Ultimate Guide to Ethereum Investment

Ethereum investment, along with all the other cryptocurrencies, was all the rage for the past few years.  But not so much now.  Bitcoin went from $5600 USD in March 2020, then took off to hit a high of $64,000 +  in November 2021.   And as of today , January 2 2023, it’s price has plummeted to $16.40 .  Not exactly investing for the faint of heart.  Big risks accompany possibly big rewards in the crypto markets.

Ethereum is the second largest cryptocurrency by market capitalization.   So it’s no surprise that many investors are interested in investing in Ethereum.  It went from $86 in December of 2018 to $4660 + in November 2021.   And it’s price fell back down to $1218 as of today, January 2nd, 2023.  Not as volatile, and a somewhat different coin and functions than Bitcoin, as our related articles have described, but still a high risk investment.

This series of articles is about Ethereum.  Even though it isn’t as volatile or highly capitalized a market as Bitcoin, investing in Ethereum can seem like a daunting task. However, if you take the time to educate yourself about the basics of cryptocurrency and Ethereum in particular, you’ll find that you can master it in no time.

In this guide, we’ll give you all the information you need about investing in Ethereum. Let’s jump right into it!

Ethereum’s History

Ethereum is often described as a digital currency, but here’s something important to remember: Ethereum is not a currency; it’s a platform. This means that users create “tokens” using Ethereum’s blockchain, which they can then use for various purposes.

Ethereum’s origins can be traced back to 2013 when a cryptocurrency researcher and programmer named Vitalik Buterin published a white paper detailing his vision for a new type of blockchain-based network. Buterin’s paper proposed a decentralized platform that would allow people to build decentralized applications (dApps) on top of it.

Buterin subsequently founded the Ethereum Foundation, a non-profit organization that is fundraising for the development of Ethereum. The foundation raised over 18 million dollars in Ethereum’s 2014 crowdsale, making it one of the most successful crowdfunding campaigns in history.

Ethereum was officially launched on July 30, 2015, with 72 million ETH pre-mined for its crowdsale participants. Since its launch, Ethereum has grown to become the second largest cryptocurrency by market capitalization after Bitcoin.

How Ethereum Works

In order to understand how Ethereum works, it’s important to first understand the Internet as we know it today. The existing Internet runs on what’s called a “client-server” model. When you want to view a website, your computer (the “client”) sends a request to the server that hosts the website files and then displays the website for you in your browser.

This system works great for most people most of the time. But there are some big problems with this model when it comes to security, decentralization, and trustlessness. First of all, the client-server model is very centralized because there are a limited number of servers (running on expensive hardware) that everyone relies on to access websites and other online services.

Vulnerability

This makes the existing Internet very vulnerable to attacks like denial-of-service (DDOS) attacks, where hackers take down websites by flooding them with requests from millions of computers at once. Secondly, because there are only a few servers that everyone relies on, these servers have become powerful gatekeepers that can censor content or throttle traffic if they don’t like what they see.

Finally, because your computer has to rely on these central servers to access websites and other online services, your data is not very secure. These central servers can be hacked, and if they are, all of your data could be compromised.

Decentralized Peer-to-Peer

How does Ethereum address these issues then? Instead of using a centralized client-server approach, Ethereum uses a network that is referred to as “decentralized peer-to-peer.”  This means that there is no central server that everyone has to connect to in order to use Ethereum (or any applications built on Ethereum).

Instead, Ethereum runs on millions of computers around the world (called “nodes”) that are all connected to each other via the Internet. This decentralized network is similar to BitTorrent in that it’s powered by its users instead of by any central authority.

Solidity Language

Ethereum also has its own built-in programming language called Solidity, which allows developers to build smart contracts and decentralized applications (Dapps) on Ethereum’s blockchain. These Dapps can do things like sending money or store data securely in a way that is censorship-resistant and cannot be hacked or taken down by any central authority.

The combination of a decentralized peer-to-peer network and user-friendly programming language makes Ethereum the perfect platform for building censorship-resistant apps and services that can’t be shut down by any government or corporation.

Ethereum Has a Bright Future

Investing in Ethereum is a wise choice for many reasons. First, Ethereum is the second most popular cryptocurrency after Bitcoin. More importantly, though, Ethereum has a bright future due to its unique features and potential applications.

Ethereum is capable of creating smart contracts. These apps run on a blockchain, a decentralized ledger that records transactions chronologically and publicly. The Ethereum blockchain is different from Bitcoin in that it can be used to create decentralized applications.

Limitless Potential?

The potential uses of Ethereum are nearly limitless. Developers are already using Ethereum to create everything from digital ID systems to prediction markets. And because Ethereum is still in its early stages, there’s a good chance that even more amazing applications will be created in the future.

Investing in Ethereum is a good way to get exposure to cryptocurrency while also diversifying your portfolio. While there are some risks associated with investing in any cryptocurrency, the long-term potential of Ethereum makes it an attractive investment for many people.

How to Invest in Ethereum

You can buy Ethereum with fiat currency or cryptocurrency, or you can mine it. Let’s get into the details.

Step One: Choose an Exchange

Ethereum is one of the most popular cryptocurrencies, with a wide range of benefits that make it attractive to investors. However, before you can start investing in Ethereum, you need to choose a cryptocurrency exchange.

A cryptocurrency exchange is an online platform where you can buy, sell, or trade cryptocurrencies. Some exchanges only deal in certain types of cryptocurrencies, while others have a more diverse selection. When choosing an exchange, you should consider factors such as the fees, the selection of cryptocurrencies, and the level of security.

Once you’ve selected an exchange, you can create an account and start buying and selling Ethereum.

Step Two: Set up a Wallet

In order to start buying and selling Ethereum, you’ll need to set up a digital wallet. This is where you’ll store your ETH tokens. While there are many different types of wallets out there, we recommend using an Ethereum-specific wallet like MyEtherWallet or MetaMask.

Both MyEtherWallet and MetaMask are free to download and use. MyEtherWallet is a “hot” wallet, meaning it stores your private keys on your computer connected to the internet. MetaMask is a “cold” wallet, meaning it stores your private keys on a piece of hardware that’s not connected to the internet (like a USB drive).

Wallet Account

Once you’ve downloaded and installed your chosen wallet, you’ll need to create a new “wallet account.” This is similar to creating a new bank account. When you set up your wallet account, you’ll be given a long string of numbers and letters called a “public key.” This is similar to your bank account number. You can share your public key with anyone you want, and they can use it to send ETH to your wallet.

You will also be given a “private key.” This is like your bank account password. DO NOT SHARE YOUR PRIVATE KEY WITH ANYONE! If someone gets their hands on your private key, they can access your ETH and steal it from you. So keep it safe!

Step Three: Buy Ethereum

Now that you have a wallet set up, you’re ready to buy some ETH. There are two main ways to buy Ethereum:

Exchanges: If you’re looking to buy ETH right away, your best bet is to use an exchange. This is where you can buy ETH with fiat currencies like USD, EUR, GBP, CAD, etc. The most popular exchanges that support Ethereum are Coinbase, Kraken, and Gemini.

OTC: If you want to avoid the fees associated with exchanges or simply don’t want to go through the hassle of setting up an account, you can also buy Ethereum directly from people who already have it using an over-the-counter (OTC) marketplace like LocalCryptos.

Step Four: Store Your Ethereum

Now that you’ve decided how much Ethereum you want to purchase, it’s time to store it safely. There are two main ways to store Ethereum: either on an exchange or in a wallet.

Wallet

If you want to have direct control over your Ethereum and aren’t worried about trading it frequently, then a wallet is probably the best option for you. You can think of a wallet as a bank account for your cryptocurrency. There are many different types of wallets available, each with its own set of features and security measures.

Exchange

Another option for storing your Ethereum is on an exchange. Many exchanges offer storage services in addition to their trading options. One benefit of storing your Ethereum on an exchange is that if the exchange experiences any issues, your funds will likely be safe since they will be stored in the exchange’s cold wallet. However, this also means that you will have to trust the exchange to keep your funds safe.

Conclusion

In conclusion, Ethereum is an incredibly powerful and versatile platform that has a very real potential to shape the future of the internet as we know it. If you’re interested in investing in Ethereum, or any other cryptocurrency for that matter, it’s important to do your homework and evaluate all of the risks involved before you make any decisions.

Click here to read a Forbes.com article on “How to Buy Ethereum” .

FAQs

What is the best way to invest in Ethereum?

The biggest reason why Warren Buffett doesn’t like cryptocurrencies is that they believe that cryptocurrencies do not generate cash flow or continuous profits, so they think it is an unsustainable investment and a bubble.

Should I Invest $100 Into Ethereum ?

Is it smart to invest $100 Ethereum? Investing $100 in Ethereum is a small entry point into the Cryptocurrency market. While there’s potential for high returns, Ethereum’s price is volatile. Researching Ethereum’s technology and the broader market is crucial.