By now, we’ve all heard of cryptocurrencies: a new medium of exchange that’s digital, encrypted, and decentralized. The crypto-craze has swept the world these past few years and many have bought, sold, or held cryptocurrencies (I know I have!). This new idea is still abstract and the concept of digital assets that we can buy, sell, and trade evolves daily.
There are many cryptocurrencies that rise fast and fall fast. While a relatively new concept, cryptocurrencies, in general, have gained an incredible amount of attention. But one crypto in particular, as of recent, has taken center stage and has become quite established: Ethereum! Let’s dive into the details:
What Is Ethereum?
Created in 2013 by Vitalik Buterin, Ethereum is a decentralized blockchain represented by its native “token” Ether or ETH: a scarce digital money that you can use on the internet, similar to Bitcoin. Think of it this way: ETH is the digital currency that powers Ethereum. You can use it to buy, sell, or in some instances use it for payment for products and services.
It’s also important to understand the meaning of the terms “decentralized” and “blockchain” as it relates to Ethereum:
- Decentralized: Not issued or regulated by a central bank, government, or other authority.
- Blockchain: The technology behind cryptocurrencies; a chain of “blocks” each containing digital records. When each block is full, a new block is created and added to the chain which cannot be changed or edited.
Currently the second-largest cryptocurrency in terms of its price and market cap, only second to Bitcoin, ETH functions differently than Bitcoin does. While ETH can be bought and sold just like Bitcoin, its primary purpose is quite different.
Ether is used by developers to develop applications and pay for transaction fees; in other words, it functions as a means for development, financial exchange, and it’s a digital currency.
Here are some important ETH stats:
- Symbol: ETH
- Current Supply: 119.4M
- All-Time High: $4,891.70
How Much Does Ethereum Cost?
As of February 2022, the cost of one ETH hovers around $3,100, according to CoinMarketCap.
To put this into perspective, ETH was valued at just about $1,500 USD during February 2021, just one year ago. That’s a more than 100% increase year over year. ETH’s value has more than doubled in one short year, even with the effects of the current crypto dip.
If you’re having sticker shock about the cost of 1 ETH token, not to worry. It’s possible to buy fractional shares of a token. This way, you’ll be able to make investments in ETH without shelling out thousands of dollars upfront.
How to Buy And Sell Ethereum
Some of the most common ways to purchase ETH are through a cryptocurrency exchange like Coinbase or Gemini, or an online trading platform like Robinhood. Let’s go ahead and talk a little bit about all three platforms and how you can buy, sell and trade ETH:
Coinbase was founded in 2012 and is an American cryptocurrency company that has grown to become one of the most notorious cryptocurrency exchanges. The most convenient part about Coinbase is that you can seamlessly buy, sell, and even convert one crypto to another right within your “crypto wallet.” The platform hosts most cryptocurrencies out there, even the lesser-known ones, while other crypto exchanges do not. However, the biggest downside is that Coinbase charges increasingly exorbitant fees whenever you buy, sell, or convert from one crypto to another.
Gemini was founded in 2014 and in 2016 became the world’s first licensed Ether exchange. Similar to Coinbase, Gemini is a cryptocurrency exchange where users can buy, sell, and store digital assets such as cryptocurrencies. You can start investing on the platform with as little as $5 and even earn interest in your cryptos. This platform also hosts a ton of cryptocurrencies and its fees are similar but can vary when compared with Coinbase. Alternatively, there is another way to buy and sell ETH that won’t cost you any fees- Robinhood.
Robinhood was founded in 2015 and is an American financial services company headquartered in Menlo Park, California, known for pioneering commission-free trades of stocks, exchange-traded funds, and cryptocurrencies via a mobile app. The nicest thing about Robinhood? You can buy and sell ETH without ANY commissions. Pretty sweet! This can save you a ton in extra fees in the long run. I have personally dabbled in buying and selling different cryptocurrencies on Coinbase, including ETH, but ultimately stick to Robinhood since I save a ton of money on transaction fees.
ETH and NFTs
I’m sure you’ve also heard of NFTs. Either someone you know owns one, you own one, a celebrity is tweeting about one, or all of the above! The point is, NFTs are a hot topic and have taken the art and collectibles world by surprise.
An NFT, to be precise, stands for non-fungible token. To break this out further:
- Non-fungible is a term used to describe things like your tablet, home goods, etc.- They aren’t interchangeable for other items because they have unique properties.
- Token, in this case, represents ETH.
So, NFTs are tokens that we can use to represent ownership of unique items. They allow us to “tokenize” things like art, rare collectibles, real estate, sports, etc. NFTs can only have one official owner at a time and are secured by the Ethereum blockchain.
So, as NFTs grow in popularity, so will the value of ETH!
ETH Summed Up
To recap: Ethereum is gaining incredible popularity due to its versatility both as a means of exchange and as a way for developers to create applications and services of their own. The Ethereum blockchain uses its native token Ether or ETH to power both the development of applications and financial transactions.
As the world of cryptocurrency continues to grow and evolve daily, there’s no telling exactly what will happen with currencies, but the current forecast is clear: cryptocurrencies are not going away. If you’re confused, overwhelmed, and just can’t seem to wrap your head around the concept just yet, trust me, I feel you!
The Bottom Line
My recommendation?* The continued development of this decentralized blockchain means a sharp increase in its value is on the horizon. ETH is one of the most established and secure cryptos currently available and could mean a significant return on your investment both in the near and long term future.
With that being said, it’s wise to carefully consider your portfolio and investment goals before deciding to invest in any cryptocurrency. For those crypto enthusiasts out there it’s a good, general rule of thumb not to invest more than 5% of your assets into cryptocurrency. For those of you who just want to get your feet wet, no more than 1-2% of your assets is recommended. At least for now, cryptocurrencies are highly volatile and can see price swings in the hundreds of percentage points in as little as one day! While crypto investing isn’t for the faint of heart, there is a lot of reward to be had if you’re willing to take some risk.
*This is not an investment recommendation. This information is for informational purposes only. Investing always involves risk.