Ethereum is a digital platform based on blockchain technology and its native currency, Ether, is the second largest in the market behind Bitcoin.
The main difference with Bitcoin is that the Ethereum (ERC-20) network is based on smart contracts that run on the Ethereum network itself. If a traditional contract describes the terms of an agreement or relationship between two parties, a smart contract ensures that those conditions are met by encoding them. That is, using cryptography.
Being a tremendously flexible network, it has become a reference within the Blockchain for being able to standardize the tokens issued, thus facilitating the exchange between tokens. The Ethereum platform was born in 2015 by a programmer, Vitalik Buterin. His goal was to create an instrument for decentralized and collaborative applications.
Ethereum itself defines itself on its website as “open access to digital money and information services for everyone, regardless of their origin or location.” In short, it is a technology that works through blockchain and was create from the cryptocurrency ether (ETH). Finect has recently launch a showcase for Bitcoin and cryptocurrencies in general. By subscribing to the showcase you will be constantly updated with the latest news and cryptocurrency investment products.
How does ethereum work?
The Ethereum blockchain is similar to that of bitcoin. It uses software with which you can manage transactions and automate some results. This software is called a smart contract: they are programs that automatically execute the contract when predefine conditions are met. Compare to a contract to use, here it is possible to eliminate the delay and the costs.
For example, you are an Ethereum user and you decide to create a smart contract to send an ‘X’ number of ether to a friend on a specific day. The blockchain enters the scene and a code is record on a chain of blocks. When the contract is complete (on the agree date) the ether will be automatically send to your friend.
What are the advantages of smart contracts, like the ones ethereum uses?
- They eliminate the figure of the intermediary, offering the user total control and minimizing costs
- Eliminate the time and effort of manual processes
- They are recorded, encrypted, and mirrored on the public blockchain, where users can view market activity
Dapps are open source platforms similar to digital contracts. They are power by blockchain and resemble smart contracts. While the latter need a fix number of participants to be create, Dapps have no user limit.
How to invest in ethereum
Investing in ethereum consists of acquiring its cryptocurrency, ether, on the market. The price is usually shown in fiduciary currency: US dollar, euro, pound… That is, you sell an amount of currency to buy ether. To access the market you will need a wallet to deposit the ether you have purchased.
Here are the main ways to invest in ethereum:
One of the main ways to acquire Ether is by mining the cryptocurrency, a process related to the blockchain that we have explained a little above. However, this process is not usually available to everyone. That is why it is reserve as an alternative only available to those with programming knowledge.
Best ethereum exchanges
Cryptocurrency exchanges are a determining factor for the ‘crypto world’. They are digital platforms to buy, sell and exchange different types of digital assets. For example, they allow cryptocurrencies to be exchange for a fiat currency (such as the euro or the dollar) or for any other cryptocurrency or token. We highlight 4 exchanges to buy ethereum: Coinbase, Binance, Bitpanda and Bit2Me. We summarize in this table the advantages and disadvantages of investing in these exchanges.
Brokers to buy ethereum
Brokers have jumped on the bandwagon of investing in cryptos and many of them offer their registered users to operate with some investment vehicles in crypto assets.
The main platforms to trade directly with cryptocurrencies are exchanges, as we have mentioned before. There are brokers that allow you to trade cryptocurrency derivatives such as CFDs (contracts for difference). You should keep in mind that these products are really complex and carry a lot of risk, even for the most experienced investors. The same goes for futures contracts for ether or other cryptocurrencies.
These are two safe brokers to buy ether from ethereum.
It is one of the most popular brokers and its offer in the crypto universe reaches 16 digital currencies. The feature that distinguishes it from other brokers is that it works as a ‘social trading’ platform. Investors in the eToro network exchange information about their trades, other traders can be track and copy those that the broker identifies as more reliable. There are even investment portfolios where you can replicate the investments of other traders, known as copy portfolios.
This broker, which is also an exchange, allows trading with the Ethereum crypto. Additionally, FTX has just announce that it is expanding its non-fungible token (NFT) market and will allow Ethereum and Solana to be sell. The name may make us think that it is also dedicate to forex (currency) trading. This company specializes in tokenization, thanks to which it offers assets such as shares, having tokenize some of the most popular in the world.