Did you hear about this year's Bitcoin conference in Miami? During the first week of June, thousands descended upon that seaside city from around the world to celebrate the wonders and discuss the possibilities of cryptocurrencies and blockchain.
And that, while the pandemic rages on.
COVID aside, it was fantastic to once again see people enjoying themselves in large crowds and, even better: so far, no infection spikes have been reported!
All of that is great news but we don't want to talk about this year's Bitcoin conference or what that city becoming a tech hub could do for the state of Florida. Great things, surely!
The Bitcoin conference we're interested in was held in 2014; that's where Ethereum's creation story begins.
In 2013, Vitalik Buterin drafted a white paper describing the ways that blockchain and cryptocurrency could be used for other applications besides financial investment. In it, he speculated on attaching assets - anything of value from real estate to company stock investments.
That same year, shortly after he published his paper, he briefly collaborated with eToro's Yoni Assia on a separate project but they could find no way to move forward Buterin's project.
It wasn't until the Bitcoin conference in 2014 that enough like-minded people were available to brainstorm and hash out the venture's details. Buterin's proposal to develop a new blockchain, one that ran on a less exacting, farther-reaching programme finally found fertile ground.
Anthony Di Iorio initially financed the project that Gavin Wood, Charles Hoskinson and Buterin put their collective minds to work on. Di Iorio's invitee, Joseph Lubin further invited a reporter to witness the proceedings. Later that year, the group met again - sans reporter and, this time, in Switzerland, to hash out the plan's finer details. That's when the first split took place.
By that time, the collaboration was raising money through a cryptocurrency crowdsale, which gave the public an early taste of what Ethereum could do. That initiative afforded the creative team the user feedback they needed to guide their efforts.
It also made it clear that, from the start, Buterin envisioned the whole thing as an open, participant-driven venture.
The fracture in the development team came when Buterin declared Ethereum would maintain its non-profit status. Hoskinson didn't agree. Surely, the concept could become a goldmine; why not profit from it? He left the project and went on to found Cardano.
Thanks to that platform's many commercial ventures, predicting Cardano prices is a hot topic in the crypto world.
What Can You Do with Ethereum?
The Bitcoin blockchain is built by mining bitcoins; ether is the currency generated by mining the Ethereum protocol. Like Bitcoin, this protocol is a proof of work system, meaning that it is energy-intensive and rewards, usually coins, are given to miners after each completed work instalment.
As an aside: the brain trust driving Ethereum's constant evolution, aware of the proof of work's incredible toll on the environment are converting their system to a much less energy-consuming proof of stake system.
By the way, did you know that the bitcoin blockchain recently came under fire from one prominent US investor precisely because of the environmental harm it may cause?
Back to Ethereum applications and utility, now.
This decentralised finance platform allows for a range of services with no third-party involvement.
Let's say you're shopping for a car online and find one you want to buy. Even better: the seller accepts Ethereum!
For such a transaction, typically, you would go to the bank for a cheque or arrange for financing through a loan company. Using Ethereum, neither institution is necessary. If you have all the ETH you need for the transaction, you can simply transfer it to the person you're buying the car from.
ETH is the standard designation for Ethereum's crypto coin, ether.
NFTs or non-fungible tokens have recently caused a stir. They are one-of-a-kind digital assets offered up for sale. Recently, the video Charlie Bit My Finger netted half a million pounds and the Disaster Girl photo sold for just under half a million dollars. It's not clear how the Charlie sale was transacted but Disaster Girl was sold for 180 ETH.
Considering that, at the time of this writing, Ethereum is trending upwards (showing an 8.51% growth in the last 24 hours) and the price for one ETH is $2561.06, not only does the math work out but the new owners' digital assets are bound to increase in value. What an investment strategy that is!
Smart contracts are perhaps Ethereum's best feature.
Imagine yourself as the head of an innovative startup and one of your apps has attracted the attention of all the major players: Apple, Microsoft, Google, Amazon... As you are interested in selling, you want some sort of guarantee that the tech giant you will deal with is making a serious offer.
Before blockchain convenience, you may have instructed your lawyer to hold that earnest money in escrow, to be released upon the completion of the sale. With an Ethereum small contract, you eliminate the lawyer and bank account needed to hold the escrow funds. The contract is valid for a set time, after which the funds are automatically released.
Granted, other blockchains support smart contracts; among them are EOS.IO, Tezos, Dero and Cardano. Bitcoin can support such contracts but they must be customised. Despite the available choices, currently, Ethereum is the gold standard for this financial arrangement.
Are you now all in on Ethereum? Let's find out how to buy some!
Choose an Exchange
Fortunately, buying Ethereum is not complicated; you just have to know the right steps to take. The first one is finding a cryptocurrency exchange; that is where you'll conduct your transactions.
Cryptocurrency exchanges are not so different from brick-and-mortar exchanges where stocks, commodities, currencies and securities might be traded. If you're thinking 'stock market', you've got the right idea... except cryptocurrency exchanges are wholly digital.
Of course, if you're uncertain of your trading skills or don't know enough about how such exchanges work, you could always engage a broker just as you would for any standard investment portfolio. Just remember that they will take a portion of your gains as commission, which sort of negates the principle of cryptocurrency eliminating third parties.
Today, the top cryptocurrency exchanges are:
- eToro: low fees, high coin selection and very safe; it is the highest-rated exchange
- Coin Corner: fees are a bit higher and it's not quite as secure; coin selection is limited
- Coinbase: fees are slightly higher and security is not as tight but they boast a wide variety of coins
- Coin Jar: fees and security are on-par with Coinbase but coin selection is not as great
- Luno: very low commission rates and average fees; safety is rated relatively low and coin selection is minimal
The Binance exchange is loaded with lots of tools and features, too. There, you can trade in a wide variety of coins and the commission price is very low. You can check out all of its pros and cons in our related article.
Prove Your Identity
One of cryptocurrency's greatest advantages, privacy, is also one of its greatest vulnerabilities.
For everyone who has ever gotten fed up with the constant scrutiny over their life, there are ten more who've relished the anonymity of the crypto world because their bad deeds can go undetected.
Feel free to blame those bad actors for honest citizens' mandate to prove that they are legal and aboveboard.
Before you can trade in cryptocurrency, you will have to prove your identity by uploading either your driver's license or your passport identity page.
Make a Deposit
After creating your account and uploading your identification, you will have to wait a few days for approval. EToro's window is three business days; others may take as long as five so no need to worry if you don't hear back from the platform for a couple of days.
Once you are approved, you need to fund your account.
You may do so just as you would when making an online purchase, with your debit or credit card; you may also load your account via a bank transfer. You might use Paypal or some other e-wallet but, beware: few exchanges permit funds transfers by those means (eToro does).
While you wait for account approval, it would be a good idea to check on the funding options open to you and whether you must maintain a minimum account balance. And you might look into Tether.
Tether is the Bitfinex exchange cryptocurrency. It is considered a stablecoin, meaning its value doesn't fluctuate with the volatile crypto market. As a new cryptocurrency trader, you may find great value in Tether's capabilities.
Whether you're buying Ether as a long-term investment or to boost your income by lending your coins (with interest, of course), once you've gotten your account approval and deposited funds, you're ready to buy. Here, the word is safety.
Hacks, malware, and ransomware have made headlines lately and, just because you only have a few hundred quid in your crypto wallet, that doesn't mean you're too small a fish for hackers to target. However, as you've (hopefully!) chosen a reputable broker/exchange, one overseen by the Financial Conduct Authority, you should have little to worry about.
That doesn't mean there are no risks involved.
Beyond the possibility of losing money - as a novice trader in as volatile a market as cryptocurrency is, you should expect some loss, you may somehow end up on a less-than-reputable - outright unregulated platform.
Here again, one of cryptocurrency's greatest assets, its lack of oversight, is also one of its greatest flaws.
There are not enough financial crime investigators on the planet to keep track of all the illegitimate platforms that spring up seemingly overnight; it's up to traders to monitor their activity to keep those miscreants in check.
With all of that being said, you can take firm assurance that Ethereum is one of the top five cryptocurrencies to invest in this year. By choosing the right broker and making judicious moves, you too could ride the lucrative crypto wave.
The platform that connects tutors and students