Invest in Ethereum in 2024

Ethereum is the second-largest cryptocurrency token in terms of market capitalization.

Ethereum is a global, decentralized platform for money as well as decentralized applications (dApps). It has been the home to smart contracts, which have been utilized in Decentralized Finance (DeFi) as well as Non-Fungible Tokens (NFTs).

Many altcoins have been developed from Ethereum due to its utility. This article will cover the ways to invest in Ethereum (ETH).

What is Ethereum

Ethereum is a blockchain network that has its own native cryptocurrency token called Ether or ETH for short. As a blockchain network, it is a decentralized public ledger that is used for the verification and recording of transactions.

Lets take a look at some of the pros and cons of Ethereum and ETH.

Ethereum Origins

Vitalik Buterin

Unlike Bitcoin, Ethereum has a named founder who is responsible for the original conception of the Ethereum network and is largely the leader of the whole project to this day – his significance to the project and cult status in the crypto community cannot be understated.

Originally born in Russia, Vitalik was the child of computer scientist Dmitry Buterin. His family soon moved to Canada to look for a better life and it didn’t take long for Vitalik to excel in mathematics, programming, economics, and cryptography.

By 17 he was thrust into the cryptocurrency world having been told about Bitcoin by his father and then founded Bitcoin Magazine in 2011 having been writing for another publication, Bitcoin Weekly, shortly before that. Vitalik was paid 5 Bitcoin for every article (a value today of over $300,000).

By 2013, aged 19, Vitalik Buterin was traveling around the globe sharing ideas with Bitcoin enthusiasts. He proposed changes to the Bitcoin Network that would allow the complete evolution of blockchain technology, but as often is with the Bitcoin community, it was met with hesitation. It’s important to understand one of Bitcoin’s core features is its rigidity. This then led to the creation of the Ethereum network as we know it today.

History

Having originally published a white paper proposing Ethereum in 2013 Vitalik began working full-time on what would be a network very different from Bitcoin’s. In 2014 the original five founders of Ethereum launched the network. They were: Vitalik Buterin, Charles Hoskinson (founder of Cardano), Gavin Wood (founder of Polkadot), Anthony Di Iorio, and Joseph Lubin.

The drama that surrounds the eventual split of the co-founders is something widely fixated over by the Ethereum community. Essentially, Vitalik wished the project to develop as non-profit but other members of the team, notably Charles Hoskinson, disagreed with this and left to form what are today some of the biggest projects in the space.

Ethereum subsequently launched as a smart contract-based network that would go on to completely open the blockchain and cryptocurrency space up for innovation and cause the subsequent explosion we see today.

What Is the Ethereum Network?

The Ethereum Network is a complex system to understand, but it is possible to have a grounded knowledge of what it is at its core by reviewing these core pillars of the system:

Smart Contracts

Smart contracts are a relatively simple concept. They represent a transaction or agreement being made automatically, in a trusted fashion, and without the need for any third party. The use cases for this are somewhat obvious – how many business deals could be streamlined and simplified when you don’t require a middleman to be a trusted party?

Ethereum was the first blockchain network to innovate and implement smart contracts. This innovated a completely new stream of use cases for blockchain technology and led to an explosion of other blockchain networks.

Most critically, it also created a platform to be built on top of. Now activity could be undertaken on top of the Ethereum network, including building decentralized apps (dApps), decentralized finance (DeFi), initial coin offerings (ICOs), GameFi, and non-fungible tokens (NFTs). All of these exciting new technologies started with the conception of the Ethereum Network.

Ethereum Blockchain

This is where everything from transactions to smart contract calls is stored. The Ethereum blockchain keeps a record of everything and is the main database, or ledger, that supports the ecosystem.

If this sounds like a lot of data to store to you then you would be right – the sheer size of Ethereum blocks and smart contracts is what provides the biggest challenge to the network. Big blocks mean less throughput, slower transaction speeds, and higher gas fees.

Consensus Mechanism

A consensus mechanism is how participants on a blockchain reach consensus about how to validate the transactions on the network. Ethereum was initially designed as a Proof of Work blockchain, like Bitcoin. This requires miners to solve complex mathematical problems with extensive levels of computing power to verify transactions on the network and in turn earns miners rewards.

• Very energy consuming

• Requires specialist hardware

• Mining is ongoing and indefinite in order to solve problems and verify blocks

However, in 2022, Ethereum transitioned to the Proof of Stake consensus mechanism. This instead requires validators “stake” their tokens, ie, lock them up as a sort of security deposit to guarantee they’ll do a good job. This process isn’t energy-intensive, and even those without technical knowledge can get involved by delegating their ETH to a validator and sharing the rewards.

Find out how to stake Ethereum and earn rewards.

Ether

Ether is the native currency and token that is the most essential tool required to use the Ethereum Network; users must use ETH to stake, pay for transactions, and execute smart contracts. Ether is currently the second-largest token by market cap on the market today.

Use Cases

Ethereum has many use cases, with new ideas being developed every day, but here are the main purposes of the network:

Development of dApps, DeFi, ICOs, and NFTs

Ethereum has opened the playing field for competing networks and the development of applications built on top of blockchain networks. Some of the resulting use cases that have come from the Ethereum Network and the dApps it offers are:

• Financial products and services

• Advertising

• Supply chain management

• Gaming

• Gambling

Developers can now also create their own cryptocurrencies using the ERC-20 token built on Ethereum. This has led to an explosion of Altcoins, meme coins, and everything in between.

Similarly, the creation of the ERC-721 non-fungible token represents the standard for NFTs. This tool has opened the floor for developers all over the world to create, trade, and sell NFTs.

Smart Contract Use Cases

Smart contracts are developing more and more ways to revolutionize trade as time goes on. Here are some of the top features that give them such a high degree of utility:

• Security

• Autonomy

• Trustless

• Cost-effective

• Fast

• Error-free

And these characteristics have led to possible uses cases in:

• International payments and trades

• Loans and mortgages

• Government and public procurement

• Supply chain management

• Voting

Decentralized Economy

At its core, Ethereum offers anyone anywhere with an internet connection the chance to connect and interface with a financial system. It offers a store of value and also access to digital money. On top of this, it offers data-friendly services to its users and a place to build and develop projects.

Ethereum is ultimately a decentralized network which means that no one individual or business is in control of it; it is instead run by the Ethereum Network Community. However, it must be said that some do criticize Ethereum for its reliance on Vitalik Buterin. Following this, the plan to upgrade the network to Ethereum 2.0 has led many to suggest it will become less secure and less decentralized than Bitcoin for example.

What Is Ethereum 2.0?

Ethereum 2.0 marked a shift in the genetic makeup of the Ethereum Network. Most notably, the Proof-of-Work consensus model changed to a Proof-of-Stake model. This is dramatically different and affected the platform in many meaningful ways.

Here are some of the key features of PoS:

• Requires 99.95% less energy than Proof-Of-Work

• Validators are chosen based on their ETH staked

• No specialized hardware

• Doesn’t require ongoing and indefinite work

Ethereum 2.0 could also solve Ethereum’s biggest problem which is an overly congested network because of its popularity. The upgrades should pave the way to increase throughput, reduce gas fees and cut transaction time.

Ways to Buy Ethereum

There are multiple ways through which you can buy Ethereum (ETH) online with ease.

You can use cryptocurrency exchanges, CFD brokers, P2P marketplaces, or in-person trading.

CFD Brokers

• Brokerages will allow you to buy or sell the Ethereum (ETH) token through them directly. This will, in turn, provide you with instant access to Ethereum, however, note that the exchange might value ETH higher than it is on an exchange, as they dictate the price of the token. This is a recommended option for beginners because they are simple to use.

Cryptocurrency Exchanges

• These exchanges offer you some of the best options out there when it comes to Ethereum (ETH) trading pairs. They also have a lot of charting tools as an availability. That said, you will need to have some experience when it comes to cryptocurrency trading.

P2P Marketplaces

• These are the type of marketplaces that facilitate direct peer-to-peer trading, which means that you directly connect with another person that is selling Ethereum (ETH) and buy it from them.

In-Person Trading

• This is a type of trading process where you trade face-to-face.

Here is everything you need to know about buying Ethereum (ETH):

How to Invest in Ethereum

Aside from just buying cryptocurrency tokens, you can also invest in the tokens. This is the process where you can speculate if the price of Ethereum (ETH) will go up or down. You can be exposed to the token, and its price swings through this without actually owning the token directly.

That said, here is what you can pick from:

Brokerages

• You have cryptocurrency brokerages that facilitate the trading of cryptocurrency tokens, such as Ethereum. Furthermore, some even go as far as to offer you specific features to guide you and help you throughout the completion of this process by giving you the opportunity to view charts, copy what other traders are doing, and so on.

Exchanges

• Exchanges will provide you with some of the best tools out there and will even provide you with additional functionalities, such as yield farming or supporting other projects that launch through the exchange by giving you the chance to invest in them early. They offer an excellent way for intermediate traders to broaden their horizons.

Index Funds

• Through ETH index funds, you can buy a share of ETH instead of the entire token.

Trusts

• ETH trusts hold your tokens for you and where you can trade your shares through a brokerage or a cryptocurrency exchange.

Apps

• There are specific cryptocurrency applications out there that were developed to provide you with the opportunity to trade cryptocurrency assets. They typically require you to download them and create an account, but you have the added convenience of being able to trade from the comfort of your phone, so you can get notified about specific price fluctuations of the ETH token on the go.

Is It Safe to Invest In Ethereum Right Now?

In terms of security, it is recommended that you use a regulated cryptocurrency exchange or brokerage that features an SSL certificate and is encrypted, offers 2FA (Two-Factor Authentication), and will conduct KYC and AML procedures across all of its users. Additionally, if you have significant holdings, they should ideally be kept in offline devices.

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