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Ethereum Investors Guide: Everything You Need To Know

Ethereum (ETH) is the second most popular cryptocurrency after Bitcoin. Launched in 2015, Ethreum is the largest open-ended decentralized platform.

Ethereum is a platform that uses blockchain technology. It facilitates cryptocurrency trading, smart contracts and stores compute code for making decentralized financial contracts that are tamper-proof. You can create a decentralized application on the Ethereum network, where you are the decision-making authority.

The “proof of stake” system is the security protocol used by Ethereum. The block time used for Ethereum is just 12 seconds, which makes it possible for Ethereum miners to receive more Ether as they complete more blocks.

Ether is the currency used in the Ethereum network. Ethereum is not just a currency, but it is an open-source software platform that facilitates DeFi. It supports easy access to financial services such as loans, insurance, and lending through peer-to-peer DApps.

Ether is the native token of the Ethereum blockchain, which powers all activities on the Ethereum blockchain. By using blockchain technology, you can make anonymous payments across the world. They store transactions in the blockchain, a decentralized ledger.

Ethereum 2.0 was a major upgrade that made it more efficient and scalable with a “proof of stake system”.

Ethereum prices have gone up almost 700% in the past 12 months. It is trading just below $3,600 levels as of October 2021.

History of Ethereum

Ethereum is the second-largest crypto in market cap after Bitcoin.

Ethereum was founded by Vitalik Buterin, Anthoni Di lorio, and many others and launched in 2015. Ethereum co-founder Vitalik Buterin introduced Ether, the blockchain network, with abilities beyond just cryptocurrency trading.

In 2016, there was a split in Ethereum into two blockchains, namely, Ethereum and Ethereum Classic.

NFT is a part of the Ethereum blockchain. It saw a massive growth from 2018 to 2020. The non-fungible tokens have a unique code to connect digital files, which helps us distinguish between original and copied files. If you are interested in crypto art, you can easily identify the original art from the duplicate. It plays a major role in collectibles, gaming, and sports. You can transact NFTs and other collectibles with Ether.

Smart contracts programs run on the Ethreum blockchain and have data and codes residing within a specific address on its blockchain, such as a digital vending machine.  The Ethereum-based applications are decentralized and self-executing.

It can store data, execute smart contracts, and is most useful in financial transactions.

It is a tried and true network with a large global community. It is the largest ecosystem in cryptocurrency and blockchain.

Ethereum Live Price

You can view the updated price, volume, and market cap of Ethereum to make trading decisions.

What Makes Ethereum Price Move

  • The price of Ethereum moves along with trader speculation, determined by supply and demand factors in the crypto market.
  • Lack of interest or enthusiasm towards Ethereum by traders moves ETH prices lower or higher.
  • As the usage of Smart Contracts and dApps increases, the price of Ether will also increase. With the wider adoption of cryptocurrencies, the Ethereum ecosystem is showing growth.
  • Bad press reports like hacks and security lapses affect the Ethereum prices negatively.
  • Government regulations and new guidelines affect the price of every cryptocurrency.

As per estimates, only about 90 million Ether tokens will be mined by the end of 2021, which is half the supply of Ether coins. Increased scarcity may lift prices. Investors, real estate, software developers, and hardware manufacturers use Ethereum. Financial companies show interest in the apps developed on Ethereum. As the usage increases, prices will proportionately increase.

Ethereum’s Price Falling

Ethereum prices move downhill whenever market bubbles, hacks, and attacks befall the market.

  • Market volatility causes a fall in Ethereum prices, especially when market bubbles bring parabolic profits and losses.
  • Ethereum functions as a ledger and is a platform for smart contracts. It can lead to hacks, breakdowns, and flaws, which may lower prices.
  • A hack in 2016 caused a split in Ethereum and a dip in prices.
  • Investors lost confidence in Ethereum when it faced a $600 million hack in August 2021, disclosing the vulnerability of the Crypto market.
  • Ethereum Classic lost almost $2 billion in 2019 by a hack on its blockchain.
  • Whenever hacks and cybercrimes occur, they expose the risks of the crypto industry, which makes investors move away from the crypto sector.

Ethereum’s Price Rising

Ethereum, the second-largest cryptocurrency in the market cap has high liquidity.

  • You can exchange Ethereum for gold or other fiat currencies such as US Dollar, Euro, or the British Pound. There is limitless usage for blockchain systems, which will keep Ethereum prices move higher.
  • In 2021, a digital art piece sold for more than $38,000 ETH is the most expensive NFT sold, creating interest among artists and creators, resulting in a price increase.
  • The IPO of Coinbase in the US exchange in 2021 brought a price growth in Ethereum, including Bitcoin, Litecoin, Dogecoin, and other altcoins.
  • Lowest fees crypto exchanges, like Binance, charge 0.04% to 0.10% fee on transactions, based on the trading volume. Users prefer to trade on the lowest fee exchanges and zero-fee platforms.
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Ways to Invest in Ethereum

Ethereum has a large market cap and is available at top cryptocurrency exchanges, where you can buy them. Identify the purpose of your crypto investment to choose the best way to invest in Ethereum.

How To Open A Ethereum Wallet

Before you start investing in Ethereum cryptocurrencies, you need an Ethereum Wallet to store them. Connect your wallet to the best cryptocurrency exchanges like Voyager, Binance, or Kraken. Choose a wallet for storage purposes if you want to purchase Ethereum crypto for a long-term investment.

When you buy ETH, you can remove your holding from the best cryptocurrency exchange and keep it safe by storing it in your own wallet. It will come under your control as you hold the private keys. 

However, Coinbase exchange does not allow you complete control over your private keys. HollaEx Kit is a free crypto trading solution that offers a crypto wallet and enables customers to trade into Ethereum and other major digital assets.

Ethereum Funds

Ethereum evolved from a network into a big ecosystem consisting of investors, entrepreneurs, and developers, making it the second-largest crypto in the world by market cap.

  • Big names like Intel, Microsoft, and JPMorgan Chase have made investments in the Ethereum blockchains.
  • The Ethereum Foundation, a non-profit organization, supports Ethereum and other related technologies.
  • The Ethereum development was through funds received in 2014 from an online public crowdsale.
  • Ethereum generates revenue from Ethereum miners in the form of tokens and gas fees.

Best Performing Ethereum Funds

The launch of Ethereum ETH made people believe that the crypto can function on a decentralized computer. The $18 million raised in 2014 made it the third-largest project to be crowdfunded.

Ethereum Bitcoin Funds

Ethereum runs on a blockchain where users can interact by making use of Ether.

  • Developers use the software platform to build apps on Ethereum. Developers pay a fee to the network when they create new tokens and decentralized apps on the Ethereum network. The price paid is gas, and the cash used is Ether.
  • Individuals support the platform through a process called “Mining”. They provide computing power through cloud space or their own servers.

Best Ethereum Trading News Sources

Stay informed on Bitcoin, Ethereum through blogs, podcasts, newsletters, and blogs. Gather the latest developments on Enterprise Ethereum and Ethereum protocol for better trading strategies.

You can download news applications on your mobile phones such as CryptoNews, Blockfolio Bitcoin, Reddit, Investing.com, and StockTwits. You can also get a customizable space for crypto market movement. The Robinhood crypto trading app introduces new features, making it easy for customers to receive and sent crypto coins. If you buy crypto on Robinhood, you can choose the instant account to get instant access to your crypto fund.

Is Ethereum A Good Investment (Chart And Summary)

Ethereum is the second-largest cryptocurrency in the market cap and is a good investment.

  • Ethereum was launched in July 2015 and traded at $2.77.
  • In 2016, it was trading within a $5 and $14 range.
  • In 2017, Ether prices rose almost 13,000% and attracted many investors.
  • In 2018, it touched a high of $1,278.
  • In 2019 and up to Nov 2020, ETH was trading below $500, except in 2018, when it surged to above $1,200.
  • In May 2021, it reached life-high levels at $4,352.
  • Ethereum prices started January 2021 at $1,000 and have seen a massive surge up to $4,352 in May 2021.

Technological developments have brought a price growth in Ether. In May 2021, a smart contract protocol, Uniswap V3 optimized Ethereum trading. Traders consider it a good investment.

However, cryptocurrency trading is not advisable if your funds are from student loans, retirement savings, or emergency funds. It may lead to financial losses.

Is Ethereum A Genuine Investment?

Ethereum is a popular alternative to Bitcoin in the crypto market. Companies adopted Ethereum for transaction purposes, while it drew interest from Startupsfor its industrial value.

Ethereum allows direct peer lending, earns interest, and allows payments without any payment processing company. It does not require an intermediator for art auctions and music streaming.

Data coordination, rapid deployment, network size, and scalability make Ethereum prices rise higher.

Choose crypto exchange with the lowest fees like Changelly, as it charges a fixed rate for crypto exchanges at 0.25%.

Ethereum uses proof of stake security protocol and makes it a safe, secure, genuine investment.

Ethereum Links With The Dark Web

The dark web allows illicit plans through the cryptocurrency market. Valuable coins like Bitcoin and Ethereum make it easy for hackers and individuals to purchase illegal products like drugs. Blockchain is an instrument used by the dark web for malicious purposes and illegal applications, as in adult industries and porn scams.

Trading Ethereum

When you trade Ethereum, you are actually trading Ether token.

When you believe that the price value of Ether will increase, you can have a Buy position, and if you feel that prices will decrease, you can open a Sell position on the best cryptocurrency trading platforms. Speculation determines the market price of the crypto coin.

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The best crypto trading app like Gemini, Coinbase, Crypto.com, and BlockFi will enhance your crypto trading experience. Beginners should research the crypto market before they start trading.

How To Trade Ethereum

Know the movement of crypto tokens and their price values. The internet keeps you updated on the latest news and trends.

  • Traders prefer to have the best app to buy cryptocurrency, Ethereum, as it makes trading easier. Robinhood, eToro, PayPal, and CashApp are some of the best apps to buy cryptocurrency like Bitcoin, Ethereum, Binance, etc. eToro is the best crypto trading app for global users, while Coinbase is best for beginners. The Gemini crypto exchange provides high-level security and real-time data. Coinbase is a free app that gives you a bonus for a deposit of $100.
  • If you want to trade Ethereum against Bitcoin, you can trade CFD on the Ethereum/Bitcoin instrument (ETHBTC). The CFD is a contract for the difference where you exchange the token using the difference in prices. You can go long or short to trade on the price difference without actually owning the crypto.
  • You can sell ETH and get paid in US Dollar currency or receive another cryptocurrency in exchange.
  • Day trading crypto Ethereum has boomed with growth in crypto currency trading. Ethereum provides a great day trading opportunity for professionals. On Coinbase, you have more than 4000 digital coins to buy, sell, and manage your crypto portfolio. Day trading crypto provides attractive financial opportunities. 

Ensuring Ethereum Trading Is Profitable

  1. Develop a good plan to trade Ether.
  2. Set goals in the trade as a daily, monthly, weekly, and monthly plan.
  3. Choose your trade and learn about the risks of each crypto trade.
  4. Determine your risk-reward ratio.
  5. Do your research and fully update yourself on the latest developments.
  6. Use technical analysis using various tools available to predict the price moves.
  7. Place the trade.

Have the best app for crypto trading, such as Gemini, eToro, and Coinbase. Choose the top exchanges that provide free trading. Keep your risks low and utilize funds that you are willing to risk.

Buying Ethereum Beginners Vs. Professionals

Ethereum is a digital platform that uses blockchain technology for a variety of applications. Its shared digital ledger makes it transparent, accessible, and hard to alter,

  • On Robinhood wallets, you can use the digital currencies without converting them to US Dollars. Beginners prefer to store their crypto tokens on their wallets with a private key.
  • Beginners who trade on eToro crypto can trade on multiple assets like stocks, forex, and CFD. It allows copy trading with a 0.75% fee to trade crypto.
  • The best cryptocurrency trading platforms for Ethereum are Coinbase, Gemini, and Kraken. They are private companies with platforms for Ethereum crypto day trading.
  • Professionals prefer to use crypto trading bots as they react quickly to market movements. 3commas provides automated trading bots to copy the trade of successful trades and to track top portfolios. Users can customize their trading strategies on 3commas. Webull crypto charges a 100 basis point spread for professional traders.
  • Blockchain uses the process of mining to create Ethereum, usually done by professionals.

Best Way For Beginners To Buy Ethereum

Ethereum and Bitcoin are two big names in the crypto space available on all cryptocurrency platforms.

  • As a newbie in the crypto sector, choose easy-to-use cryptocurrency platforms. It should have educational resources to give you an insight into the complex crypto market. Look for crypto brokers who charge a flat rate and not a percentage model. Make sure that the amount of liquidity at the ethereum trading exchange is good so that it is easier to buy and sell crypto.
  • As a beginner, choose a commission-free cryptocurrency platform like Robinhood for cryptocurrency trading. The Robinhood crypto fee for Ethereum is nil. Choose the best crypto trading platforms that provide safety and security and learn the basics of crypto day trading to be profitable. Coinbase, Binance, and KuCoin are the best crypto trading platforms for beginners.
  • According to the Forbes Advisor, Coinbase is the best US crypto exchange for beginners, which charges a fee of 1.99%.
  • Best cryptocurrency brokers like CoinSmart, ChangeNow, Cash App, and PrimeXBT are crypto brokers with low fees. Robinhood is one of the best cryptocurrency brokers for Ethereum trading. The Robinhood crypto broker charges $0 Commission and $0 account minimum. Robinhood crypto day trading is safe as it has rules to protect its investors like the pattern day trading rule (PDT).
  • eTrade crypto and Robinhood crypto plans to let investors trade Ethereum on their platform to woo millennial customers towards crypto currency trading. You can access trading tools with real-time market data, read relevant news articles, and get notifications on important events related to Ethereum when you trade crypto on Robinhood. Coinbase is the best crypto platform for newbies in the crypto sector.
  • Select crypto exchange with the lowest fees for Ethereum, such as CoinSmart, which has two-factor authentication and a 0% fee for Bank Draft and Bank Wire. Prime XBT, FixedFloat, Binance, CashApp, Coinbase, and Bittrex fees are the lowest fees on crypto exchanges.
  • Robinhood cryptocurrency allows you commission-free trading. You can start trade with just $1, and you can grow your crypto on Robinhood over time.
  • There are trading forums that will guide you through the day trading cryptocurrency process.
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How Pros Buy And Invest In Ethereum

  • Professionals stay in tune with everything Ethereum, such as Business Insider, Coindesk, Quora, Reddit, and Crypto Insider. Top crypto exchanges for Ethereum are Coinbase, Crypto.com, Kraken, Gemini, and Gate.io.
  • Speculative traders prefer the best crypto exchanges with research, analytical tools, technical indicators, and charting options. Day trading cryptocurrency is the most used trading strategy by professional traders. The best US crypto exchanges for day trading are BlockFi, Coinmama, Coinbase, and eToro crypto.
  • US is the best US crypto exchange, as it charges a lower transaction fee for high-volume crypto traders. Kraken is the oldest, best crypto exchange in the US that offers a wide range of coins with lower fees.
  • Crypto trading bots can save many hours of painstaking work before the computer screen. Once you program in your rules, the robot will execute the order. Coinbase, Binance.US, Kraken, and Gemini are some of the best US crypto exchanges.
  • Professionals prefer to trade with a mobile app. It keeps them connected to the market, especially when there are sudden violent movements.
  • Long-time traders prefer to trade on cryptocurrency futures. You can leverage and multiply profits using advanced trading strategies. With cryptocurrency futures, you can speculate on the direction of the crypto market to minimize risks.

Tax liabilities on Ethereum

Tax on Ethereum US

Tax questions are on the minds of all crypto users. The Internal Revenue Service sets up enforcement rules on those who hold the crypto and trade on it on top crypto exchanges. The IRS does not look kindly on tax cheats and treats every profit on the crypto exchange as capital gains. Accounting allows free crypto trading and functions as a tax platform to generate a tax report according to the user’s jurisdiction.

  • If you have sold, sent, or exchanged your cryptocurrency, you have to disclose it.
  • You have to report your gains. If you had a capital loss, deduct it from your taxable income.
  • If you have exchanged virtual currency for fiat currency or goods or services, you are liable to pay tax.
  • If you mine Ethereum, you can deduct your expenses.
  • If you gift Ethereum, it is subject to a gift tax if it is above $15,000.
  • Treat inherited Ethereum like any other capital asset.

Tax on Ethereum UK

  • According to HMRC, if you hold crypto assets in the UK, you have to pay tax on profits made on these assets.
  • You have to pay tax on the Ethereum received from mining, confirmation rewards, and airdrop.
  • If you received a salary in crypto from your employer, you have to pay tax.
  • Your crypto portfolio is just like your stock portfolio. You have to pay tax on profits and deduct losses from the taxable amount.

How Much Do You Need To Start Investing In Ethereum

Investors require a minimum purchase of $200.

Before investing in Ethereum crypto, make sure that you have adequate savings as emergency cash funds. ETH is just another risky alternative asset, so do your research, allocate a small portion of funds on your portfolio on it.

Ethereum Investors Summary

Cryptocurrencies dominate the headlines, but they are volatile crypto assets to be handled carefully. It will not be possible to liquidate your position instantly when cryptocurrency prices drop suddenly. Unusual trading activity, news events, and changes in the cryptosystem may bring high volatility in prices leading to heavy losses. ETH has been under enormous price volatility. 

But, it makes it a super alternative to Bitcoin as it is open to reform strategies. Many companies use Ethereum as a building block. You can invest in Ethereum for long-term gains, but it is not advisable for short-term investments. Investors use crypto investment as a hedge against inflation and use technologies based on Ethereum.

There is a spike in attention in Ethereum as non-fungible tokens transacted on the Ethereum network attract traders.

Ethereum is a volatile asset class. Though its future is uncertain, it offers plenty of opportunities for substantial profits. The best crypto platforms for trading Ethreum are eToro, Coinbase, Coimama, and Binance.

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