Explaining cryptocurrencies: What is Ethereum?

If you are looking into cryptocurrency trading and investing, you may have come across Ethereum. Ethereum is different from its competitors, like Bitcoin or Ripple, in the way it operates. 

Ethereum is an open source blockchain computing platform and operating system. It has its own cryptocurrency called ether (ETH). In cryptocurrency trading, the currency is often referred to as Ethereum.  

Since launching the Ethereum platform in 2015, its creators have been attempting to build a new financial system that is decentralised and accessible by anyone with an internet connection.  

The platform allows users to move money or make agreements with other Ethereum users without any third parties being involved.  

Due to way its algorithms work, transactions on the platform are processed very quickly – up to 10 seconds, compared with the 15 minutes-per-transaction time it takes Blockchain to process requests. 

ETH is used to pay for transactions between users in the Ethereum system. It can also be used to buy other cryptocurrencies. Its underlying platform has also been used to generate many other tokens and currencies currently available on crypto exchanges. 

ETH prices 

ETH is the second most valuable per-unit and popularly traded crypto on the market, behind Bitcoin. 

The recent Bitcoin surge has generally been good for other popular cryptos and ETH is no exception. Across 2020, ETH grew 400% in value. Prices hit $1,150 in January 2020. These were the highest levels seen since January 2018.  

However, like other cryptocurrencies, ETH is subject to very high volatility.It still has not reached the heights seen since January 2017, when ETH hit its highest valuation so far, registering $1,433. 

However, commentators believe it may peak above $2,000 in 2021.

It helps that platforms like Apple Pay have begun to accept ETH as a payment option. Generally, the value of non-Bitcoin cryptos will be tied in with Bitcoin’s price action. Those will be a good barometer for speculating on ETH. As seen in 2020, when Bitcoin performs highly, Ethereum does too. 

How is ETH traded? 

Ethereum investors buy ETH to hold onto. They do this by buying ETH tokens from cryptocurrency exchanges. Binance is currently the world’s largest cryptocurrency exchange. 

Traders, on the other hand, prefer to speculate on the crypto’s price movements, doing so either via spread betting, or by trading products like CFDs or ETH futures. These are available on the Marketsx platform. 

Please be aware: cryptos like ETH are subject to high price volatility and trading crypto futures and CFDs contains a high level of risk. Only invest if you can be sure you can afford any potential loss in capital that comes from crypto trading.