Should You Buy Ethereum?
What to know before buying ethereum.
Ethereum is the second largest cryptocurrency by market cap.
What does that mean?
The total value of its circulating supply is second only to bitcoin.
Ethereum broke $1,000 in the first week of 2021.
Ethereum’s all time high is roughly $1,400. While hitting $1,000 for the second time in 2021, its market cap is just above $115 billion.
For comparison, bitcoin’s market cap is just under $600 billion.
All of these numbers change— rapidly.
The crypto market is in the middle of an unprecedented bull run. Bitcoin, the world’s largest and most established cryptocurrency was the early mover.
Now, it looks like ethereum is benefiting from bitcoin’s tailwind.
Given that ethereum hasn’t matched its all time high yet during this rally, many believe it’s a cryptocurrency to watch closely.
Should You Buy Ethereum?
I do own some ETH. I also mine ethereum.
And, this is not financial advice.
You can read about the mining rig I built here.
From a speculative standpoint, the current cryptocurrency bull market is going to leave many investors looking for promising entry points.
Bitcoin, despite continuing to rise in price, is often dismissed as “too expensive.” While that’s a shortsighted assessment of bitcoin, it remains a reality that many investors are hesitant to get involved unless they believe their return on investment will be great enough.
You Don’t Need to Buy a Full ETH
Many newcomers to bitcoin, ethereum, and cryptocurrency also don’t realize that you don’t have to buy a full coin.
In bitcoin, the smallest unit of account is a satoshi — one hundred millionth of a bitcoin. In ethereum, the smallest unit of account is a wei. A larger and more common unit of ether is a gwei.
1 Ether = 1,000,000,000,000,000,000 Wei (1018)
These are large and confusing numbers at face value.
The point is that you do not need to buy a full bitcoin or ether in order to acquire either cryptocurrency.
You can buy a much smaller amount.
Ethereum Basics
Ethereum was proposed by Vitalik Buterin.
Buterin, along with Gavin Wood, Charles Hoskinson, and Anthony Di Iorio, and Joseph Lubin were co-founders or early contributors to ethereum.
Ethereum development was crowdfunded in 2014 and the network went live in mid-2015. It is a decentralized, open-source blockchain featuring smart contracts.
Ethereum is largely used for decentralized finance.
It should also be noted that the Ethereum Foundation is a guiding entity associated with all things ethereum.
From their website:
The Ethereum Foundation (EF) is a non-profit organization dedicated to supporting Ethereum and related technologies.
The EF is not a company, or even a traditional non-profit. Their role is not to control or lead Ethereum, nor are they the only organization that funds critical development of Ethereum-related technologies. The EF is one part of a much larger ecosystem.
What Is a Smart Contract?
A smart contract is a computer program or a transaction protocol which is executes, controls, or document events and actions according to the terms of a contract or an agreement.
These types of contracts are often used for legal and financial transactions and agreements.
Watch this short video for more info on smart contracts.
Buying Ethereum
I don’t regularly purchase ethereum.
I mine ethereum using a GPU cryptocurrency mining rig, so I do earn ETH on a regular basis.
I have, however, purchased some ETH in the past.
Ethereum is readily accessible for purchase on virtually all cryptocurrency exchanges. It, along with bitcoin and litecoin, are the cryptocurrencies that you will most often encounter at an exchange or crypto ATM.
Dollar-Cost Averaging
My two cents (not financial advice) is that you should not invest in anything you do not understand. You should also not invest any amount of money in anything that you cannot afford to lose.
Ethereum, and cryptocurrencies in general, are speculative assets.
Consensus is that bitcoin has demonstrated strong store of value (aka digital gold) attributes and ethereum is progressing as a useful and growing network for decentralized finance and applications.
You need to make the decision for yourself whether or not you will buy or invest in any type of cryptocurrency.
If you are going to buy ethereum, dollar-cost averaging is a common strategy — buying small amounts, over time, to accrue a position.
Dollar-cost averaging reduces the impact of volatility on an otherwise large or bulk buy.
Ethereum Price Predictions
These aren’t as common as bitcoin price predictions. Many are calling for bitcoin to reach $100,000 in 2021.
What we can say about ethereum, however, is that it stands to benefit from bitcoin sell-offs and investment interest during crypto bull markets.
New money during a bull market tends to look for opportunities in less expensive cryptocurrencies like ethereum. As bitcoin’s price rises, ethereum may look more attractive to investors.
Ethereum recorded a high of $1,448.18 roughly three years ago — that’s currently the number to beat.
In the same way that bitcoin reclaimed the elusive $20,000 price point with conviction, ethereum must retake $1,400 and push higher. If it can do that, we’ll see plenty of ethereum bulls emerge.
Final Takeaway
Before you decide whether or not to buy ethereum, consider why you want to buy it in the first place. Establish an investment strategy and educate yourself further about the cryptocurrency space.
If you do buy ethereum, will you have an exit price?
It’s something to think about before you get involved as it will determine how you hold or custody your crypto and how and when you transact.
Thanks for reading! I am not an investment or financial advisor. This is not financial advice. All opinions expressed are mine alone. If you want more content like this, sign up for my weekly email.
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