share represents at the current conversion rate.
Bitwise Ethereum Fund
Bitwise Ethereum Fund is a managed fund that invests in Ether on behalf of qualified investors. The fund’s minimum investment is $25,000. To minimize transaction costs and maintain the fund’s Ether in cold storage, the managers of this investment vehicle seek to reduce them as much as possible.
The firm levies an annual management fee of 1.5%. Investors may also buy shares of the Bitwise 10 Crypto Index Fund (BITW). Ether accounts for less than 20% of the assets in this fund.
HIVE Blockchain (CVE:HIVE)
HIVE Blockchain mines both Ether and Bitcoin, compared to other publicly traded cryptocurrency miners, which focuses on just one currency. HIVE Blockchain has concentrated on Ether and presently holds 65% of the digital assets in Ethereum. However, in 2020, after purchasing a Bitcoin mining operation, the cryptocurrency miner now has more significant resources to mine Bitcoin than Ether.
AMD and (NVDA) produce GPUs for personal computers, but their chips are also suitable for mining Ether and other currencies that utilize Ethereum’s infrastructure. The cryptocurrency miners have long been purchasing AMD and Nvidia graphics cards in their mining systems, and Nvidia has begun creating GPUs specifically for Ethereum-based currency mining. AMD is anticipated to release a similar solution in the coming months.
Coinbase Global Inc (NASDAQ:COIN)
Coinbase is the most renowned cryptocurrency exchange. The firm charges transaction fees to sellers and buyers of a variety of cryptocurrencies, including Ether. As more people become interested in cryptocurrencies, Coinbase’s income will rise.
High cryptocurrency values, on the other hand, have been shown to boost trading activities. Because many of the cryptocurrencies exchanged on Coinbase are based on the Ethereum blockchain, investing in Coinbase exposes your portfolio to Ethereum and Ether technology.
CME Group Inc (NASDAQ:CME)
The CME Group is a multinational financial services corporation that offers the world’s largest venue for derivatives such as futures contracts and options. In early 2021, CME Group introduced an Ether futures exchange, allowing traders to profit from price changes in Ether while lowering their portfolio risks. The trading platform also enhances Ether’s price stability. Investors can buy shares in CME Group to take advantage of the institutional Ether adoption. However, CME isn’t a pure-play on cryptocurrency.
How Can You Buy/Sell Stocks Involved in Ethereum?
The most straightforward way to gain portfolio exposure to Ethereum technology is by investing in some companies mentioned above. Still, if you’d instead buy Ether straight away, any of the cryptocurrency exchanges will let you do so. The exchanges listed above allow people to create accounts, known as wallets, and trade fiat money for digital currencies like Ether. These exchanges profit from transaction fees and the spreads between cryptocurrency bid and ask prices.
You can keep the cryptocurrency in your exchange-hosted wallet or move it to a wallet that you fully control when you’ve got Ether or other crypto money in the wallet. If you want to keep your cryptocurrency tokens for a long time, it is a good idea to transfer them to your wallet. If the exchange were to be hacked, the personal keys to your private cryptocurrency coins might be exposed, potentially resulting in the loss of all of your funds.
Pros/Cons of Buying Ethereum
Pros of Buying Ethereum
- Volatility: Volatility has been viewed as a negative for much of history. On the other hand, intelligent investors have recognized market cycle patterns and can profit from the parabolic gains produced by market bubbles.
- Liquidity: Ethereum is among the most liquid financial assets due to creating internet brokerages, exchanges, and trading platforms worldwide. You can quickly exchange Ethereum for valuables like gold or cash at a meagre cost.
- The less danger of inflation: Ethereum has a defined inflation plan that is less vulnerable to manipulation. There’s nothing to be anxious about your cryptocurrency deflating because blockchain technology is boundless.
Cons of Buying Ethereum
- Scaling Issues: Ethereum, like Bitcoin, is a platform for smart contracts and other applications that can lead to hacks, breakdowns, and flaws.
- Includes a Difficult Programming Language: Although Ethereum is Turing comprehensive and uses a programming language comparable to learning Solidity, Java, Python, C++, the platform’s native language might be complex. One of the main difficulties is that there are few easy-to-follow lessons for novices.
- Investing in Ethereum can be risky: Investing in Ethereum, like any other cryptocurrency, can be dangerous. Cryptocurrency prices are highly volatile, resulting in numerous losses and substantial profits. The cost of Ether has changed a lot in the past, which might be an issue for some investors, especially novices. Furthermore, Ethereum’s pricing varies unpredictably.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
A Complete, Comprehensive Overview of Ethereum