Ethereal investments today: benefits, risks, pitfalls

Investing in ethereum today: benefits, risks, pitfalls

What is etherium (Ethereum)?

Ethereum is the second most popular cryptocurrency in the world, which in many aspects (for example, growth rate, capitalization growth, etc.) has already surpassed Bitcoin. One ethereum cost only $ 10 at the beginning of this year, but now its price has exceeded $ 300. It would seem a win-win option for investing money. Does it seem so? What is so remarkable in ethereum? Are investments in ethereum justified today? We will talk about all of that.

This is a virtual platform built on the basis of a blockchain, an unbroken chain of transaction blocks. It can not only mine cryptocurrency and store information on transactions, but also exchange currency, carries out various operations with exchange and other assets, etc.

Vitaly Buterin, a young Canadian programmer with Russian roots, began work on a new platform in 2013. He managed to collect the required amount in two years of intensive crowdfunding  and implement his project in the form of the Ethereum blockchain.

The starting price of 1 etirium barely reached 50 cents and today the bill goes to hundreds of dollars. If an investor who invested money in the etriums two years ago would now simply sell them at the current rate, his investments would have paid off 600 times the size.

Yes, it is different, and first of all due to the fact that the possibilities of ethereum are expanded due to the function of smart contracts. That is what has become an important factor in its ever-increasing popularity. For conventional money transfers, you can use the usual Bitcoins or any other cryptocurrency, but only ethereum translates the relationships of users into a fundamentally different plane.

Smart contract is a complex software algorithm designed to support commercial contracts in blockchain technology. Only one type of address is used in all other cryptocurrencies – a personal account. The contract address is added to the ethereum, in which it is possible to register any conditions of the transaction. In other words, when concluding a contract with other persons, you will not need the help of a lawyer or a notary – the platform itself acts as a guarantor of the fulfillment of the agreed conditions.

There are two main ways to invest in ethereum – do it directly (that is, just invest money in the purchase of cryptocurrency) or indirectly (invest in projects related to the platform).

How to invest in ethereum?

Most experts agree that ethereum is not yet the cryptocurrency that needs to be bought and stored in huge amounts for a rainy day. If you catch the moment of fluctuations in the course, you can reach quite a decent profit in a short time. Conditionally, they bought ethereum at $ 100, and after a couple of months they sold it for 400. Moreover, the level of capitalization of the etrium is rising, its price is growing by leaps and bounds, so buying this cryptocurrency today is a far-sighted and quite promising solution.

Experts estimate that 7 out of the 10 largest cryptoactive assets are based precisely on Ethereum. Many large investors (even Microsoft Corporation among them) are inclined to believe that it is strategically more beneficial not to buy Ethereums, but to invest in projects related to the platform. After all, ethereum is nothing more than the Ethereum blockchain token, a huge platform for creating decentralized applications.

If Bitcoin is primarily a means of payment, then ethereum, by connecting smart contracts, also becomes a tool for safe investments. Moreover, new startups appear every day – these are cryptocurrency payment systems (for example, TenX), real-time asset trading platforms (OmiseGo), and even sweepstakes platforms (Augur). All this is in demand and promising projects that, according to analysts, can shoot out tomorrow and many new projects continue to appear with enviable regularity. Many of them are potentially good options for long-term investments, however, a thorough preliminary analysis and risk assessment is not enough here.

Nobody can answer this question exactly. Some say that ethereum is the second bitcoin, only advanced and therefore more promising. It is even rumored that its price will soon exceed the mark of $ 1,000. Others argue that this is a bubble that will inevitably burst soon and leave all cryptocurrency holders with nothing.

Skeptics often use the etherium stable argument. How many coins were mined in one day last year, so much is mined today. In other words, a large number of new coins are issued every day – accordingly, the price of them will rise to a certain level and then the moment of devaluation and reduction of market value will come.

However, the creators of ethereum are planning to transfer the platform to POS mining in the near future. The essence of this technology is to create a limited resource (in this case, ethereum) by blocking a certain amount of currency within the system. When using the POS protocol, the owner of the coins can block a certain amount of them in his account and receive dividends for it. In general, this is similar to the banking system of deposits – money on a deposit brings additional income to the depositor and at the same time keeps the bank afloat. In the case of ethereums, the introduction of such a technology will play to increase the cost of cryptocurrency by reducing its overall availability.

We must not forget that, as in the case of any other cryptocurrency, the value of ethereum is directly related to its demand among consumers. The more people want to buy ethereum, the higher its market price is. Now the ethereal confidently comes to the peak of popularity, which means that there are no serious reasons to fear the collapse of this cryptocurrency.