Everything You Need to Know About the Crypto Giant
If you are new to the crypto space and have only heard about Ethereum recently, then you must be wondering what it is and why you should know more about it.
Ethereum is a digital currency that anyone can purchase or trade on cryptocurrency exchanges. Global users can purchase Ethereum on Swissborg or can sign up on ByBit or Binance for trading. Users in the USA can directly purchase Ethereum by signing up on Kraken.
In simple terms, Ethereum is an open-sourced digital currency that operates on a blockchain of its own (similar to Bitcoin). The blockchain is known as Ethereum blockchain, and its native token is also referred to as Ethereum or Ether. The Ethereum blockchain is a much faster, efficient, and advanced form of the blockchain, and unlike Bitcoin blockchain, it has multiple real-life applications.
It was founded by a Russian Canadian programmer Vitalik Buterin, who first proposed the idea of an open-sourced digital currency in 2013 with the aim to create decentralized applications. The project was launched in July 2015 and went live with an initial supply of 72 million coins.
Blockchain technology aims to eliminate third parties from transactions and give full control to the users. Ethereum takes this idea to another level with its smart contracts. It allows users to build decentralized apps (dapps), which eliminates any possibility of third-party involvement, downtime, or censorship. It not only makes the transaction faster but also more secure.
What Are Ethereum Smart Contracts?
Smart contracts refer to a collection of code and data that is associated with the Ethereum blockchain. They are programs written as a code and are committed to the blockchain. Once a smart contract has been deployed on the blockchain, it is distributed and becomes immutable. This means no one can tamper with the contract once it is written, and the funds will be released only when the contract goals are met.
What makes smart contracts so special is that they eliminate the need for a third party. The contract itself acts as a third party, and if the goal is not achieved, the fund goes back to its sources. Ethereum smart contracts not only allow you to exchange money, but they also allow you to exchange property, stocks, or any other assets.
Bitcoin might have been the first cryptocurrency, but if it were not for Ethereum, the crypto space would not have become this big and advanced. The majority of the cryptocurrencies out there are built on the Ethereum blockchain and uses ERC20 tokens for transactions.
The bitcoin blockchain also allows users to create smart contracts, but they are limited and do not offer the same utility. Ethereum smart contracts are built with the help of a blockchain-specific computing language known as Solidity and are much more advanced.
Ethereum smart contracts are gaining attention because they offer:
One drawback with smart contracts is that they cannot be amended once written, but some might argue that it is also their strength.
Any cryptocurrency that is hosted on the Ethereum blockchain becomes an ERC20 token. An ERC20 token for any project works like Bitcoin as it holds value and can be sent or received by anyone.
ERC20 tokens are basically smart contracts that can be stored on Ethereum addresses and require you to pay a gas fee to transfer it from one address to another. The gas fee varies on multiple factors and depends on the network congestion. The Ethereum Blockchain can process up to 8 transactions per second, and the more transactions are pending, the higher the gas fee will be.
Every ERC20 token follows the same set of rules that allows them to interact smoothly with each other.
Dapps refers to blockchain applications that are built with smart contracts. In plain words, a Dapp is a smart contract with a user interface. If the interface is the front-end, then smart contracts are the backend.
Smart contracts allow users to create applications that are decentralized, deterministic, and isolated. They are also public, which means they can work as an API, and anyone can use smart contracts to build an app of their own. Dapps are hosted on the Ethereum virtual machine and are not affected by the environment or any bug in the code.
Dapps are becoming highly popular because they offer:
- Zero Downtime
- No Censorships
- Data Integrity (As they are built with smart contracts, Dapps are immutable)
- Trusted Computation
What is Ether Token (ETH)?
The Ether token, also known as Ethereum, is the native token of the Ethereum blockchain and is also the second-biggest cryptocurrency in the world in terms of market capitalization. It has an unlimited supply, and the Ether tokens in circulation increases every year.
But why do we need the Ether token? And why is there so much money flowing into it? The answer to that lies in the nature of the blockchain. Ethereum is a virtual network that stays up thanks to the computing power provided by the miners/validators. That power is not free, and people who use the network must pay for it.
Ether is the solution to the payment problem as it acts as the blockchain’s currency, which can be used to pay the gas fee or the marginal fee. Ethereum is a virtual engine that needs fuel to work, and that fuel comes in the shape of Ether.
It does not matter whether you want to create smart contracts, build dapps, or transfer your ERC20 tokes to another address; you will need to pay in Ether to perform all those functions. The current supply of Ether is 115 million that increases by 18 million every year
Ethereum Price Analysis and Predictions
Future Prediction: Can Ethereum Reach $10,000?
Whether Ethereum will make it to $10,000 or not has been one of the hottest topics in the crypto space. The truth is predicting the price of a cryptocurrency is extremely hard as the price is not just affected by internal factors but also by several external factors.
Ether offers great utility, and with every project that gets built on Ethereum blockchain, it becomes more valuable. However, Ethereum is not the only blockchain out there that is offering smart contracts, and the market is getting competitive day by day.
If we were to compare the current market cycle with the last one, we are still nowhere near the market top, and that makes a $10,000 Ethereum possible on paper.
However, there has never been this much money invested in the crypto space before, and for Ethereum to make it to $10K, it will have to achieve a market cap of $1.2 trillion.
It might seem like a ridiculous amount of money, but Bitcoin recently was also able to surpass the trillion-dollar market cap. Ethereum is next in line with Bitcoin and has a lot more applications. Ethereum has always followed Bitcoin’s path, and there is no reason to speculate that it won’t do the same this time.
On technical grounds, if Ethereum keeps following the Bitcoin trajectory, it should get to the $10,000 mark by the end of the current market cycle (early 2023).
Price Prediction for 2025
Predicting the price of a cryptocurrency in the long-term is always challenging, but with major institutions like Goldman Sachs showing confidence in the Ethereum blockchain, the future of the Ether token is likely bright.
Institutions are labeling Ethereum as the “Amazon of information” and the actual use cases for the Ether token give it more value.
According to Finder’s latest Cryptocurrency Predictions Reports, the price of the Ether token can go as high as $19,842 by the end of 2025. The report is based on a survey conducted among 35 well-respected crypto experts and financial investors.
More than 50% of the experts also stated that they believe that Ethereum will replace Bitcoin as the leading cryptocurrency by the end of 2025 and will attract trillions of dollars in investment.
Is Buying Ethereum Worth It?
Believe it or not, if you are looking to buy Ethereum, you are still early to the party. Ethereum’s market cap has increased four times over the past five months, and if it is to follow Bitcoin’s path, it is still highly undervalued.
Ethereum is also in the middle of transitioning from Proof of Work (PoW) to Proof of Stake (PoS) Consensus mechanism with the ETH 2.0 update. The update is being rolled out in three phases and aims to improve the network’s speed, efficiency, and scalability. Once the update is deployed completely, the gas fees will decrease dramatically, and a spike in Ether’s price is highly likely.
When you combine the update with the fact that Ethereum is one of the best performing cryptocurrencies of the past 12 months, buying Ethereum at the current price point seems like a steal.
How to Buy Ethereum?
If you are looking to board the Ethereum train, then you can purchase the cryptocurrency by simply signing up on trusted exchanges like Swissborg (for Global users) and Kraken (for US Citizens) or can trade it on Binance or ByBit. The purchasing process is easy and simple, and you can hold your assets in the exchange wallet. New investors can buy Ethereum in the following steps:
1. Choose a Trading Platform
The first thing you need to do is choose a trading platform that best suits your need. You have to take certain things into consideration during this step, including geographical restrictions, transaction fees, security, and ease of access.
It is advised that you choose from the top-ranked crypto exchanges like Binance or ByBit exchange as they are reliable and trusted by millions of people. Ethereum is the second-largest cryptocurrency in the world and is easily available on the majority of exchanges.
2. Create an Account
Once you have selected a crypto exchange, the next thing you need to do is create an account by providing your personal details on the platform. Trusted exchanges like Swissborg require you to complete the Know Your Customer (KYC) verification process, and you can only trade once the exchange approves your account.
You will have to provide your name, address, and government-issued ID scan. Once you have done that, you will have to verify the account through your email, phone, or Google authenticator.
You can also use Binance exchange as it allows you to purchase or trade Ethereum without having to go through the KYC verification process.
3. Depositing Funds
Once you have the account ready, you can start depositing funds by using a method you prefer and is supported by your exchange. On an ideal exchange, you can deposit funds in the following manners:
- PayPal Transfers
- Direct Bank Transfers
- Credit/Debit Cards
- Cash Payments
After you have deposited the FIAT, you will be able to purchase any cryptocurrency available on the exchange, including Ethereum. You can also deposit any other cryptocurrency you own that is supported on the exchange and can convert it into FIAT to purchase Ethereum. FIAT represents a traditional payment method (bank account, debit card, or credit card) that is used to make the initial cryptocurrency purchase.
4. Trade Ethereum
You can use your FIAT to buy Ethereum on the spot market. You could set a limit order, or you can simply purchase it at the market price. If you want to hold Ethereum against the Bitcoin value, you can simply purchase Bitcoin first and can trade Ethereum’s BTC pair.
You can sign up on ByBit or Binance for both spot and margin trading. And as both those exchanges are not active in the United States, US Citizens can trade Ethereum on the Kraken exchange. New users can also sign up on PrimeXBT Covesting and mimic the trades of experts.
If you are planning to hold long-term, it is suggested that you withdraw your Ethereum tokens in a secure digital wallet or a hardware wallet.
Depending on the exchange you are using, you will be charged a withdrawal fee, and you will also have to pay the blockchain gas fee for the transfer.
How Much I Should Invest
The general rule of crypto trading is that you should only invest around 5% to 10% of your investment portfolio into crypto as the markets are highly volatile.
The investment amount depends entirely on how much risk you are willing to take. If you plan to hold Ethereum long term, you can also consider investing more than 10% of your investment portfolio.
Long-term holders have an advantage because they are immune to the selling pressure during a bear market (when the value of cryptocurrency decreases for a longer period) and can always wait for the market to go green. On the other hand, if you are planning to buy Ethereum for the short term, you should be more careful.
You should invest your hard-earned money after a great amount of consideration and at your own risk. This is an educational blog, and nothing mentioned here should be considered financial advice.
The general public views Ethereum only as a cryptocurrency, but it is a lot more than that. Ethereum is a technological advancement that has revolutionized the crypto space. If it wasn’t for the Ethereum blockchain, the crypto markets would not have been this big, and we would not have over 4,000 different currencies in circulation today.
The financial pundits see crypto as the future of finance, and institutions are also accepting the idea slowly. The president of Coinbase, Emilie Choi, recently compared the crypto market with the early days of mobile phones, which indicates that the crypto market is yet to take off.
Ether is currently one of the most important cryptocurrencies in the crypto space, and with the expansion of the markets and more projects being built on the Ethereum blockchain, the demand for this cryptocurrency will only increase. If you don’t want to miss out on this opportunity, now is the ideal time to get on the Ethereum action.