In a short span of 5 years, it has become the second-largest cryptocurrency in terms of market capitalization and is often compared with digital silver.
Ethereum is different from Bitcoin in that it’s a platform that enables smart contracts and applications to be built and run without censorship, fraud, or any third-party interference.
It is a decentralized platform and decentralized application (DAPP) that runs on smart contracts; which are sets of coded instructions.
Ethereum is based on a blockchain infrastructure, which was designed to be distributed and secured in a way that is resistant to attacks by third parties. Ethereum allows you to take advantage of the full potential of blockchain technology and revolutionize the way that financial services are delivered.
Ethereum’s focus is on smart contracts, which are blockchain-based systems for executing complex operations and transactions.
Each transaction needs “gas” as a form of payment, and this would usually be paid in Ether, a native digital currency of the Ethereum blockchain.
It also provides a platform for decentralized applications and a cryptocurrency — namely Ether. This is for an added layer of security and decentralization.
Buying or trading in Ethereum is relatively easy too, but with the slew of platforms available it might feel a bit tricky.
Picking the right platform to trade in Ethereum!
If you are looking to trade Ethereum, there are several platfroms that you can choose from. These platforms will provide you with access to the Ethereum market and the ability to buy and sell Ether.
However, as good advice, it’s best to go with the platform that embraces diverse payment options and provides you with a good level of customer support.
For instance, if you wish to buy ETH with a credit card, it is best to go for a platform that accepts this payment method such as Moonpay. Or if you have a liking for decentralized exchanges, then you should go with an option that offers this feature.
Let us now look at 9 things you need to know to trade Ethereum:
1. Understand Ethereum’s blockchain
Before you even think of investing in Ethereum, it is important to understand a bit of the blockchain technology it operates on. The Ethereum blockchain is based on distributed ledger technology, which is cryptographically secure.
It is fully decentralized and does not rely on any third-party service. Transactions are processed through a series of computers connected to the Ethereum network.
2. Create an Ethereum wallet
Ethereum is an open-source, decentralized platform for distributed applications and smart contracts, and each account on the network must be managed by a wallet system. This wallet is designed to hold Ether and other tokens on the Ethereum network.
The wallet needs to be secure and access to it should be more than two-factor authentication. It should also be compatible with your chosen platform’s features.
3. Get familiar with trading tool
You want to make sure that you are familiar with the various trading tools available in the market, such as charts and technical indicators. Knowing your way around these tools will help you to analyze the market sentiment, which can give you an edge when it comes to trading.
For example, a good charting tool would allow you to review and compare the performance of different Ether pairs. You can also use indicators like the Stochastic Oscillator and the Relative Strength Index to ascertain market trends
4. Learn about the different market
If you are buying and selling Ethereum, then you need to understand the different markets that exist. There are different types of exchanges available, such as centralized and decentralized exchanges
Each of these exchanges offers its own unique features and capabilities, so understanding the pros and cons of each will help you decide which one is best for you.
5. Understand the risk
Cryptocurrency trading carries potential risks and volatile price movements, so you should always do your research and understand the different types of risks that you may come across
6. Secure your investment
Trading Ethereum is potentially lucrative, however, there is always the risk of losing your funds due to malicious activity. To ensure the security of your funds, you should always make sure to store your private keys in a secure wallet, as well as protect your funds with two-factor authentication.
7. Fee structure
Exchanges charge a fee when you buy or sell Ethereum, so you should make sure to check the fee schedule before you start trading. Some exchanges may charge a flat fee per trade, while others charge a percentage fee based on the amount of Ethereum you are trading
Experience is the best teacher in investing, so it is important to gradually build up your knowledge and experience before you invest a large amount of money in Ethereum trading. Be sure to observe the market, practice with a demo account, and start small until you develop your trading strategy and become comfortable trading Ethereum.
9. Note eligibility
You may also need to check the eligibility criteria for an exchange in order to start trading Ethereum. Certain exchanges may only be available to residents of certain countries, so be sure to check this before you start.
Start trading in Ethereum today!
While initially, trading Ethereum may seem intimidating, the truth is that it is actually a very simple process.
All you have to do is research the market, understand the risks, create a wallet and secure your investment, and make sure you are familiar with the tools and fee structure of your chosen trading platform.
With a bit of practice and patience, you should be able to start to trade Ethereum successfully!
Lastly, don’t forget to choose a platform that suits your preferred payment method and provides good customer support.