You nowadays have to be situated under a stone if terms like Bitcoin or cryptocurrency are entirely unknown to you. Newspapers, news sites, and bloggers almost stumble over each other in an attempt to be the first to collect as quickly as possible and as much information as possible about the phenomenon of digital currency.
But what is the mysterious new currency, and how does Ethereum fit into the picture? And more importantly, how do you get started? How can you successfully invest/invest in Ethereum? In other words, how can you act in Ethereum? You will find out more and more in this article!
What is Ethereum?
To understand what Ethereum is, you must first have some prior knowledge about cryptocurrency ( crypto currency ). Ethereum is, like its predecessor Bitcoin (2009), a form of a new generation of currencies, the digital currency , better known as cryptocurrency. Coins are the currency of cryptocurrency. All types of cryptocurrency that are not Bitcoin fall under the denominator Altcoins .
What is cryptocurrency?
Thomas Carper, a US senator, summarized the response to the rise of digital currency:
Because cryptocurrency, a digital medium of exchange, seemed to be something from a distant future just a decade ago. Earlier attempts to decentralize currency failed. And now that it is finally here, many still do not know exactly what to do with it - while others are eagerly plunging into it.
However, Satoshi Nakamoto succeeded - madly unintentionally - in inventing a new digital currency. He had found a way to develop a decentralized digital payment system: a payment system without a central entity, such as a bank or government.
In the case of cryptocurrency, such a third party no longer plays a role in a transaction between two parties. In the case of 'normal' traditional currency, such a third party, a central server (bank), performs an important task: checking whether a certain amount is not spent twice ( double spending ). This is done by keeping track of all transactions and balances.
The blockchain
But this also means that there is an authority present, who controls your money and has all your personal data. In a decentralized network such as cryptocurrency, each participant must carry out this work himself. This is done via the Blockchain .
This is a series of blocks ( blockchains ) with data about transactions made. You can also see it as a ledger, in which all transactions that have ever been executed are stored within the network, and that is available to everyone. Everyone on the network can view the balances of each account.
However, transactions still have to be confirmed. As long as a transaction remains unconfirmed, it can be counterfeit. This work falls on the shoulders of miners. They do this by calculation power.
Only when they have confirmed the transaction is it completed. They are rewarded for this work. These rewards ( fees ) are collected during the process of adding a blockchain to the ledger.
Other features of performing cryptocurrency transactions are:
The transactions are - if you take care of a secure wallet and your private key keeps well (more on this later) - very safe.
Transactions can be executed all over the world, with anyone. All sorts of currencies can be redeemed or exchanged for the cryptocurrency.
Transactions are irreversible. This is because most altcoins use blockchain technology, and transactions made with this can not easily be reversed. Once the transactions in the public ledger have been written and confirmed by other nodes (transmitter of messages) in the network, it becomes increasingly difficult to adjust the transaction, because more and more blocks are added to the series.
Users can work anonymously. The blockchain of most types of cryptocurrency is designed in such a way that the identity of users remains protected. This is never done on the blockchain Transactions are usually carried out via public addresses, and not via names or other details that can reveal the identity of the user. However, the address can be found, but not to whom the address belongs.
The transactions are very fast. They can be confirmed in a matter of minutes.
Ethereum
Ethereum is an open (global) software platform based on blockchain technology , which ensures that developers can build and apply decentralized applications. The Ethereum blockchain (similar to an infrastructure) focuses, unlike Bitcoin, on running the programming code of every decentralized application.
In other words, Ethereum can be used to code, decentralize, record and trade just about anything: domain names, financial exchanges, crowdfunding, contracts, intellectual property, etc.
Ethereum uses smart contracts. These help to exchange money, property, shares, etc. in a transparent, conflict-free manner, avoiding the need for a third party. They have carried out autonomously.
In the Ethereum blockchain miners are rewarded with Ether (ETH). It is the currency of the Ethereum network . Like Bitcoin, it can be traded on the internet and 'mined'. It is also considered as a kind of crypto-ping that functions as fuel (financing) for the network.
For example, Ether is used by application developers to pay for transaction costs and services on the Ethereum network. In the following video, Vitalik Buterin, inventor of Ethereum, once again explains what Ethereum means. (Note: video is in English.)
How can you trade in Ethereum?
As an example, we take the trade platform poloniex. Please note that you do not possess Ether, but act in Contracts for Difference (CFDs). These are leverage products.
That is to say; if you want to 'buy' Ether (actually trade it), you only have to enter a certain percentage (for example 50%). You play for the full 100%, but only have to pay part of it.
You can use the fact that cryptocurrency is a very volatile currency . This means that the value fluctuates constantly. If you respond to this, you can (possibly a lot) make money from this method. You can do this by buying Ether at a low price and selling it again at a high price .
Five tips for investing / investing in Ethereum
When investing and investing are some pitfalls you have to look out for. That is why we like to give you the following tips for investing / investing in Ethereum, which increase your chances of a successful outcome.
Tip # 1: Provide a (safe) wallet
Save your Ether yourself! When you buy Ether, you obviously need a place where you can receive, store and spend. For this, you must provide an Ether Wallet. You also have the choice of hardware (USB type) and software (desktop, online and mobile) wallets.
Good, safe wallets have the following features:
They use private keys, a series of numbers or characters that provide access to your wallet, and which only you have access to.
They are easy to use.
They know an active development community.
They regularly back up and offer recovery opportunities.
They are compatible with different operating systems.
Note that when you have bought Ether on a platform, you transfer it to your wallet! Only then are you the owner of your purchased Ether.
Tip # 2: Learn about exchange rates, the market, the language and risk management strategies
It may sound smart, '' respond to the exchange rates '', but it is not nearly as easy to play as before - certainly not as a beginner! Therefore, invest time, effort (and money) in acquiring knowledge of the cryptocurrency market, especially Ethereum, and exchange rates. On the basis of this investment in knowledge, you can invest more successfully in Ethereum.
It is also important, if you want to be able to get along better in the Ethereum world, to speak 'the language'. That is, learn about the terms in the area of Ethereum . This makes it much easier to invest and trade in Ether. Moreover, you can make friends in chat groups or on forums, which can also help you further.
Yet it can still go wrong once; investing is simply not without risks . But to prepare yourself for setbacks and to learn how to deal with this, it is wise to teach yourself some risk management strategies.
Because if you then unexpectedly lose money (for example because you sell your Ether on a lower price than on which you bought it), you can file for it.
Tip # 3: Do not invest in more than you can afford
ethereum7 Actually this speaks for itself. Still, it pays to tie this well in your ears, especially if you have a tendency to become overconfident. Because no matter how much profit you think you can achieve, always check whether it is worth the risk .
From one moment to the next you can suffer (huge) losses. And what do you prefer: guaranteed a nice balance with which you take less risks, or a potentially great balance that you can lose in one fell swoop by risky investments?
Tip # 4: Do not immediately go all-in , but save some coins for worse times
Make sure that your Ethersaldo can take a beating. After all, ether is very volatile ; from one day to the next, the value can drop sharply (or even rise). And what you are not waiting for is a scenario in which you (almost) already sell your Ether at a low price. Then you turn (after all) (substantial) losses. Therefore always put some Ether aside - just in case.
Tip # 5: Invest/invest in safe parties
Shown figures are only illustrative
If you can earn money from something, it often means that scammers are lying in wait to see their chances of being abused. That is why you obviously want to invest via a platform that is reliable, safe and user-friendly.