Ethereum has touched its highest point at the time of writing following the reveals of several new projects being developed on the Ethereum platform. You might have heard some people have made some good money due to the recent hike. However, before investing your hard earned money in Ethereum, one has to learn what exactly is Ethereum and how it works. If you are keen to know how to make money with Ethereum, read on and find out more.
I started paying attention to this so-called Cryptocurrency 2.0 from last year and make a huge purchase of 550 Ethereum ($5,500) early this year in January at the price of $10. At the time of writing, I have made approximately 400% profit ($21,300) from the recent spike of this cryptocurrency.
There are several factors behind this price hike. One of the main reasons was Ethereum has been marketed to various potential corporate and government partners are a way of generating revenue through its integration of blockchain technology. Some highly publicized partnership are JPMorgan Chase, Cisco Systems, Inc, Bank of New York Mellon Corp, Microsoft, and other 30 big brands to create a partnership know as the Enterprise Ethereum Alliance (EEA).
Hence, if you are looking into another opportunity after Bitcoin to start your investment, Ethereum is probably the best choice for you.
What Is Ethereum?
Ether is a digital currency used for operating smart contracts on the Ethereum network. Like Bitcoin, the Ethereum network and Ether tokens are not controlled or issued by any bank or government – instead, it is an open network which is managed by its users.
If you are not familiar with the term Smart contracts, they are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that make a contractual clause unnecessary. Smart contracts often emulate the logic of contractual clauses.
In a laymen term, smart contracts are Blockchain technology that will replace lawyers that will save you time and conflict where there is no need to pay intermediaries (middlemen). That is partly the reasons why banks and governments are turning to them as Blockchains are rated, undeniably faster, cheaper and more secure than traditional systems.
Ethereum was initially proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher, and programmer. Development was funded by an online crowdsale during July–August 2014 and the system went live on 30 July 2015.
Centralized systems are vulnerable because they have a single governing element, which can become a target of an attack. Ethereum’s vision is to decentralize the internet by creating a platform where applications can be built and run on a decentralized network. A decentralized system doesn’t have a single point of failure, and if any one element goes down, the rest of the network stays intact. Hence, Ethereum is also called a “world computer”.
Quite simply put, Ethereum is a worldwide distributed decentralized computer with a theoretically unlimited power.
You probably will ask what is the difference between Bitcoin and Ethereum. Like Bitcoin it is decentralized but unlike Bitcoin, it is not used as a currency as its supply of digital tokens (Ether) is not fixed. This is by design as Ether is used for creating smart contracts rather than as a currency.
Ethereum has been deployed in different phases. Currently, the Ethereum project is in the 2nd phase, called “Homestead”.
The 4 planned phases for the growth of the Ethereum network are, in order: Frontier, Homestead, Metropolis, and Serenity. Ethereum Homestead clients are working smoothly after being in beta for several months without any major incidents.
However, Ethereum is still an experimental technology. Since it allows for programs to run on a virtual machine, it’s still possible that some things may still go wrong, such as poorly written smart contracts that contain bugs.
How to Make Money With Ethereum?
#1 Buy and Sell
At the present stage of Ethereum, it could be just like Bitcoin when it was first introduced to the world in 2009. There was this story where this Norwegian man bought $27 of bitcoins in 2009 and forgot about them. He then discovered their value had since shot up to $980,000 at today’s price. Will Ethereum repeat the same history? No one knows what will happen 10 years down the road but it has a bigger potential growth as compared to Bitcoin.
There are several reasons you should consider buying Ethereum for long-term investments.
(+) The technology that underlies Ethereum means that it can be used for a number of other purposes that will be built off of a decentralized and autonomous system. Simply put, it potentially will be a revolutionary technology with the potential to impact a whole spectrum of industries.
(+) The developers at Ethereum want one to think of the network as a large virtual computer that facilitates applications to run. It is indeed this allure that has been the reason that the project has got the backing from a number of individuals such as Bill Gates.
(+) Making waves in the established industry: Microsoft offers Ethereum as a blockchain-as-a-service, IBM’s in the game too, MIT teams are doing active research and even proposing their own alternatives (Lisk – Decentralized Application Platform)
(+) The second biggest market cap after Bitcoin only, and one of the most popular cryptocurrencies ever in terms of volume and buzz.
How and Where to Buy Ethereum?
There are several numbers of platforms online that you can use to buy Ethereum. One of the most reliable platforms is Coinbase that you can buy and store it securely in the e-wallet. It available to users in over 30 countries such as the United States, United Kingdom, Canada, Singapore, and the following European countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland.
As of 2017, Coinbase is the world’s largest Bitcoin broker. You can buy Bitcoin and Ethereum with a connected bank account, SEPA transfer, Interac Online, and many more payment methods.
Below is a print screen of my Coinbase dashboard. It is ver user-friendly, easy for new users to buy and sell Bitcoin and Ethereum. Furthermore, you can make an instant buy with a credit card or debit card.
If you are wondering if it is a reliable platform, Coinbase is a Bitcoin company based in San Francisco and backed by trusted investors.
#Step 1: The first step is to sign up for a Coinbase account. This will give you a secure place to store your Ethereum, and easy payment methods to convert your local currency into or out of digital currencies.
NOTE: At the time of writing, when you sign up Coinbase account, buy and sell $100 of bitcoin or more, you will be earning $10 of free Bitcoin.
#Step 2: Connect Your Bank Account, Credit Card or Debit Card. After you sign up, connect your bank account, credit card or debit card. You’ll need to complete some verification steps before you can use the account. Once the verification steps are complete, you can start a purchase.
#Step 3: Buy and Sell Ethereum. After starting your first purchase, Coinbase will complete your buy and deliver your Ethereum. (Sells work the same way but in reverse). The price of Ether changes over time, so Coinbase will show you the current exchange rate before you buy.
Should I Buy Ethereum Now?
“Buy Low, Sell High”.
Ethererum is currently priced high but it could be one fo the best time to invest when you look back a year later.
Ethereum is at an All Time High at the time of writing. I’ve been investing in Ethereum for less than a year and I’ve seen the price rise and fall many times. The price could still rise to a new high in the upcoming days and weeks, but history says otherwise.
#2 Ethereum Mining
Bitcoin mining started out with simple CPU and GPU mining that can be done on high-powered home computers before the introduction of ASIC miners overwhelmed the industry resulting in only specialized hardware being capable of any worthwhile mining. The Ethereum blockchain, however, is far more resistant to ASIC miners which result in most of the processing being done on rigs mounted with GPUs.
If you have a high-powered system for gaming then your computer is more than capable of mining Ether at a respectable rate. You can choose to mine Ethereum solo but you’ll probably get better results by contributing your resources to a pool. Personally, I have never mined any myself but I have a good read on Nanopool and they’re easy to use. Thanks to their great help page.
In my opinion, Ether could be at a high price but still not profitable to mine because your electricity costs are so high, or visa Versa. You also have to account for the difficulty increase associated with a price spike.
Furthermore, the Ethereum Founder’s view on the ETH mining community can be described as neutral to wary due to the example that Bitcoin mining community gave us. Today, more than 90% of all mining power for the Bitcoin blockchain exists in China, causing a lack of innovation and significant political strife. The Ethereum founders are aware of this and attempting to prevent this.
Hence, it may not be a good idea to make a huge investment in mining equipment as it can be tough for you to be profitable in a long run.
Dislaimer: This is not investing advice, this website is for educational purposes only.