5 Ways To Invest In Ethereum In 2021
Widely considered the second most important cryptocurrency after Bitcoin, Ethereum has emerged as an excellent investment option for crypto traders over the years. What really sets it apart is the fact that it holds both industrial as well as intrinsic value. Whilst Bitcoin operates quite like digital gold, with price largely derived from its monetary premium, Ethereum has much wider applicability, particularly in the manner it enables the creation of Distributed Applications (Dapps) and Smart Contracts.
Ether (ETH), the native coin of Ethereum, is trading at around $3500 per coin at the time of writing, with a total market cap of $411.4 billion. For anyone who wishes to ride the next crypto wave and potentially profit from Ethereum, we are going to cover how to invest in Ethereum using five different methods in this article. Read on to find out more.
1. Trade Ethereum
The first and most frequently used option to invest in Ethereum is through a reputed broker website. Although this may not be the purest way of investing in the cryptocurrency, as you’d be essentially betting on its price movements, through derivative products like Futures, Options and Contracts for Difference (CFDs), it would nevertheless give you an opportunity to book profits from your crypto trading knowledge.
As can be inferred, this type of trading activity doesn’t involve owning and managing the digital currency under consideration. Hence, you would not be required to store your ETH in any software or hardware wallet. It’s a short-term trading activity that is appropriate for people who have a high-risk appetite and can devote ample amounts of time to it. It also requires a certain level of knowledge of technical and fundamental analysis, to enter and exit the market at the right times. For this reason, new Ethereum investors should start slow and learn the ropes before going all in.
Where to trade Ethereum
Please note, if you’re keen on trading Ethereum through derivative products, you will need to use the services of a cryptocurrency broker. Considering how cryptocurrency trading has really caught on with the masses over the past few years, the market is currently overflowing with a large number of brokerage platforms. For anyone new to this type of trading, it’s important that they transact with only the best brokerage websites, which appropriately meet their needs. As a rule of thumb, you must look out for a broker which is regulated by a reputed authority, offers excellent customer service, charges minimum spreads, is extremely secure, offers multiple deposit & withdrawal options, and meets whatever other criteria you deem important.
Comparing multiple brokerage platforms on all such criteria can be an extremely time-consuming affair. We understand the importance of your time and have done all the necessary due diligence to come up with some highly recommended broker services below.
2. Buy and HODL
A term coined by a frustrated and drunk Bitcoin investor back in 2013, when cryptocurrencies weren’t as big as they are today, HODL is basically a backronym for ‘Hold on for Dear Life’, based on a misspelling of ‘hold’. It’s essentially about continuing to hold onto one’s crypto coins, irrespective of volatile market movements, in the hope of their value appreciating at some point in time.
Hence anyone who believes in Ethereum as a concept and cryptocurrency would be best served by choosing to buy as much of it as they possibly can, and then holding on to it safely, perhaps in a hardware wallet, for the long term. You can procure ETH for this purpose from any of the well-known cryptocurrency exchanges operating in the market. These platforms can put you through to interested sellers, from whom you can purchase Ethereum directly. Alternatively, you can also buy Ethereum from online brokers which facilitate the actual purchase of the cryptocurrency and allow you to store it somewhere safe such as a hardware or software wallet.
As this investment strategy essentially revolves around buying Ethereum, we have done thorough research and have put together dedicated pages to tell you all about the different ways of purchasing Ethereum on the Internet. Below we have provided links that will take you to different pages focused on buying ETH with specific payment options. Please note, some or all of these payment methods may or may not be available in your country, depending upon your local crypto laws. These transactions may also involve certain costs which must be factored in while making the purchase.
3. Invest in Cryptocurrency and Blockchain Companies
In case you’re not too keen on trading or buying Ethereum, and don’t want to take on the hassle of storing ETH somewhere in a cryptocurrency wallet, you can also invest in ETH through an alternative channel. We are talking about investing in stocks of companies that either use Ethereum technology as an integral part of their day-to-day operations or are heavily invested in Ethereum. When you invest in the shares of such companies, you stand to benefit from both ETH price movements as well as the performance of the company itself.
Please keep in mind that even in this scenario, to invest in the stock of an Ethereum-based company, you will require the services of a reliable broker platform.
Where to invest in Ethereum shares
With regard to investing in the shares of an Ethereum-based company, you can either purchase the actual company’s shares and keep them somewhere safe, or you can speculate on that stock’s price movements through derivatives like Options, Futures and CFDs. Both investment strategies can be implemented with the help of a broker.
In case you choose to go with the derivatives, you’d need to open an account with a broker platform and then take long or short positions on the concerned stock, based on your analysis and which way you hope the market will move. The broker may also allow you considerably larger market exposure by accepting fiat currency for margin and offering you leverage on your trades. This way, you may be in a position to register significant profits, provided you know what you’re doing. Please be aware, the losses can be equally big, as leverage will amplify both the positive and negative results of trades.
Owing to the important role played by brokers in this undertaking, it’s critical that you select the right brokerage service for your trades. Security measures, regulatory compliance, spreads, customer service, value-added services, and payment options are some of the important parameters you should look at when shortlisting providers. In case you don’t have the time to compare brokers based on all these factors, you can use our list of recommended brokers below to start trading Ethereum-based stocks today.
4. Become a Staker
Another way of investing in Ethereum is by becoming a Staker. Ethereum is now transitioning to become a ‘Proof of Stake’ cryptocurrency, implying that you can help to validate Ethereum transactions depending upon the number of ETH coins you are willing to stake. The more coins you stake, the more you will be rewarded for your role in validating the blockchain.
Staking Ethereum using your ETH holdings enables you to maintain the network, strengthen it and make it expand. You get rewarded with ETH coins for this process, which can be an excellent means of making a several per cent passive income through your Ethereum holdings. Please note, when you stake ETH, you’ll essentially be locking up your coins for a certain time period in order to earn that reward. Being ready to lock up your ETH coins shows commitment on your part, and you’ll be awarded the privilege of being one of the Ethereum network validators in exchange.
Where to store Ethereum
As mentioned above, when you stake a certain number of ETH coins to become one of the Ethereum network’s validators, you can expect to earn in the vicinity of 7.5% per annum returns on your stake. This return is awarded in the form of ETH coins which will then need to be stored somewhere safe in a cryptocurrency wallet. There are all kinds of cryptocurrency wallets available in the market, but you can broadly categorise them as hardware wallets or software wallets, depending upon their form and what purpose they serve.
As can be gauged, hardware wallets are physical devices, usually the size of a USB drive, which can be kept disconnected from the Internet to maintain high security for your ETH holdings. Software wallets on the other hand are usually online wallet services, mobile apps, desktop applications, and so on, which make ETH coins readily available for online and offline transactions. Below you can find a list of cryptocurrency wallets highly recommended for storing your ETH coins.
5. Become an Ethereum Developer to Make Money
If being a direct Ethereum investor is not your piece of cake, you can choose an alternate route to acquire ETH coins and invest in a different way. We are referring to the option of becoming an Ethereum developer. It’s worth noting that blockchain developers make anywhere from $150,000 $200,000 per annum, which is far higher than the average national salary in the United States.
Once you get started, you’d be able to develop applications powered by Ethereum, and thus may be able to invest into Ethereum in an indirect way.
Expert Tip on When and How to Invest in Ethereum“ In this detailed article on different ways of investing in Ethereum, we’ve touched upon multiple investment routes including trading Ether through brokerage platforms, buying and HODLing ETH, investing in Ethereum-based stocks, staking ETH, and finally acquiring ETH through development. No matter how you invest in Ethereum, if you are serious about making some money from the activity, you will need to stay on top of parameters like history, price, and potential future developments to ensure the investment is successful. Please remember, while timing one’s entry and exit is considered crucial in the crypto market, there is no specific right or wrong time of making such an investment. As long as you base your decisions on thorough research, you may be in with a good chance to register handsome profits. Make sure that you manage your risks well at all times in order to prevent excessive losses. ”- Ashish Sood