Ethereum is the second biggest cryptocurrency right now when it comes to market share. It went live in 2015 and since then, It has gained a massive following. It differs from its main competitor – Bitcoin in a few key areas: transaction speed, the aim of its inventors, and security protocols. In this article, we will explain in depth if you can make money with Ethereum, and more importantly how you can do it!
Ethereum is a decentralized platform that is running on blockchain technology. It is a platform where all applications can be built. The Ethereum network has its own cryptocurrency called Ether, which is a vital part of it. You can use it to pay for the services and products within this network. In the same way, you can use fiat currency (dollar, peso, euro) for the same purposes.
How does Ethereum work?
The Ethereum network was created to run different applications. It acts as a platform for developers to build these apps and services. The Ethereum platform allows you to create smart contracts – computer programs that are automatically executed when certain conditions are met. These smart contracts are stored on the Ethereum blockchain in the form of a transaction. When the conditions are met, the transaction is automatically executed. In a nutshell, the entire platform works on the basis of transactions.
Ether is one of the most useful assets in the Ethereum network. It is the second biggest cryptocurrency with a market cap of just over $100 billion. Just like bitcoin, it can be used to make payments without any middleman involved. The transaction fees are also relatively lower compared to other services like PayPal or Payoneer.
What can you do with Ethereum?
Ethereum’s primary function is to allow users to make payments without involving a third party like PayPal or Payoneer. Users can send money directly to each other without paying any fees or waiting for days before it gets confirmed. You can also make payments through smart contracts. Smart contracts ensure that both parties involved in the transaction get what they wanted from it. The contract executes itself automatically once all conditions are met.
For users who are new to cryptocurrencies, Ethereum is a great option for them to start their journey with cryptocurrencies. Although the platform is still in its early stages, it has already gained massive popularity among cryptocurrencies enthusiasts. This popularity will only increase with time if more and more people start using it for its primary purpose – payments and transactions.
How to make money with Ethereum?
If you want to profit from your Ethereum holdings, you need to understand how the whole system works first. Apart from playing fun crypto slots you can try some of the most popular ways in which people make money with cryptocurrencies:
The art of buying low and selling high!
You buy an asset at one price and then sell it at an increased price later on. Cryptocurrencies are traded on various exchanges across the globe, including Coinbase and Binance.
You just need to open an account on one of these exchange platforms and then fund your account with fiat currency (dollar, peso, euro) or cryptocurrencies (bitcoin, ether). Once you have done that, you can begin trading your crypto assets for profit.
Investing – Like in any other business, investing can be risky but it also holds a lot of potentials. There are many ICOs (Initial Coin Offering) that investors participate in to make some profit out of it in a long-term perspective. Some ICOs like Filecoin managed to raise $257 million during their token sale!
Miners help confirm transactions in the network by using their computational power. They get rewarded with newly minted coins and transaction fees for their efforts. Mining requires a lot of hardware power and electricity so it isn’t something you should start immediately without knowing what you’re doing.
Proof-of-Stake (PoS) is a method of validating transactions in cryptocurrencies that uses your stake in the currency rather than your computing power. It is similar to earning interest on your bank account balance. For example: let’s say you have 100 ETH in your wallet and that’s your “stake”. Now every time there is a new transaction on the network, you will be able to validate it depending on how much “stake” you have in your wallet.
If there are two transactions at once and yours is higher, then yours will be validated because you have more “stake” than others! With PoS, everyone can earn money even if they don’t have expensive mining equipment!
Some people prefer not to trade or invest but rather collect cryptocurrencies and keep them as an asset that they might be able to sell at a much higher price in the future! Right now, there aren’t many options to collect digital currencies but that might change in the near future when new companies enter the market!
What are the risks?
There are many risks associated with trading and investing in cryptocurrencies. Here’s a quick overview of those risks:
Cryptocurrencies fluctuate very rapidly and sometimes unpredictably. A currency might rise, fall or even crash overnight.
For example, look at what happened with Bitcoin Cash when Coinbase added Bitcoin Cash as a payment method >> its value shot up from $3200 to over $9000. This kind of volatility is not good for people looking to invest for the long term because if you invest in something that suddenly spikes overnight, you might end up losing money instead of making some profit.
Scams & Frauds
Most of these cryptocurrencies run on blockchain technology, which means that every transaction needs special software like a miner before it goes through. Many scammers have misused this opportunity and have launched Ponzi schemes promising insane returns on your investment. Some have even launched new projects just to steal funds from people…
Since there is no centralized body controlling these cryptocurrencies, users need to do their own research before investing in any project.
Every transaction on blockchain technology is irreversible and permanent. This is one of the most attractive features about blockchains but it also poses security threats for users. The most common type of security risk is phishing attacks where people try to steal your private keys and passwords through fake websites and emails. Always remember that if you lose your private key, you lose all your coins forever.