Ether is probably the most-used and currently the most useful crypto-currency next to Bitcoin.
Plus, although some may disagree, the alternative coin investment with the greatest potential. It’s on its way to starting its own decent exponential growth curve. The token/coin of Ethereum is called Ether. (I may use the term token and coin interchangeably, for the good reason that they are for the most part, interchangeable). The adopted name is usually just down to the preference of the company releasing a new crypto-currency.
I’m going to keep this article at a level that can be understood by everyone with a decent grasp of English, or if you have translated it using the Google Translation tool on this website, a decent grasp of your chosen language.
Hence, I won’t be doing much discussion of the blockchain. It can get very technical, but most of it is unnecessary information for the ordinary user of crypto-currency, just as the knowledge of the particular alloys that form your fiat coins are unnecessary to be able to count the change in your pocket.
Let me just say that Ethereum works on blockchain technology like Bitcoin and others, but with a few differences that don’t really matter to someone who wants to invest in Ether.
Most people either buy and hold their coins until they accumulate a lot of value, or fail completely (which can happen to new crypto-currencies that don’t have good teams or a useful purpose), or people hold a certain amount of coins to accumulate in value. They then use an amount set-aside to make purchases of other coins, which is what I do myself. It’s a bit like having a savings account that you continuously add to, but never withdraw from, and a current account that you use to buy things and pay bills.
How are New Crypto-currencies Formed?
Since many newer crypto-currencies are built on the back of Ethereum code (and it is incredibly easy to do this), and since the best time to get into a cryptocurrency is during the ICO (Initial Coin Offering), when you can get coins/tokens for a fraction of the price they will probably reach when they have been on the market for a while, and since Ether is an ERC20-compliant coin, and most of the newer coins built on the backbone of Ethereum comply to the same standards, it means that at least initially, until further adoption of the new coins/tokens, the newly formed companies with their newly formed ICOs usually want Ether in exchange for their new coins. Thus, they make use of the existing Ethereum blockchain.
Therefore, holding some Ether in a safe crypto-wallet such as the Trezor, where you can make different accounts to hold crypto, and actually name them for example, Current Account and Savings Account, and which provides you with a doubly encrypted connection with My Ether Wallet, is a good thing to do if you have any interest in some speculative investment in new ICOs that may increase greatly in value once released to the marketplace.
So Ethereum has some very good uses, but they are not limited to blockchain currencies
According to Wikipedia, use-case proposals have included finance, where banks will use Ether to settle inter-bank/inter-country transactions, and do that instantly at far less than the current cost with traditional methods, and there is a project called TrustLines working on this; the internet-of-things, it’s long been talked about, but now it really is only a few years before your fridge will order food for you and pay with Ether; farm-to-table produce, like getting a box of vegetables delivered from a local farm every week, again paid with Ether; electricity sourcing and pricing — wouldn’t it be good to get a discount for paying in Bitcoin or Ether?
And amongst a myriad of other possible uses, sports betting — places where you can place a bet are likely to give better odds when you pay with Ether or say a specific betting coin such as the already existing PPY from Peerplays built on the back of Ether, used only for the huge industry of betting and casinos. And the bonus – nobody can mug you for your wad of bankrolls on the way home!
That is one way Ether will increase in value as a tool to use for purchasing things. The time will come when you can also buy gold or silver, or leverage it on the stock market. Wait a minute… I think that time came as I was writing the last sentence!
My own Advice
Avoid business with USA-based exchanges. You might never manage to prove who you are to their satisfaction, like with Kraken, for example… Plus, many are likely to close down or be so heavily regulated that they are next to impossible to deal with. In fact, I’d go so far as to say never deal with any exchange that wants you to pay in US Dollars! That’s my humble opinion. As for Peerplays, I’m sure they can afford the regulatory fees in the USA, but I’m hoping they’ll jump-ship to a country where it won’t be necessary to tell the Fed every detail of your life in order to deal with them.
Do you want to risk being put on a NO-FLY list because some terrorist has also made a bet using PPY? If that happens, your own country will also put you on their NO-FLY list! Everyone bow to the All-Powerful America. And raise your right hand in a salute to their values! You know the salute I’m writing about…
Yes, there are nice people in the USA. No, their government and central banks are not very nice. But then, if you know of a non-corrupt government, let me know in a comment below this post.
As for the value of Ether, it has greatly increased this year (although it is still at the stage of dramatic price fluctuation depending on news releases and what is happening with Bitcoin. If some bad news comes out about Bitcoin, such as China closing some ICO companies, and planning to regulate crypto-currency, some people (the impatient ones) tend to sell Bitcoin and invest in other cryptos such as Ether.
But be smart with Ether
Ether is down from a short while ago, currently, so buy on the dips and save yourself quite a lot on the cost of each coin you add to your crypto-wallet. Additionally, when you see a drop in Bitcoin value, the money often stays in the crypto-system. It’s just moved about somewhere. Often to Ether. So when Bitcoin has a dip, Ether tends to get a boost, and vice-versa, although not always. So it is worth keeping an eye on both markets.
It is actually far more beneficial financially to do this, to stay in the system, that is, than to cash your coin in for fiat currency, because cashing in you will probably only get market value. Or less. But crypto-currencies never really sell for the market value given on exchanges, unless you are stupid enough to accept those values and sell your coin to the exchange for the price quoted. Localbitcoins is an exception, because there you can see the real prices you can buy and sell Bitcoin for. Cashing-in your Bitcoin or Ether for folding money will often cost you about 10% of its actual value against other crypto-currencies, or more.
Shop Around for Ether
Whatever the case, even when moving crypto-currency around, it is best to shop around. Coinbase is another place to have a look. And if you swap Ether for another crypto-currency that you anticipate is going to rise in value faster, (because why else would you do so?), best to get as much of that new currency as you can for your Ether. Oh, and you’ll be charged ‘GAS’ for moving Ether. That’s just their way of naming a small fee that goes to the miners that confirm your blockchain transaction.
However, a serious word of warning about GAS: Be careful. Do not, repeat do not make large last minute Ether transactions. Because if the transaction fails for any reason, you will lose your GAS fee. It is kept by the miners who tried to validate your transaction. Here is a cautionary example of someone who lost just over $US80,000 on a single large failed transaction.
That is my summary of the basics. I’ll be going into more detail later. [Have done so now as per the 27th Sep. 21017. See that here.]
Disclaimer: I am opinionated! Never invest more than you can afford to completely lose without regretting it. Many people say, “Don’t put more than 10% (or sometimes 1%) of your investment portfolio into cryptocurrency”. Others have sold their house and everything they own to buy Bitcoin. The latter are probably multi-millionaires by now, but people like that have a big appetite for risk. As someone who is NOT a financial advisor, I don’t give advice on this subject.