what is ethereum ?
Ethereum is a digital platform that embraces blockchain technology and expands its use to various applications. Ether, its native cryptocurrency, is the second largest on the market.
The Ethereum platform was created in 2015 by programmer Vitalik Buterin to create an instrument for decentralized and collaborative applications. Ether (ETH), its native cryptocurrency, is a token used in transactions using this software. Like bitcoin, ether exists as part of an autonomous peer-to-peer financial system, free from government intervention. Also, like bitcoin, the value of ether skyrocketed in a short period.
In January 2016, ether was trading around $ 1, and in January 2018, the cryptocurrency touched its highest level yet at $ 1,391. However, in October 2020, ether is trading far from its historical peak to be below $ 390. Its value is volatile, with frequent fluctuations on the intraday. Although this is only one among hundreds of cryptocurrencies, it is also one of the few with a significant market capitalization, along with its two great rivals, bitcoin and bitcoin cash.
How does ether work?
Ether, like other cryptocurrencies, uses a shared digital book where all transactions are recorded. It is publicly accessible, wholly transparent and complicated to modify afterwards.
This ‘digital ledger’ is called a blockchain, and it is built through the data mining process.
Miners are responsible for verifying groups of ether transactions to form “blocks” and encode them by solving complex algorithms. These algorithms can, in turn, be more or less complex as a way of maintaining a sure consistency in the processing time of the blocks (around one every 14 seconds).
The new blocks are then linked to the old blockchain, and the miner in question receives a reward, that is, a fixed number of ether tokens. Usually, it is five ether units, although this figure can be reduced if the cryptocurrency continues to rise.
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Cryptocurrencies are still relatively new to most people and can be highly volatile. We want our clients to have access to advanced educational material to help them in their operations. Read our risk management guide to learn about the risks associated with a market as volatile as cryptocurrency trading.
Ethereum price: what are the influences?
The price of ethereum depends on factors other than those that affect traditional currencies but is affected by factors such as:
Availability: Contrary to what happens with bitcoin, its offer is not limited to a finite number but is limited annually. However, units of ether are added and lost over time, causing their availability to fluctuate.
Regulation: Ethereum is currently not regulated by governments or central banks. If this changes over the next few years, the value of ethereum could vary.
Reputation: Negative information in the media, especially regarding the security and longevity of the cryptocurrency, can affect the price.
Technological Advances: The future of blockchain technology is uncertain. However, its integration in areas such as payment systems and crowdfunding platforms could enhance its appeal.
Our section on news and analysis follows the latest ethereum news, among other topics relevant to cryptocurrencies. To keep up with potential changes in the virtual currency world, follow our dedicated page.
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How to invest in ethereum
When you buy ethereum coins (ether) in the market, the price is usually displayed in fiat currency (USD, EUR, or GBP). That is, you sell a certain amount of currency to buy ether. If the price of ether rises, you will be able to sell and make a profit, and if the price falls and you decide to sell, you will realize your loss. You will also need access to a market or a wallet to deposit the ethers you have purchased.
With CMC Markets, you can trade ether by trading CFDs. This way, you can invest based on price fluctuations without owning the cryptocurrency. It also does not assume any ownership of ethers. Therefore ethereum cannot be purchased through an account with CMC Markets. What it does is open a position whose value will increase or decrease depending on the fluctuation of ether prices against a fiat currency.