What is Ethereum Crypto? – Consultant Forbes Australia

Ethereum, also known as Ether, is the second largest cryptocurrency in the world behind Bitcoin and, like any digital currency, has seen its fair share of ups and downs in its relatively short life. .

Ethereum’s price hit an all-time high of $ 4,800 at the end of 2021, which meant an increase of more than 900% over the previous 12 months and sparked speculation that Ether would surpass Bitcoin’s value.

However, Ether was not immune to the crypto routing of May 2022 and lost value along with many other cryptocurrencies. Ether is now trading at $ 1423 (July).

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What are cryptocurrencies?

In the truest sense of the word, cryptocurrencies are a digital medium of exchange that uses cryptography as a form of security. However, more recently, the term “cryptocurrency” has evolved to encompass a decentralized financial system (DeFi), a highly volatile asset class that can dive or rise on the back of a Tweet, a space where attackers can steal identities and vulnerable investor money, a way to diversify assets and a form of digital payment.

Ethereum once had an effective market capitalization of around $ 250 billion, but it recently lost over $ 100 billion due to the cryptocurrency crash of May 2022 and is now at around $ 135 billion in market capitalization.

If you’re familiar with Bitcoin but less familiar with its closest rival, here’s what you need to know about Ethereum, including why, someday, it may still become the dominant player in the cryptocurrency scene.

Source: eToro

First, a crypto wealth warning

It is not necessary to follow the financial world so closely to know that cryptocurrencies have become one of its biggest stories in recent years.

These days they are a matter of concern to governments and large financial institutions, and they split opinions as to whether they are essentially Ponzi schemes that need to be heavily regulated or just volatile asset classes for investors who like to play for high stakes.

If your financial plans revolve around capital preservation – holding on to what you have – then the volatile behavior of cryptocurrencies is definitely not for you.

Last month, Jerome Powell, chairman of the US Federal Reserve, described cryptocurrencies as nothing better than “vehicles for speculation.” And at its annual general meeting in May, legendary Berkshire Hathaway VP and investor Charlie Munger said that Bitcoin is “disgusting and contrary to the interests of civilization.”

However, such comments fail to dissuade millions of enthusiasts around the world from trying to make money with cryptocurrencies, including Bitcoin. This includes Australians, who are getting into more and more action: recent research by Roy Morgan found that 5%, or more than a million adult Australians, own at least one cryptocurrency.

If that includes you, Laith Khalaf, a UK financial analyst at broker AJ Bell, offers some simple advice: “Those looking to gain exposure to cryptocurrencies should only do so with a small amount of money they are willing to lose,” he suggests. .

It should be added that cryptocurrency investments are not regulated in Australia, as well as in most EU countries and the UK, and there is no consumer protection in case of a problem.

Which brings us back to Ethereum.

What is Ethereum?

According to the online broker eToro, Ethereum is unique in the cryptocurrency universe.

Ethereum, launched in 2015, includes an open source software platform that developers can use to create cryptocurrencies and other digital applications.

Ethereum’s native cryptocurrency is called Ether (the trading symbol is ETH), while Ethereum actually refers to a specific blockchain technology, the decentralized distributed electronic ledger that tracks all transactions. Ledgers are the basis of cryptocurrency transactions.

Think of Ether as the cryptocurrency token derived from the Ethereum blockchain. A blockchain allows for the secure transfer of encrypted data, making counterfeiting nearly impossible. As with Bitcoin, these tokens are currently being “mined” via computers that solve mathematical problems.

Bitcoin also uses blockchain technology (see above for the differences between the two cryptocurrencies), but Ethereum is considered more sophisticated and can be used to run applications. It is this aspect, some commentators say, that could one day help push Bitcoin away from the top spot among cryptocurrencies.

In recent times, Ethereum’s popularity has increased among retail and institutional investors.

What are the advantages of buying in Ethereum?

According to eToro, Ethereum can easily be traded or exchanged for other cryptocurrencies.

Additionally, the broker says the cryptocurrency can be used by a growing number of online and brick-and-mortar retailers. Transaction times are faster than Bitcoin and it also provides access to a number of decentralized applications (dApps) that allow developers to create new tools online.

Advances in retail payments were highlighted in March 2021, when UK-based Christie’s became the first auction house of its kind to accept Ether as payment for a Beeple artwork. Entitled “Everydays: The First 5000 Days,” the purchase price was worth $ 69.3 million.

At the end of April 2021 and confirming the growing interest of the financial sector in cryptocurrencies, the European Investment Bank issued its first 100 million euro digital bond in two years via the Ethereum blockchain.

Meanwhile, in early May, the S&P Dow Jones launched several cryptocurrency indices, including one for Ethereum, aimed at measuring the performance of digital assets.

This can be done via a cryptocurrency exchange like Coinbase or via online platforms like Gemini, Kraken or eToro. You can also choose from a range of Australian-based exchanges, such as CoinSpot and BTCMarkets, which allow users to buy cryptocurrencies with AUD, including via wire transfer in some cases, or via BPAY.

You create an account with your chosen provider confirming your place of residence and your identity, then log into your bank account to purchase the currency. Fees vary from provider to provider and may depend on the amount you wish to deposit, (optionally) withdraw and the transactions you wish to make.

Payment methods may include those via PayPal debit / credit cards and bank transfers. New investors may require a higher level of customer support than experienced traders.

Could the price of Ethereum increase further?

In the world of cryptocurrencies, little can be taken for granted and there is no certainty. And as we noted above, many leading figures in the financial community have deep reservations about the safety, if not the viability, of the overall concept of cryptocurrency.

But Nigel Green, CEO and founder of international financial advisory firm deVere Group, previously suggested that Ethereum is the cryptocurrency to watch: “Ether can be expected to significantly reduce Bitcoin’s market dominance over the next year. and beyond. Compared to its biggest rival, Ethereum is more scalable, offers more uses and solutions, such as smart contracts that are already used in many industries, and is based on superior blockchain technology, “he said.

AJ Bell’s Laith Khalaf acknowledges Ether’s relative strengths in the context of cryptocurrency, but calls for the utmost caution: “Ether, or Ethereum, is more flexible than Bitcoin because it is programmable on a per-use basis., So it can be used for verify business transactions or contracts as well as to make payments.

“However, the value of this asset is still only what someone else will pay for it, and while it may be a lot right now, once the cryptocurrency fever subsides, it may not be worth much. It may not be the code in. which is written. “

This article is not an endorsement of any particular cryptocurrency, broker or exchange, nor does it constitute a recommendation of cryptocurrency as an investment class.

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