To invest in Ethereum, you must have a digital wallet first.
With a digital wallet, you can buy and store it. This means, you need to look for a cryptocurrency exchange.
This should allow you to invest or send and receive cryptocurrencies.
When dealing with these exchanges, you can use your fait currency or another cryptocurrency to buy ethereum. Never the less, you have to own an account with them.
How do you own a digital wallet
First, choose a cryptocurrency exchange and sign up for an account.
Some of the common exchanges are; Coin base, Bitfinex, eToro,Kraken to mention but a few.
Then verify your identity. You will be asked to provide details of your address, names and any other personal information.
Confirm the information to verify your identity.
Alternatively, you can create your own wallet.
Ethereum platform allows you to create a personal/private wallet for yourself.
This means you alone has full control over the private key and your funds.
Once you get to the website, you will receive several safety reminders, read through to understand how the system works.
Then select the option create password and set up a new wallet. You must set a strong password.
After that, you will have an option to download your key store file.
Save your private key.
You can memorize it or write it somewhere and store it in a safe place.
Only you should know your private key for your wallet.
You will need to use your private key to access your wallet.
Now you can easily transfer your Ether from exchange to your wallet and store it.
Different ways you can invest in Ethereum
Like any other cryptocurrency such as Bitcoin, one can invest in Ethereum in several ways.
1. Mining Ethereum
Of course to mine Ethereum, it requires you to solve complex mathematical equations and come up with a proof of work in a fastest time possible.
Just like Bitcoin, the more miners on the network, the more difficult it becomes.
Once you solve the equation, the next block is added to the network and you receive a reward(Ether) equivalent to amount of computational power contributed to the network.
Ethereum validates blocks in just 12 seconds unlike bitcoin which takes 15 minutes.
Also the miner who creates the latest block receives 3 Ethers as reward.
Notably, Ethereum plans to transfer its network from proof of work to proof of stake before end of 2020 as they launch the Ethereum 2.0 upgrade.
2. Using Cryptocurrency Exchanges
Alternatively, you can also buy ether and hedge it against the other fiat currencies like USD.
What do we mean??
You can choose to buy ether tokens in exchange for any local currency hold it and then sell it at a higher future price.
Also you can exchange Ether tokens with other cryptocurrencies on the exchange markets.
Or else, you can invest in Ethereum for personal use. Through using EVM, smart contracts and carrying on online payments.
3. Speculation on the Market Prices
Like bitcoin or any fait currency, you can earn from ethereum through speculating its future value in relation to other cryptocurrencies or fait currencies on exchange markets.
In this case, you earn from value differentials.
You may want to put your technical or fundamental analysis tools to use to predict future direction.
Take a look at the ETH/USD 4-Hour chart
From the above,
You can spot a bearish Flag. This is signal for continuation of the trend to the downside.
When the candle closed below the lower trend line, it confirmed the Sell entry. Our Stop loss is just above the previous highs.
To get the target, measure the previous move distance and then projecting it forward.
Learn more on the Flag pattern here.
How to Buy and Sell Ethereum using Peer-to-Peer Exchanges.
You can buy or sell Ethereum the same way you do for bitcoin only that this time you will be rewarded ether not bitcoin.
This operates on a web platform.
The platform connects you to the other users of Ethereum. You buy or sell Ethereum basing on mutual agreements.
Therefore, the platform acts as a web broker where you can buy or sell any cryptocurrency.
You can also pay your seller using paypal, credit card or hard cash in case you agree to meet in person.
All you need is to have a valid Ethereum wallet address to make your transactions.
As a rule of thumb, Buy when price is low and Sell when price is high. However, Ethereum prices tend to be more volatile.
Therefore, since you never know what the future may hold, risk only what you can afford to lose.
How does ethereum work?
Ethereum works almost the same way as bitcoin. Ethereum block chain shares records of the all transaction history but mainly the most recent data.
Ether and other crypto assets are held in the Ethereum wallet which allows you to create and use smart contracts.
The Ethereum Virtual Machine (EVM) is a turning complete software that runs on the Ethereum network.
It allows anyone to run any program regardless of the programming language given enough time and memory.
Its bockchain is similar to that of Bitcoin however, its programming language enables developers to write a software through blockchain transactions.
This software is called the smart contract
In other wards EVM enables the development of thousands of different applications all on one platform instead of building an entire block chain for each new application.
This makes the process of creating block chain applications much easier and efficient.
Smart contract are just computer codes you can use to facilitate the exchange of money, content, property shares or anything of value.
Smart contracts run on a block chain, exactly as programmed without any possibility of censorship, downtime, fraud or third party influence.
You can also use Ethereum to build Decentralized Autonomous Organizations (DAO) which run by programming codes on a collection of smart contracts written on the Ethereum block chain.
The code is designed to replace rules and the structure of a traditional organization.
In fact, it eliminates the need for people and centralized control.
This makes it work completely transparent and independent of any human intervention even its original creator.
Everyone who purchases tokens owns it and acquires voting rights.
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