Ethereum

How to Invest in Ethereum: Is It the Right Time?

May 31, 2019

By Team Basil Zaff

Cryptocurrency can be quite confusing especially when you are choosing coins that you should invest in. When faced with the decision of various values that are available today you may hear some of the favorites like Bitcoin, Ethereum and more. Understanding the difference between these types of currencies to help arm you with the knowledge that you need to start investing.

In this article we’re going to explore one of the most popular types of Cryptocurrency available right now. It’s considered the second highest-traded cryptocurrency and the technology behind it has gained amazing investment traction.

In this guide we will be explaining Ethereum, some of its pros and cons as well as how you can go about investing in Ethereum for the first time. By the end of this guide you will have a complete understanding of Ethereum and you’ll be able to decide whether or not it’s a good investment for you at this time.

Is Ethereum a good investment for the future? How can you invest?

Investing in Ethereum has proven to be a great decision for many individuals back in March of 2017 the price of just one Ether was around $30. The current price in March of 2018 is around $750. You just that short amount of time ETH saw an increase of 25,000%. This means that if you invested $1000 in Ethereum in the year 2017 yield at least $25,000 in ETH today. ETH peaked in December of 2017 and at this point you could have seen prices of up to $1350 for ETH. The reason for the massive peak comes from the amazing amount of support that the industry has faced as new developers continue to build blockchain projects.

It’s possible to see visibly the growth that Ethereum has taken on throughout the years and as new developers begin building using Blockchain.

In order to understand where Ethereum is going we need to look a little more in depth into the history.

The History of Ethereum.

Ethereum was a concept that was first proposed back in the year 2013 by Vitalik Buterin who was a programmer that felt Bitcoin needed a brand-new way to build new applications on the Blockchain but without the same technology backing it. When the idea was regularly rejected by Bitcoin developers, the core of Ethereum was built from there. Back in the year 2014 they continued to develop the system a little bit further until July and August when they launched the system to the public in a crowdsale. Ethereum has continued to make improvements to its system and the token itself.

The first version (Ethereum Classic)

There are two main tokens with Ethereum. ETH and ETC (Ethereum Classic)

ETH has become the more widespread format and this is the version that developers are consistently offering new forms of support to. It is generally considered to be the secondary version of Ethereum and the fork system of Ethereum.

Forks are a trend that occurs within blockchain technology when the tech is massively changed or improved in a way that can make it disconnect with all other previous versions. The Iphone 8 software for example is a way that a system can offer a fork. When the new software gets released an update occurs, all users will update their phones rather than stick with the older version of the software. The fork leaves the previous version of the software behind but there are still users that will stick with the original update. Even though the users are on the same system the people that are using the original update will not have the same level of support on their phones. ETC has lost a considerable amount of value because he was involved in a massive hack on cryptocurrency exchanges in which a number of these coins were stolen. In order to punish the hackers the community instead decided to fork into the ETH token.

Now that we have determined some of the differences between the main types of Ether, we can look into whether or not it’s a good investment in the short-term and long-term.

Is it wise to invest long term (1 year+)

Investing in Ethereum has definitely been a successful idea for many of its earliest investors but there are some people that have unfortunately lost money with Ethereum. This is a currency that as many falls and rises over time and it can be a member of the fairly volatile market. If you’re going to invest in Ethereum over the long term, you need to be mindful of your investment and willing to hold onto it over a long period of time. You should never consider panic selling Ethereum if you are going to be investing long-term.

Ether adoption.

Although the industry for Crytpto is still somewhat young it’s continuing to grow over time and this means that Ethereum is continuing to grow with it. This is one of the very few coins that has been used in ICOs. Internal coin offerings acts primarily as a launching pad for a variety of new ideas. By introducing tokens on the Ethereum blockchain it allows a business owner to create a small community filled with valuable ideas. The price of ETH will only continue to grow as more people adopt and use it. ETH is currently one of the top three most traded cryptocurrencies and it should continue to be one of the most widely traded coins in the world. These are some of the top reasons why Ethereum has such great potential for long-term investment.

The Improvements to the block chain.

Ethereum is considered such an excellent investment because they’re our plans for continuous improvement in the future. The improvements that are made to Ethereum could cause legitimate success across the entire system and will definitely cause the price of ETH to go up quickly. Even though there are new types of blockchains that are coming up and competing with Ethereum, the improvements that are offered through this system can help to keep Ethereum ahead.

The adoption rate of Ethereum is already quite high and it will only continue to improve for the future.

Proof of stake.

Bitcoin and Ethereum use a system called proof of work to validate every transaction across the system. Ethereum is planning a radical new update this year that will change it over to a POS or proof of state system. We have covered some of the differences between the two systems and it can be quite complicated especially in the way that the systems verify transactions. POW requires quite a lot of electricity in order to compute and validate the ledger whereas the POS method is far more cost-efficient and energy-efficient.

If Ethereum is able to place in their update for proof of stake this could make it a far more affordable and valuable cryptocurrency compared to even Bitcoin. The network could also become much more secure than Bitcoin too. Currently only individuals that have access to the most powerful mining equipment are able to afford to become a miner in Ethereum or Bitcoin.

The disadvantages of investing in Ether over the long term.

Currently there are a few other investments that you could make in the sector that could offer you more money over the long term. It is possible that you could make some excellent money investing in Ethereum over a year or longer. Other Cryptocurrencies could help you earn more money however.

HODL or holding on for dear life in a long-term investment doesn’t allow you to capitalize on the volatility of the network especially with the prices of ETH fluctuating by a few hundred dollars over the course of weeks.

Ethereum is also one of the largest cryptocurrencies today. Nobody really knows if another coin is going to come along and compete with it. Many people are speculating that Ethereum will remain at the top of the list but if a better solution came along to take its place this could make a long-term investment simply unfeasible.

Government regulations concerning Ethereum could also slashed the price quickly. While Ethereum has not currently face too much government push back, major changes to government regulations could seriously harm its price point in the future. If you are going to invest in any cryptocurrency, you need to be able to watch government regulations closely to make sure that you can secure your investment.

Should you invest in Ethereum over the short-term?

A short-term investment between 0 to 12 months in Ethereum is a much wiser idea. The goal of this style of investment is to continue actively trading Ether in order to earn a profit on the price as it rises and falls. There’s plenty of opportunities to make quick profits especially with the heavy volatility of this cryptocurrency.

Trading at low prices.

If you are going to buy Ether when the price is especially low it’s possible to sell it again when the price goes up quickly. This is a quick way that you can lock up profits and wait for the price of the token to drop again to reinvest. Continuing to repeat the cycle and net your earnings is how many people are continuing to make money with ETH.

A great example of how this consistent trading could earn you money could be if you were an early investor buying in March of 2017 only to turn around and sell it in December. Your investment of $1000 could have netted you around $45,000 at that time. It would have been possible to reinvest half of your earnings and then net the rest of the profits and still be massively ahead.

Ether is quite safe to hold on to for another set of profits if you are going to be trading short-term. You just need to make sure that you have some form of money back on your investment and then you can position yourself to make more money as more users adopt Ether.

The disadvantages of investing in ETH over short term.

You can make some reasonable profits was short-term investments using ETH. Currently there are some other cryptocurrencies that do offer the chance for greater investment but with a larger risk.

Many governments across the world are building new regulations for the cryptocurrency market. Some of the regulations that they are publishing could severely affect the usability and value of Ethereum. If a regulation on taxes for profits on every trade were to come into effect, this could affect your overall profits and the time at which you would have to stop trading.

As banks and credit card companies continue to stop people from using their credit card or debit card to buy cryptocurrency, there has been a large number of users that have simply given up on entering into the market. Short-term investment is simply not as profitable.

The process of active trading in crypto markets can be considered quite risky especially if you aren’t a traitor that’s particularly experienced.

The future for Ethereum.

With such an increase of internal corn offerings that are releasing their own tokens across this network, it’s possible that we will only continue to see Ethereum continue its rise. Many financial forecasts have suggested that it will raise back up to its all-time high value or potentially even pass some of the greatest values its ever seen. Ether is still considered to be down in value for many investors and looked at as a wise investment at its current price.

If the overall price of Ethereum is that the rise in the near future it a good idea to consider locking in your profits now so that you can see the greatest increase when it becomes massively adopted. Even though you may see the price going up now remember that there are no guarantees and that there is some volatility to be expected.

There are a number of factors that can affect the volatility of Ethereum. Some of the factors can include competition, market manipulation and ongoing government regulations. In order to make money off of Ethereum you need to have an idea of a stopping point of where you would like to take your profits out. Waiting too long or trying to reach an unobtainable return could have you losing money quickly.

Gaining an understanding of actively training in crypto markets can take time. It’s usually a good idea not to jump in with a large investment until you feel more comfortable with cryptocurrency trading.

What to consider before you invest.

Before we go through the process of what it takes to invest in Ethereum it’s very important for you to first set up a secure wallet. Storing your Ethereum will be paramount especially if you are going to be keeping your coins for investing. Keeping your coins in an online exchange could be extremely risky as many exchanges can be hacked quickly. This could have many of your coins stolen from you. One of the best ways to protect your Ethereum is to have a wallet where you will have full access over your private key. The private key will be how you access your wallet and it works just like a password. If someone has access to your private key they can easily steal your funds.

Some of the wallet that you can use for storing Ethereum include:

MEW: The My Ether Wallet.

This is a free and open source client-side interface web wallet. It’s a great way that you can easily create an Ethereum wallet and it has its own private key which is very different from other forms of web wallets. This is an extremely secure wallet and you can store any ERC-20 tokens in it. Be sure to read our MEW wallet review to learn more.

Ledger Nano S.

This is a hardware wallet that will allow you to store your coins off-line. This is an area where the coins can’t be stolen or hacked. This can be an extremely safe method for storing your Cryptocurrency and it’s possible to store a large number of cryptocurrencies in the Ledger Nano S too. The only downside to using a hardware wallet like this one is that it will cost you around $90-$100 to get set up. It is a highly secure piece of technology however.

Exodus.

This is considered one of the first desktop wallets to support multiple cryptocurrencies with a user-friendly interface. You can view a variety of balances all from the same screen and your computer can be used as a wallet with a secure private key. You do have to be online in order to use it but your private keys will all be kept on your machine. Exodus also comes with a variety of recovery options in case you forget your password or in case your account could compromise.

Jaxx.

Jaxx is a mobile wallet that is available on desktop, IOS and android devices. Jaxx has support for multiple cryptocurrencies and a design that’s quite elegant. It has security that can be considered robust and all of the private keys that you own will never leave your device. Jaxx also offers a variety of seed keys to help you recover your wallet when required.

How can you invest in Ethereum?

By learning the process of investing in Ethereum you can gain a handle on how you can invest in this currency as well as others like Litecoin or Bitcoin. Almost all of these cryptocurrencies follow the same format. You will first need to have access to a P2P exchange or a broker account. After you have purchased your accounts you can then finance your secure wallet by transferring them.

How to invest in Ethereum with Fiat currency?

Broker exchange:
A broker exchange can help you quickly exchange Fiat currency for your own cryptocurrency. There are a number of broker exchanges but there’s only a small number of them that can be considered reputable. The main broker exchanges include Coinmama, Cex.io and Coinbase. All you need to do to sign up for these exchanges is provide them with your email, confirm your identity, deposit your funds from an account of your choice and then purchase the ETH. You can send the freshly purchased ETH from a web wallet in the broker exchange to your secure Ether wallet by using your public key address.

The advantages of using broker exchanges.

Broker exchanges for cryptocurrency are very well-funded and professional

They come with great customer service

They are simple to navigate and very easy-to-use

They can be perfect for use with credit cards, bank cards or fiat currency.

Often more secure than other exchanges you might make person-to-person.

Disadvantages of using broker exchanges.

They can have high transaction fees

They require you to submit ID

They are subject to government rules and can be audited by tax authorities

You will never own the private key is in the exchange wallet for the broker and this leaves it vulnerable.

P2P Exchanges for Ethereum.

Buying Ethereum with a p2p exchange can be a great way to you can anonymously by ETH without the identification requirements. A buyer and seller will connect anonymously and decide on an overall price for ETH. Payment is then sent to an escrow account and it’s possible for the money exchange we made and the Ethereum to get sent shortly after.

The most popular exchange for buying Ether currently is LocalEthereum. It works by buying Ethereum off of an individual that already owns it and they will then see that you have sent money to an escrow account, transfer the Ethereum to your wallet using your public key and then accept the money into their account.

The advantages to using p2p.

Transactions can be anonymous
Buyers and sellers will agree upon the price and negotiate it.
The disadvantages of a P2P exchange:
They have the highest fees amongst exchanges.
They are hard to coordinate for large purchases
Some of these networks can take advantage of users.
Sellers usually look for premium market prices on ETH.

Investing in Ethereum using other Cryptocurrencies.

A centralized crypto trading exchange.

If you already own cryptocurrenciy, you can easily buy into Ether. The easiest way to do this is by using a centralized exchange system. With the help of one of these exchanges you can trade a crypto that you own for Ethereum all for a smaller transaction fee. Some of the most popular exchanges are Okex, GDAX and Binance.

The advantages of using centralized trading exchanges.

You can quite easily trade a wide variety of coins for ETH

High volumes of users make it quick to liquidate a falling crypto for ETH

The interfaces are simple to learn and easy to navigate

They can be used anonymously

They have the lowest fees amongst all exchanges

Customer service for this network is great.

Disadvantages of using centralized trading exchanges.

You will not have access to the private keys for your wallet.

You cannot use Fiat currency to buy in or withdrawal.

Some exchanges require ID verification on large transactions

Exchanges can be hacked easily if you leave your ETH in them.

Decentralized trading exchanges.

A decentralized trading exchange can be an excellent way to invest in Ethereum using the current cryptocurrencies that you own. This type of exchange will help you remain secure because your private keys are never stored on main servers. You can quickly trade cryptocurrencies to other people but with enhanced security. The most popular decentralized trading exchanges are Waves Dex, EtherDelta and IDEX.

Advantages to using a decentralized exchange.

You remain completely in control of a private key and you can connect your wallet to the exchange.

This type of exchange is not prone to hacking so your coins will not be stolen

Every transaction on the exchanges anonymous.

The disadvantages of using a decentralized exchange.

Lower volume of traders means transactions can be slow and getting rid of your coins can be tough.

A limited number of coins on the platform.

No customer service to facilitate trades and troubleshoot

A difficult user interface to learn.

Is it wise to invest in Ethereum now?

Ethereum offers an excellent investment right now. The prices of most cryptocurrencies has fallen quite recently and so has Ether. Theoretically Ether has one of the best positions to gain ground in the future however. If you are looking to invest, Ether sits at an excellent point for profits in the future and at a buy in stage.

Ethereum sets to have an excellent year in the future. A number of ICOs our forecasted for this year alone and they’re all using the Ethereum Blockchain. There’s a very good chance that we will see the proof of stake update implemented this year as well as a variety of updates that could resolve issues with scalability.

ETH shows a number of signs that it could go up in price from where it is now and this represents one of the safest investments you can make in cryptocurrency.

If you’re going to be investing in ETH over the short term or the long term it’s very important that you set your investment goals now. It is possible to make money with Ethereum using either strategy. By completing thorough research and speculation into the market you can often determine a point where you would want to get out of your investment. Speaking to a financial advisor or a professional that has some experience with ETH can be a wise choice here too.

Be sure that you follow the golden rule of investing. Only invest what you are willing to lose. As the world of cryptocurrency is still quite young and very volatile almost anything could happen at this time. By doing the appropriate research and investing only what you can afford, you can make sure that if a disaster affecting ETH were to happen suddenly, your finances would be okay.

Now that you understand how to invest in Ethereum, it’s important to look at your options for the future. Do you think that Ethereum is the right investment choice for you now? Do you think Ethereum can reach its high point from December of 2017 by the end of this year? Let us know what you think in the comments!
If you would like to learn more about Ethereum and its future please consult our Ethereum guide on price prediction.