If Bitcoin is the big name player in the Cryptocurrency sphere, Ethereum is the main rival, looking to take the supremacy away from the behemoth that is the original digital currency.
Ethereum was developed in Switzerland by a nonprofit organisation called the Ethereum Foundation. They also sought expert advice in forming this blockchain coin.The big difference though for Ethereum compared to Bitcoin is its ability to run smart contracts.
Smart contracts are computer protocols that “facilitate, verify, or enforce the negotiation or performance of a contract.” For this reason, it becomes clear and obvious that the value of the Ethereum platform is not just its coin value, but the application its smart contract protocol can have on businesses.
When a smart contract is run along a Blockchain network, such as is possible with Ethereum, it starts to operate like a self-operating computer program that executes certain actions when the required conditions are met. It is the blockchains, with their transparent, and unhackable nature, that makes them so secure and appealing to companies and businesses.
Another reason that Ethereum is so appealing to businesses who are looking beyond its digital currency capabilities is because of its open-source nature. Companies can use it to build and deploy decentralised applications on its network or blockchain.
In comparison with Bitcoin, you can imagine Bitcoin as a blockchain that has one function which is to keep tabs on ownership of the digital currency, meanwhile, Ethereum has that function, and more. The Blockchain of Ethereum is focused on running any decentralised program that is implemented on top of it. You can picture Ethereum as a train track that will accept any form of locomotive to work on top of it - that locomotive is developed by companies to operate on the blockchain tracks.
Ethereum, like all digital currencies, have their inherent worth, and that worth is constantly fluctuating - wildly. There is of course money to be made in trading the digital currency, especially as its fluctuations can often be wilder and more volatile compared to Bitcoin.
While the volatility is a scary prospect, it also leads to possibilities for money to be made on well-timed trades. Ethereum's price is also pretty linked to Bitcoin's (mostly because a lot of the buying of Ethereum is done with Bitcoin as the more popular and common digital currency).
Ethereum has this tag as the presumed successor to Bitcoin. It is thought to be biding its time because it has better and clearer applications outside of just being a currency - this drives its value as software and makes it more valuable, especially in comparison to Bitcoin which is simply a currency.
However, Ethereum is still the new kid on the block and is susceptible to a few teething issues with its smaller market cap. There is possible market manipulation that can occur by a few big whales, which has already happened. A flash crash in Ethereum saw its value tumble from above $300 to 10 cents, and back up again, within seconds.
Ethereum is indeed the next in line to the throne, but no one knows when, or if, Bitcoin will ever step down and let someone else take over. But as a trading and buying option, Ethereum offers something a little different to Bitcoin with potentially more relevant software.
How to Buy Ethereum
As one would expect with a coin with the prestige of Ethereum, it is one of the more accessible and easily obtainable coins. Much like Bitcoin, as well as Litecoin, Ethereum is available on a digital currency exchange called Coinbase. Coinbase is one of the bigger, and more popular exchanges - especially in the United States of America - and offers the opportunity to buy Ethereum directly with fiat currency.
1 - Visit Coinbase and set up an account with the basic information, such as name, last name, email and password.
2 - An important, but optional, second step is to set up your two-step verification. This is an added level of protection that makes you input a second password that is constantly changing and is only available to you on your mobile device. Because you are dealing with money, and digital currency, there are always fears of hacking and online thieves, so this simple step offers peace of mind from the exchange.
3 - Once you are set up on Coinbase, you can begin to add payment methods. This is the beauty of places like Coinbase, it is as simple a linking your bank account, making a direct deposit into your new Coinbase wallet, and getting on with buying your Ethereum.
Click on add a payment method and select the most appropriate one - in this instance a bank account. Because of the banking laws, there will be a period of verification as Coinbase confirms your account, it could take some time because of the upswing in popularity of Bitcoin and associated coins like Ethereum and their exchanges.
4 - Once verification is complete, you will be able to fund your exchange account with USD and from there you can make your first purchase of Ethereum. At first, there will be little other verification needed, but as you get more involved, spending and buying more, Coinbase will need more and more verification, asking you to verify your Identity and proof of residence.
How to Buy Ethereum with a Credit Card
Linking of a bank account is just one of the options you can use to buy Ethereum at a place like Coinbase. You would have noticed when selecting a payment method that there was also an option to buy with a credit card.
This option has its advantages, but it also has a few drawbacks. Firstly, there is less waiting and verification with buying Ethereum with a credit card, it is almost instant. However, there is also a limit on the amount of digital currency you can buy, and the associated fees with using a credit card anywhere also come into play.
There is a step where you will have to verify that the credit card is indeed yours. Coinbase will charge the card a small amount and you will have to confirm that figure for your card to be accepted on their platform.
With a credit card you will be limited daily on the amount of Ethereum you can buy, so it is not a great option for those looking to spend big on the exchange.
How to Buy Ethereum with Paypal
There was a possibility of buying Ethereum through PayPal at a stage, but because you can charge back transactions with PayPal, that option has been removed from places like Coinbase. Instead, they do still allow you to withdraw from your exchange wallet into a PayPal account. So, instead of taking money from your Ethereum transactions back into your bank account, you can move them straight into your PayPal account instead.
This also requires verification and linking of your PayPal account to Coinbase to make the transaction seamless.
For this to happen you will first have to verify your ID with Coinbase. Then PayPal will need to be manually added as a payment method via the payment method page. Next, verification will be required so that Coinbase can access your PayPal account.
How to Trade Ethereum
Ethereum is not difficult to trade with but to be fair, it is a tough commodity to trade because it offers such high rewards, with such high risk. However, for many, that makes it even more attractive for if one understands the possibilities of the coin, the value becomes even clearer.
The real world application for Ethereum, with its smart contracts, means that adoption of blockchain increases - which it will beyond simply the digital currencies. Ethereum’s true use will be realised and its value will continue to rise.
It is still in its infancy and it needs to build to a stable and accepted base, much like Bitcoin before it motors towards the $3000 mark, but in the meantime, there is money to be made on the violent swings.
A popular trading platform that goes beyond what Coinbase can offer is AVATRADE, and just like setting yourself up with Coinbase, it is just as easy to get started on AVATRADE.
1 - Firstly, go to the website: www.avatrade.com and sign up by again providing basic personal information. In fact, AVATRADE makes it even easier offering you a choice to sign up with Facebook or even Google+.
Once you are into your profile, you will need to fill in further personal information from your date of birth to your preferred choice of trading platform - something we will get to later.
AVATRADE is more focused on being an efficient tool for actively trading digital currencies, and other assets, so it will ask your level of experience when it comes to trading. This will help you with the level of support you need from the site.
When it comes to selecting your trading platform, if you are looking to trade Ethereum, it is best to select Floating Spread Account with MetaTrader 4. This will give you the option to work with Ethereum, as well as other Cryptocurrencies.
From here, you can fund your account, and much like with Coinbase, it is about linking a bank account to AVATRADE and making a direct deposit. Once there are funds present, you can buy your Etheruem and start trading by clicking ‘Web Trading’.
Once you reach the trading platform (below), a list of all the available Cryptocurrencies will come up, running down the left-hand side of the screen. Begin your trading of Ethereum here by using your available funds to purchase Ethereum's a start.
Future of Ethereum Trading
Just like no one can predict the markets, no one really knows if Ethereum will overtake Bitcoin as the main player in the digital currency realm, but there are indications that point towards it.
Ethereum has the advantage of seeing what Bitcoin has done, and where it has not succeeded, and it has improved upon it. Currently, Bitcoin’s growth has slowed because of its inability to handle the huge upswing in interest and traffic on its network. The debate on how to scale has arisen and is reaching a climax that could either save or spell the end of Bitcoin.
For Ethereum, this debate has already been dealt with as the cryptocurrency split early on in a hard fork. This meant that there were two schools of thought as to what should happen to deal with the scaling issues and Ethereum branched into two chains. Both the chains did enough to survive and be feasible, in terms of hashrate and usage, so there are now two versions of Ethereum: Ethereum and Ethereum Classic.
So, Ethereum's network can handle a lot more traffic, it has added usability in its Blockchain thanks to the smart contract function, and it is newer and full of fresher ideas. It thus seems likely that Ethereum will continue to exist, and won't go down in history as a wasted coin, in fact, it could very well be the next big coin if Bitcoin cannot handle the changes facing it.
Another important reason that Ethereum may have an edge on Bitcoin is that it has a personable head at its formations, meaning that there is someone who is actively trying to shape this coin into a working piece of software.
Bitcoin’s creator, Satoshi Nakamoto is firstly an enigma, and also totally uninvolved today. Ethereum's Vitalik Buterin at its head and he is young, hungry to succeed, and hungry for Ethereum to succeed. His vision for Ethereum is one that is aimed at global efficiency through the use of blockchains, rather than to just make a bucket load of money.
Despite not knowing what could come, and anything can happen in the world of digital currencies, Ethereum’s future is incredibly bright. Its adoption with major companies and corporations is much higher than Bitcoins, so, when the masses come around, Ethereum could be the leading Blockchain.
Learn to buy and trade another, very different cryptocurrency, called Potcoin here.