Since the explosion of digital currency, there have been many ups and downs. Amongst the top cryptocurrencies in the world, Ethereum is one that has managed to sustain its position as the 2nd most important crypto. Conceived in 2013 by a programmer called Vitalik Buterin, Ethereum is the talk of the crypto town.
Let us take a closer look at Ethereum!
What is Ethereum and how does it work?
Ethereum is more than a cryptocurrency and it includes global payments and applications, along with digital currency. Like Bitcoin, it works on blockchain technology and is a decentralized computing network. Ethereum uses cryptography to keep transactions safe. Miners solve complex equations to record on the Ethereum network and get the tokens or “Ether”. Everyone who mines, holds the same copy of the ledger, giving them access to all past transactions. Ethereum is the blockchain network while Ether is the digital currency.
One of the important things that separate Ethereum and Bitcoin is that Ethereum can be used to build applications that can store or transfer data and handle complex financial transactions. These applications run on the Ethereum blockchain just like software on a computer. Ethereum is used for “smart contracts” as well. The contract can be coded by the parties involved on Ethereum and once the conditions are met, ether is delivered to the concerned party without any manual prompting. This eliminates the need for lawyers while making a contract.
Let us look at steps to follow when you wish to buy Ethereum.
1. Do your research:
Ethereum price in INR is approximately 3,17,327 rupees as of November 2021. If you are a budding investor or new to the world of crypto, then it is advisable to read about the patterns, history, origin, and possible future of the digital currency you wish to invest in. There are plenty of websites that enlist economists to determine the future and predict the patterns. Your research should give you enough answers to be able to confidently invest in or confidently walk away. If you are unsure where to begin, then here are a few questions that you should ask yourself when you start reading up.
- What is Ethereum?
- What is the background and history of Ethereum?
- What is the future of Ethereum?
- Why am I investing in Ethereum and what are my expectations?
The volatility of the market indicates against investing in Ethereum for the long term. It may be good to make a quick buck or if you are thinking of exchanging it for services and goods.
2. Measure how much risk you can take:
As attractive as digital currency is, the risk involved is quite high. It is unwise to put all your eggs in one basket and that is especially true in this case. There have been sharp ups and downs in the value of Ethereum overnight. You may think it is the right time and invest a chunk of your money and end up with half of it gone by the next day. It is advisable to invest only how much you can bear to lose.
3. Get an Ethereum wallet:
Once you have accessed your financial situation, you can begin by buying an Ethereum wallet. This is a secure digital vault that stores your precious digital assets.
- Hardware wallets – Hardware wallets are like USB drives and they can be bought online to store your digital currency. They are a little expensive but more secure than any other option.
- Digital wallets – Digital wallets can be on a website, on your computer hard disk, or a mobile app. The downside of digital wallets is that they can be hacked and you may be at risk of theft. Website wallets must be avoided as a third party can access them easily.
4. Create an account on a trading platform:
When you are getting started, you need to first make an account on a trading or exchange platform such as Coinswitch which is a noted cryptocurrency exchange in India. This is where you can start your buying journey from, you can easily create an account within minutes for free. Once you have made an account you need to add funds to your account and get started. Once the funds reflect in your account, you can buy Ethereum with a few taps.
5. Purchasing Ether:
After the funds are added, all you need to do is buy. The funds will be deducted from your account on the exchange platform. When you are buying you can view the pattern of the rise and fall of Ethereum and wait for the correct time or the best time to buy Ethereum. Then all you need to do is wait for it to rise in value!
Market risks are a part of every investment, however that should not deter us from making investment decisions. Though the trend of digital currency has picked lately, the idea of investing in them can be phased. Digital currency is the future of finance and Ethereum is already leading by example in value creation and asset appreciation.