Understanding Ether: The Cryptocurrency Competing with the Bitcoin

Avery-Taylor Phillips |

Image via BTC Keychain/Flickr CC

With it’s dramatic rise in value over recent months, Ether has been in the headlines, touted as a Bitcoin nouveau. Ether has been one of the best-performing assets of 2017, growing 2400% over the last six months. Whatever your stance on the second most popular cryptocurrency, there’s no denying that that kind of growth grabs attention.

If you’re interested in Ether, understanding the basics about the cryptocurrency is a good place to start. Ethereum is more than digital currency; it’s a platform that looks to change how we do business, make financial decisions, and use the internet.

The Basics of Ether

We are approaching an event that’s been anticipated by investors in cryptocurrencies for quite some time. The “flippening” is the point in time where the Bitcoin will be overtaken by Ether as the largest player in cryptocurrency, in terms of market cap.

While this event had seemed an unlikely possibility even as little as six months ago, the value of ether has risen dramatically since the beginning of 2017. Today, ether is valued at $336. Tomorrow? Who knows.

Cryptocurrencies are notoriously among the most volatile liquid assets, but they’re only gaining more legitimacy as a form of currency. This is particularly true among the younger set, who also tend to be intrigued by the prospects of quick riches through daytrading in a time when investments can seem less appealing. Digital currencies are also capable of providing more security from fraud and theft than more traditional currencies, which have struggled to provide protections to users.



Understanding Ethereum and digital currencies can be difficult if you’re just beginning to learn about them. Ether is the digital currency used by Ethereum, a new digital platform that seeks to decentralize the internet and create a new, decentralized app store. Trying to distill this down into the simplest of terms, it’s easiest to think about how Ethereum works when we compare it to our current model of the internet and apps.

Currently, if you would like to purchase an app, you purchase it through a company like Apple or Google. These companies handle your payment for the app, and control what apps are

available to purchase. Ethereum hopes to change that, putting the control back into the hands of developers, and Ether is required to make transactions possible.

The value of Ethereum is in it’s ability to decentralize information: “Ethereum makes it possible to establish communities and outlets for freedom of speech, stores where you can buy things, voting mediums that can not be rigged, transparent auditing with live updating of accounting information for firms, transfer of money and content without an intermediary and more,” according to an explanation from Seeking Alpha writer Richard Gordon. All of this is possible thanks to the technology that this digital currency is based on, the blockchain.

Investing in Ether: What You Need to Know

Some investors believe that the fast rise in value of ether isn’t an indicator of a bubble, despite appearances. Skeptics, however, point to the many bubbles that Bitcoin experienced over its lifetime, and wonder if Ethereum provides ether any protections from the same rises and falls in value. So far, ether has continued to gain on Bitcoin in relative terms.

Those who invest in Ether do so because they believe consumers will want to use Ethereum and will need ether to complete transactions. Real-world applications of Ethereum are few so far; this is one area where bitcoins have the advantage.

Ethereum has not been without its setbacks, either. Last year, the platform seemed poised to fail after a major investor, the Decentralized Autonomous Organization, suffered a major loss when a hacker stole a third of of its $150 million investment in Ethereum. However, the continued growth of Ether despite this speaks to the value of the platform as a tool for revolutionizing commerce.

Like any volatile asset, Ether presents very high risks with the potential for great returns. Investment strategies are all over the board. Some, who believe in the Ethereum platform and its potential, are in it for the long haul. Others stick to daytrading and try to hedge. Whatever the approach, no one can deny the fact that this cryptocurrency is a source of major intrigue for investors and that its ultimate value is yet to truly be determined

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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