Cryptocurrencies are big news at the moment. They have made the leap from a risky, dark web currency used only by geeks and hackers to a currency that ordinary people can use. You don’t need to be a tech legend to have a stash of cryptocurrency in a virtual wallet.
Bitcoin is probably the best-known cryptocurrency, but Ethereum is catching up fast. Here are all the things you need to know if you want to trade Ethereum.
What is Ethereum?
Ethereum, also known as ‘ether’ is almost as hot as bitcoin these days. In fact, some would argue that Ethereum is destined to become bigger than Bitcoin in the long run, so investing in it now is a smart move.
Like Bitcoin, Ethereum is a cryptocurrency. It is a decentralized software platform, which aims to disrupt the current internet by replacing servers and cloud technology with ‘nodes’. People using the Ethereum blockchain work to earn Ether, a type of payment token used on the network. Like Bitcoin, Ether can be bought, sold, and traded, but unlike Bitcoin, there is an unlimited supply of Ether.
Buying and Selling Ethereum
Buying and selling Ether is easy. All you need to do is open an account on a reputable cryptocurrency exchange. From there, you can buy and sell Ether directly. On larger cryptocurrency exchanges, you can buy and sell Ether directly, but if you opt to use a smaller exchange, you may have to purchase Bitcoin and exchange it for Ether.
If you prefer not to buy and sell Ether, another way to make money is by trading Ether CFDs on a site like easyMarkets. Contracts for Difference are contracts between you and the broker. It’s a type of derivative trading whereby the trader speculates on the price of an asset, which in this case is Ether. You decide whether Ether is going to rise or fall in value and then profit if the price moves in the right direction.
ETH CFDs are one of many CFD products you can trade online. The beauty of CFDs is that you can take advantage of higher leverage and lower margins. This means less capital outlay and greater profits. There are a few downsides, of course. CFDs are classed as a high-risk investment vehicle with the potential for heavy losses. Ether is volatile, so be aware of that before you trade Ether CFDs.
There are also great opportunities to profit from forex trading with Ether. Trading two cryptocurrencies against each other is less risky than trading Ether against a fiat currency such as the USD or GBP.
ETHBTC is the most popular cryptocurrency pair. Right now, the market favors Ether, so there is money to be made when Ether continues to rise in value against Bitcoin. However, cryptos are volatile, so it is best to open a demo account before you begin trading with real money.
It makes sense to diversify your Ether trading strategy. Hold some Ether in a virtual wallet, speculate using CFDs, and use the rest of your trading capital to profit from price movements in the FX markets.