Ethereum is a blockchain platform that hopes to become the backbone of the new internet. It offers developers all over the world the ability to create, not just program and run applications on it, but also create new smart contracts. The fact that bitcoin has been such a success already is a sign that Ethereum may have some wind in its sails as well. But if it succeeds, what impact will Ethereum have on traditional finance? Let’s take a look at how this might work out for investors and traders alike.
First, let’s look at how Ethereum works. Much like bitcoin, it uses a decentralized hard-coded blockchain. However, while bitcoin is just one blockchain and there’s no way to add new blocks or change them once they’re created, Ethereum has a total of seven blockchains running simultaneously. FX brokers accepting Ethereum (ETH) deposits and withdrawals will therefore be able to easily differentiate between ETH, bitcoin, and other cryptocurrencies that are currently in the mix.
What’s known as Turing-complete code?
It means Ethereum can execute any kind of transaction. This opens up possibilities that aren’t possible with bitcoin at this time, such as different trading models. One major example is a fund, which is exactly how we would describe a traditional exchange-traded fund (ETF). There are also many new ways to invest in cryptocurrencies; one example being an ICO (initial coin offering). An ICO allows investors not only to buy into the coin at a fixed exchange rate, but also to buy into future projects they believe will develop into valuable coins or tokens. (Editor’s note: By the end of the year, Ethereum will have a total of 100 ICOs.)
How does Ethereum work with trading?
There are two types of trading: intra-coin trading and cryptocurrency trading. Intra-coin trading is where you trade on the price action of a single coin. Cryptocurrency trading is where you trade on the price action of one, two, or multiple coins. Because Ethereum gives you access to 100 different coins at once, it gives you the ability to use new trading methods – and the possibility of returning incredible profits if they’re used in a smart way.
FX brokers accepting Ethereum (ETH) deposits and withdrawals will therefore be able to easily differentiate between ETH, bitcoin, and other cryptocurrencies that are currently in the mix.
What would those methods be?
Well, one example is the percent spread indicator. At present, trading spreads range from tight to wide, depending on the broker you choose and on the market conditions at any given time. The key is to choose a broker with low spreads so that you can capture more profit opportunities. If Ethereum becomes a major part of trading operations, spreads will have to widen as they’re 100% spread – which means they will always be at least double what they are now.
So, what would this mean for Ethereum trading? I’m glad you asked! Let’s say that you buy an FX broker accepting Ethereum (ETH). If the spread is 1%, then the price of your coin will be $101. If the spread is 5% then it will be $105. The difference, in this case, is that you could buy 2,000 coins at $100 and also sell 500 at $105. If you would have sold instead at one point in time when the spread was 1%, then your profit would have been USD 5.
How does he know it’s one, two, or three crops?
Cryptocurrencies are based on a blockchain ledger. The ledger is distributed with a certain amount of data. Each new block (or group of blocks) contains the same data, but with changes made to each block to authenticate the transaction. With each transaction recorded, the new blocks will be added and the old ones will be removed. Before making your next transaction, you can check if you have enough funds in your wallet to send that amount and confirm that all the necessary changes have been made.
What are the advantages of using Ether?
Generally, the speed of Ether transactions is more than two times faster than bitcoin. In addition, Ether has a much lower amount of volatility and higher liquidity. This makes it ideal for traders who wish to acquire coins at better prices.
How does Ethereum fit in with regulation?
At present, the SEC has yet to make a clear decision on how to classify ETH or any other cryptocurrency. Therefore, ETH is in an unregulated state. However, there’s no reason why it wouldn’t eventually become regulated – at present, bitcoin and Litecoin are both considered as commodities or money, meaning that they are not subject to SEC regulations. There is also no reason why Ethereum wouldn’t be regulated as well.
How will this impact the markets? Let’s say that Ethereum is regulated, just like bitcoin. What will this mean to investors?
Well, it probably won’t be a positive thing in the short term. With regulation come additional costs, increased time for transactions, and less anonymity. However, what it means, in the long run, is that more money can flow into Ethereum and other coins without worrying about tax issues or capital gains.
It will also make it easier to invest in tokens because they can be easily traded in local currencies.
How will the Ethereum price impact this?
In short, if BTC continues going higher, ETH will likely follow along as another trading option for investors. However, if BTC were to crash and ETH/USD became the only major currency for cryptocurrency trading (at least for a while), then it could also quickly become a serious contender to bitcoin. But let’s look at that from another perspective: If you believe we’ll see the end of the ICO phenomenon, then Ethereum may be a good buy at current levels – as it would allow more investors access to more coins and tokens.
With the Ethereum road map now more clearly defined, we can expect further developments that will create a new platform for blockchain technology. At this point, it’s not just another cryptocurrency – it’s a fully-fledged alternate financial system that has come from the wilder parts of science fiction. It’s a new way of working that will undoubtedly have profound impacts on the world of finance and in turn, the world at large.
Bitcoin is only one step along the way – it’s like the starting line for a race that involves four other cryptocurrency barriers. When you consider how far each has come so far, it becomes easy to see why Ethereum is such a force to be reckoned with.