Cryptocurrencies are a hot topic at the moment. Although bitcoin is the most popular, there is an alternative that is making its mark on the scene. Below you can find everything you need to know to invest in Ethereum and the keys to the operation of this virtual currency.
What is Ethereum?
Ethereum is both a cryptocurrency and a platform. In fact, the name of Ethereum really only refers to the platform, while the virtual currency is called Ether. Although this is technically the case, most people refer to the whole thing simply as Ethereum.
The Ethereum project was born in 2014 and came to light in July 2015. The platform, developed by the Russian Vitalik was created as an improved version of Bitcoin. Its objective was to improve the performance of its predecessor in terms of number of transaction and also to decentralize the web.
Ethereum uses blockchain technology or block chain. This technology serves to decentralize transactions, so there is no need for a third party to certify them. In the case of digital currencies, this third person is usually the bank or the credit card, instead it is the users themselves who are the ones who validate this process.
Ethereum seeks to apply blockchain technology to any area, not just currencies. For example, it could help serve voting systems, games of chance, insurance and many other options. For these uses, it created intelligent contracts. The users themselves validate the operations and ensure the reliability of the contract, and due to the nature of the system, you can’t modify or cancel them without the agreement of the entire community.
What is ether?
Ether is the cryptocurrency of Ethereum, and is used as the incentive that developers receive for writing applications and the miners for contributing resources (their computers) to the chain of blocks of Ethereum. The founders of the currency call it a cryptocombustible, like gasoline that allows the operation and evolution of the platform.
The initial offer of ethers was 60 million plus an additional 12 million for its development fund. Since then they have continued to create ethers every year. Until 2017 the new emissions were limited to 18 million per year.
Ethereum and Ethereum Classic
One of the characteristics of cryptocurrencies is that they can be divided into two. This occurs when a new, separate version of the base currency is released, which is known as a new fork. Even bitcoin has a fork called Bitcoin Cash. The fork of Ethereum is called Ethereum Classic (ETC on the market), and was created after a hacker stole about 50 million dollars in ether after detecting a security breach.
This incident caused the community around Ethereum to split between those who wanted the code to be altered to return the money, to those who suffered the theft and who believed that the code should remain unchanged. Those that wanted the code to be changed are now supporters of Ethereum classic. The result of the dispute was the division of Ethereum into two cryptocurrencies, however Ethereum is still the most used.
Do you want to enter the ether market? Buying Ethereum is not that different from buying any financial asset like stocks.
To invest in ether, you simply need to enter a cryptocurrency or exchange platform.
Once you have registered with the exchange and supplied the relevant documents, you can buy Ethereum or any other virtual currency with which the platform operates. Most will allow you to operate with a checking account, credit card and even with PayPal, and will charge you more or less transfer fees depending on the method you choose.
Depending on your investment and the level of security you want, you can protect your Ether with a digital wallet. There are many different types to choose from, so you should conduct some research before making a decision about which to go with.
You own investment platform in Ethereum is likely to be the one that provides you with the quote price of ether so you can follow its evolution. Once you decide to sell your Ethereum, it will be as simple as giving the order to the platform and collecting the rewards of your investment.
Before launching into the adventure, you should be aware of the risks of investing in Ethereum. The first risk is that cryptocurrencies are a very volatile asset, its price can fluctuate dramatically. Ether is a clear example of this, with drops of 30% in a single day.
Finally, there are issues related to the safety of Ethereum, which has already been the victim of several robberies.
Is it safe to invest in Ethereum? Yes, but there will always be an inherent risk if you do not store your currency in your own physical virtual wallet.
The second option to get Ethereum is to mine ether. The work of cryptocurrency mining involves solving complex algorithms to obtain a portion of the virtual currency in exchange. It is a fight against other users for being the fastest, which is why more and more powerful equipment is needed to mine it.
Formerly it was possible to mine cryptocurrencies with domestic equipment, but nowadays specialized computers are needed (like graphic cards). These machines are also highly priced and it can be difficult to get one.
If you are still willing to enter the mining business, you should know that the starting price of the equipment is around 1,300 euros. Although some of the latest models can reach up to 3,000 euros. You must then install specific mining software, otherwise you will find a powerful graphics card without configuration.
At the cost of the machine you must add the electricity consumption. The more powerful the machine, the more electricity it will consume, but it will also make the calculations faster and it will be easier for you to get the price of a portion of ether. Right now, 5 ethers are created for each block of the chain for the block miner.