Ethereum has increased by more than 1,000% – here's how much you'd have if you invested $1,000 a year ago
This month, Bitcoin isn't the only cryptocurrency that has set new highs.
On Friday, the value of a single ether token reached an all-time high of $4,461.96, bringing the market cap of the second-most valuable digital token above $520 billion.
If you bought ether a year ago, you've made a lot of money in the last year. A $1,000 ether purchase on October 29, 2020, at a price of $382.82 on crypto exchange Coinbase, would have gotten you 2.61 coins. At the peak on Friday, those coins would be worth $11,645.71, representing a more than 1,000% increase.
That return is more than three times that of bitcoin, where a $1,000 investment a year ago would be worth around $4,476 today.
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Over the same time period, the S&P 500 rose 38.8 percent, a small increase in comparison to either digital coin. However, unlike cryptocurrencies, which are notorious for their volatility, the S&P 500 is regarded as a relatively reliable investment, with a decades-long track record of providing returns to investors.
The rally in ether was triggered by an important upgrade to the Ethereum network on Wednesday. The Altair upgrade is part of the transition to Ethereum 2.0, or Eth2, in which the network's infrastructure will change. Ethereum mining will become obsolete once Eth2 goes live in 2022.
How Do I Buy Ethereum?
The Ethereum blockchain token, known as ether (ETH), is one of the top three cryptocurrencies in the world. As of October 2021, it has the second-highest market value at $353 billion, trailing only Bitcoin ($821 billion) and surpassing Tether ($68 billion).
Cryptocurrency assets dwindled in 2018 and 2019 since their peak in December 2017, but are now worth many times more than what they were.
There is still a great case for buying them as the market continues to see innovation. ETH’s value is trading at around $4,425.71 in October 2021.
The primary appeal to the digital currency is its integration with the Ethereum Network. Essentially, ETH is the driving force behind the capabilities of the Ethereum Network overall. With the Ethereum Network offering vast opportunities for development, ETH is an investment that many see as more promising than bitcoin. Ethereum is also backed by multiple Fortune 500 companies and is being used by multiple financial institutions. For all of these reasons and more, many investors are rapidly adding ETH to their portfolios.
Here's how to incorporate Ethereum into your investment strategy:
1. Select a Trading Platform
It is critical to identify the best trading platform for your needs as the foundation for placing any trades. When it comes to cryptocurrencies, some of the top platforms include Coinbase, Kraken, Bitstamp, Gemini, Binance, and Bitfinex. Ethereum is available on all of these exchanges.
The type of exchange is one of the most important factors to consider when selecting a cryptocurrency trading platform. Fiat exchanges or cryptocurrency-to-cryptocurrency exchanges are two types of cryptocurrency trading platforms (C2C). Investors can easily trade Ethereum on fiat exchanges because it is one of the world's two largest cryptocurrencies. Some investors who want to trade multiple currencies or have the ability to easily convert other currencies into Ethereum may want to take a closer look at C2C exchanges. Many investors maintain multiple accounts with both a fiat exchange and a C2C exchange.
Keep in mind that cryptocurrencies are highly unregulated and evolving at a rapid pace. This can create a great market opportunity, but it also increases the risk of fraud, so make sure you're confident in the credibility of the trading platform exchange you choose. When considering an exchange, ask the following questions: Where is the headquarters?, Do they have a license?, How secure is their website?, How secure are your funds?, and Who are the managing executives?
Binance is the world's leading exchange in terms of trading revenue. In the United States, Coinbase Exchange is at the top of the list.
2. Register for an Account
After deciding on a trading platform that meets your requirements, the next step is to open an account. This procedure is similar to registering for a brokerage account. You will be required to provide your name, address, social security number, and various forms of identification, among other things. Once you've decided on a site, you can usually open an account in a matter of minutes.
The final step in the account opening process is usually verification. The majority of exchanges will require you to verify your account in one or more ways. This is where you will most likely be required to upload documents in order to verify your identity and ensure that your account meets regulatory requirements. Depending on the exchange, verification can take anywhere between an hour and a day or two.
3. Deposit Money
You must then deposit money into your account. After verifying your payment information, this can be relatively simple for fiat currency platforms. Simply deposit funds into your bank account or debit card on file. You can invest as little as $5 or as much as $1,000 or more in cryptocurrency exchanges because the minimum investment is generally low. Because most exchanges charge a fee per trade, it may be best to trade large sums at once.
Depositing currency in C2C exchanges can be a little trickier. These exchanges require you to send cryptocurrency from one location to another via code. Because Ethereum is a popular depositing currency for many C2C platforms, having a large amount of it can be advantageous. Code transfers take a little longer to complete, sometimes up to an hour.
4. Start Trading
With a verified account and money deposited into it, you'll be able to use the exchange to buy ethereum and other cryptocurrencies. Each exchange has a slightly different interface, but be prepared to confirm transactions and then allow for processing time, which can also vary depending on the total number of transactions requested.
5. Deposit ETH into a Wallet
After purchasing ETH on the exchange, you can withdraw it into your bank account or a wallet that you control. Fiat exchanges make it simple to withdraw ETH by selling it and transferring the proceeds to your bank account. C2C platforms take longer to develop. On a C2C platform, you'd have to code transfer your ETH to a fiat exchange and then sell in order to cash out. On all platforms, you can also generally send ETH to a wallet.
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