Ethereum trading in 2020: step-by-step guide

November 17, 2020   Ethereum

The Ethereum cryptocurrency is an open software platform based on blockchain technology that allows developers to create and release decentralized applications. It is actually much more than a cryptocurrency. This is just one part of the Ethereum can offer. This article discloses the meaning of:

  • What is Ethereum;
  • Bitcoin vs Ethereum;
  • Ethereum price formation;
  • How to buy Ethereum;
  • Ethereum wallet;
  • Ethereum trading;
  • Ethereum price USD;
  • Ethereum mining;
  • Invest in Ethereum.

Ethereum trading has its pros and cons, so read the article to know more about this financial instrument.

What is ethereum?


Ethereum was launched in 2015 and became the world's leading programmed blockchain.

Like other blockchains, Ethereum has its own crypto product that is brand as Ether (ETH). ETH stands for digital money. ETH has many similar characteristics as Bitcoin (BTŠ”). It is completely digital and can be sent instantly to anyone in the world. The creation of ETH is not controlled by any government or company. This is a decentralized cryptocurrency. Ethereum is a scarce commodity. People all over the world buy and use Ethereum to pay for goods or services, as a store of value.

But, unlike other blockchains, Ethereum's capabilities are much broader. Ethereum is a software, which means developers can use it to create new kinds of applications. These decentralized applications combine the benefits of cryptocurrency and blockchain technology. It is credible because once it is uploaded to Ethereum, it will work as programmed. The applications can work with digital assets to create new kinds of financial applications. It can be decentralized, which means that no organization or individual can keep a hold of it.

Bitcoin VS Ethereum


Bitcoin uses blockchain technology to create a peer-to-peer monetary system that allows people to pay for purchases on the Internet at less cost than with their usual national currencies. People can use Ethereum in the same way: the most popular altcoin can be used to pay for purchases and services.

However, a significant difference between the Ethereum cryptocurrency and Bitcoin is that Ethereum is not a self-sustainable coin, but an entire system for hosting applications on the blockchain. If Bitcoin is a method of payment and an asset for investment, then Ethereum is an app store where developers can publish their programs for consumers and companies. The developers of this coin intended to create their own version of the internet, where large companies do not have that much power. Therefore, they decided to enable users around the world to develop decentralized applications using the Ethereum blockchain.

Another difference between Ethereum and Bitcoin is that many startups and ICOs are created on the Ethereum platform. Their developers use the system as a working tool. Besides, launching an ICO with Ethereum, there is no need to use the Kickstarter service, which takes 10% of the collected funds for its services. This approach attracts a large number of clients.

Ethereum price formation


Due to the Solidity software language, in which the Ethereum platform is written, it compares favourably with other cryptocurrencies. Expanding the scope of Ethereum leads to an increase in demand. The dynamics of Ethereum cryptocurrency depends on the attention of its potential customers entirely.

In recent times, the price of Ethereum has risen drastically and reached all-time highs. With the rise in the price and popularity of Bitcoin, traders are also turning to other cryptocurrencies to make a profit. Ethereum and Bitcoin do not compete in any way, and therefore the growth of one currency can lead to the growth of another.

Various news may affect the Ethereum price. For example, in June 2017, the price of Ethereum crashed after news of an algorithm failure. As a result, traders began to sell off their positions and thus made it worse, so the Ethereum price fell. Then the algorithms were restored, and the price went up again. The volatility of digital currencies is huge, and their rate can make a difference every moment. Currently, both ordinary people and investors closely followed the course of ETH, wondering how long the leap in digital currency would be.

How to buy Ethereum?

Ethereum also works as a standard cryptocurrency, and you can use it in a variety of ways, even if you have no intention of running your own application. As with Bitcoin, you can use Ethereum to pay for anything from art to pizza. Many people believe in investing in Ethereum, believing that it could one day become the world's leading app hosting platform and the digital currency value will fly up.

If you decide to buy this cryptocurrency, and then sell it or exchange it for any other, including popular currencies, you can do this through the wallet. Cryptocurrency wallets are a bit like online banking and are protected with a private key. It is a code that acts as your password and prevents others from accessing your account.

How to create an Ethereum wallet?


Just a year ago, it was a problem for the Ethereum cryptocurrency market to find a wallet to store it. The developers offered only a few types of wallets, which were hard to manage. However, after electronic currency rightfully won second place after bitcoin, and many other ether wallets have appeared that can not only store savings but also exchange them, as well as carry out settlement operations with other users.

For convenient work with digital currency, there are two main types of wallets:

  • Stationary. To work with this wallet, you need to download the installation file to the computer, download the program, and continue using it with an Internet connection. A distinctive feature of these wallets is its increased reliability.
  • Online wallets. The most common way to work with Etherium. All you need is to register a wallet directly on the site offering online services for storing ETH, which gives the ability to get the right to access electronic money from any device convenient for you in real-time. A feature of such wallets is their multicurrency, which allows working with several cryptocurrencies at the same time.

To create a wallet, it is necessary to decide on the location of its placement (on your own computer or on the network). Then choose the most suitable one. During its activation, the system will require the user to enter personal data, after which a wallet number will be generated, with which you can carry out income/expense transactions.

Ethereum trading


The virtual currency ETH is considered one of the most interesting altcoins in the cryptocurrency market today. In fact, it is the second-largest digital currency after Bitcoin in terms of capitalization. Its price continues to increase at an insane rate and causes increased interest among investors, miners, and financial traders.

To get profit on the growth of ETH, you can use several options: trading on exchanges, mining, and invest in Ethereum in Forex. Against all the nuances of mining and speculation on crypto-exchanges, Ethereum trading on Forex looks the most attractive. Firstly, a trader does not need to actually buy coins, but just conclude a CFD contract that allows earning a profit on the difference in the rate. That is, even if a small rollback occurs in the ETH market, having predicted such an event in advance, a trader can also take advantage of the fall in the rate of the digital currency. Neither miners nor investors and stock speculators can boast of such an opportunity. It is possible to carry out ETH/USD trading directly. Secondly, Ethereum is a new trading instrument on which even the most ordinary trading systems of technical analysis can bring return.

Contract for Difference (CFD) on an ETH cryptocurrency. You can hold a long position or a short position. For example, when trading Ethereum CFDs, you are also speculating on the ETH / USD pair.

There are notable differences between buying cryptocurrency and trading cryptocurrency CFDs. When you buy cryptocurrency, you should store it in the wallet. However, CFDs trading sets out the position is carried out in the trading account, which is controlled by the financial authority. You have more flexibility when you trade CFDs as you are not tied to an asset. You just bought or sold a derivative contract.

Ethereum is a platform for developing decentralized applications. In Ethereum scripting language added a tool for creating smart contracts. A smart contract is a try to automate transactions, where all the conditions and results of transactions are considered in advance. This ensures solidity and reliability at the same time since there are no third parties involved in the procedure. The terms of the contract cannot be changed.

Ethereum price USD


Most of the financial services providers began to add Ethereum digital asset to the arsenal of trading tools. So today ETH as a trading instrument in pairs with the dollar (ETH / USD) was added on the list of tools. It should be noted that when trading CFD contracts with brokers, the trader works on a regular type of trading account, which means that the withdrawal of profits will be carried out on classic terms. In the event that trading is performed directly on the type of Crypto account, the withdrawal of profits occurs through the appropriate payment service of the company to a crypto wallet, from which you can cash out funds through online exchangers.

Traders who prefer long-term trading should wait for the ETH / USD to drop to the lowest possible level and enter a buy position with the expectation that the global growth trend will continue. Traders of intraday operations can use even the most basic strategies. However, in this case, they will need to keep up with the current significant news, which can provoke an unexpected price impulse in an unfavourable direction.

Ethereum mining


The optimal way for mining Ethereum for 2020 is cloud mining, due to the flexibility of contracts and more favourable working conditions than mining on trader’s own equipment. Cloud mining is the mining of cryptocurrencies using special cloud services that accumulate capacities in their data centers and farms. This is a new form for earning cryptocurrency, which creates groups (mining pools) with a single goal: to generate more income due to the management of equipment by a contractor who solves all issues related to technology and software components.

The number of Ethereum coins is not limited. This step was taken by the developers to guarantee the stability of the cryptographic platform. If you stop mining ETH coins, its value will skyrocket over time and it will become unprofitable to use the services of the platform. Therefore, Ethereum mining remains in demand for a long time.

Invest in ethereum


The world of cryptocurrencies is full of different coins to invest in, and with such a wealth of choices, it can be difficult to make an informed decision. Traders have the opportunity to buy ETH at a low price and sell at a high price, thereby ensuring a profit until the price changes again. Then traders can repeat this process again for even more profit.

Brokerage exchanges are one of the ways that allow traders to exchange fiat currency for cryptocurrency. Traders only need to register, verify their identity, replenish the account balance, and buy ETH. After that, traders have the opportunity to send it to the wallet.

If traders already have another cryptocurrency, for example, Bitcoin, then they can use it to buy Ethereum. To carry it into execution, they need a centralized exchange. With the help of such platforms, it is possible to exchange one cryptocurrency for another with a much lower commission.

If you are interested in investing, cryptocurrency trading, Ethereum price, Ethereum wallet, and the digital currencies market in general, you can visit the Investlite.com website. Here, we provide information about this topic for everyone who wants to go into this question. We offer useful articles, tutorials, e-books, webinars, and many other contents to help traders to understand more about financial market operations. We offer the experience of Ethereum CFD trading with InvestLite and try to take some advantage from ETH transactions.

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