Ethereum is one of the most promising technology in today's fast-paced world. Since its creation in 2015, its growth seems not to slow down anytime soon. The ETH project aims to create a “world computer” by replacing old model servers with a new approach or nodes provided by volunteers.
The team behind it seeks to introduce an alternative model for apps and data that doesn’t rely on big tech companies. While it is an open-source network, Ethereum trading means investing in the network and a unique transformational platform.
In this article, we will move you through what the Ethereum project is about, the benefits and risks of trading it, and how to trade CFDs on it.
What is Ethereum?
Ethereum is an open-source network featuring smart contract functionality. It was developed by a Russian-Canadian programming prodigy, Vitalik Buterin. By market cap, it is the second-largest cryptocurrency behind Bitcoin. The native currency of the Ethereum network is Ether. And is the blockchain with the most use case in the world.
What Are The Features of Ethereum Trading?
- Growing In Popularity. The number one feature you may consider with Ethereum trading is that its popularity is growing as the day goes by. Right now, it is the second-largest crypto after Bitcoin. The most significant attractive feature of it is the fact that third-party applications can run on its network.
- Valuations Are On The Rise. As people start to embrace the Ethereum project, the valuation of ETH native currency, Ether, has started to rise in recent months. Since 2016, investors have started trading Ether, and the issuance is only limited to 18 million in a year.
- Payment For Goods And Services. Ethereum can be used to pay for goods and services. Most online merchants now accept it as an alternative to Bitcoin.
Bitcoin vs. Ethereum - What's The Difference?
The major difference between these two is that Ethereum is a platform, while Bitcoin is a cryptocurrency. Transactions involving ETH may be executable codes; however, those of bitcoin are primarily monetary.
In terms of transaction speed, transactions on the Ether network are much faster than Bitcoin. What's more? Bitcoin is a medium of exchange and a store of value, while ETH is not. Ethereum developer created the network as a complement to Bitcoin, but it turns out to be a competitor.
- Ethereum Terminologies. Ethereum has some terminologies that can be confusing if you don't know the meaning. In this section, we have put together some of the most popular ETH terminologies for you to familiarize yourself with.
- External Actor. This is an entity or a person that is able to interface with an Ethereum node through depositing signed transactions.
- Address. This is a 160-bit code that is used to identify accounts on the Ether network.
- Account. An account on the ETH network has a transaction count and an intrinsic balance. All the accounts on the network have a unique address for identification.
- Transaction. This is a piece of data that represents either a new autonomous object or a message. It is usually signed by an external Actor.
- Apply (S,TX). This serves as the blockchain validation function. It is used to check whether there are available funds or an address is correct.
- Autonomous Object. An autonomous object only exists within Ethereum's hypothetical state. It has an account and an intrinsic address.
- Message. A message is data that is passed between two or more accounts. A message can either pass through an autonomous object or the cryptographically secure signature.
- Message Call. This is the practice of sending messages from one account to the other.
- Gas. This is the network cost unit. It is paid for by Ether. The price of gas is set by the transaction. In fact, miners have the choice to either accept or ignore any transaction whose gas is very low.
- Contract. It is the term used to describe a piece of EVam code.
- App. This is an application that is hosted in the ETH network.
- LLL. LLL stands for Lisp-like Low-level Language. It is basically a language that is used to author a simple contract for trans-compiling.
How Can I Do Ethereum Trading in CFDs?
You have two options before you – the first option is to buy directly from an exchange so that you own the coin. This option is usually a long-term method, as you have to wait until the price of the coin increases, then you sell to make a profit.
The second option is to trade a contract for difference (CFD) on it and speculate on the price differential with an aim to make a profit. At its core, a CFD is a contract between an investor and a broker, where one party pays the other the difference in the opening and the close price of ETH.
While trading CFD on it, you can either hold a short position (that is, speculating that the price of the coin will fall) or a long position (speculating that the price of the coin will increase). Trading CFD on it is a short-term investment.
Ways to Trade it
Ethereum trading requires discipline, attention to detail, and robust knowledge of how the cryptocurrency market works.
So now you know about Ethereum trading and how it works, let's give you a heads up to help you have a better idea. Below are other things to keep in mind before placing your first trade.
- Read Everything. Before you start trading it, research is very critical. As you try to study the market's direction, coverage from news sites and tweets from analysts can be exceedingly helpful. The bottom line is to read every piece of information that comes your way.
- Think Ahead. You need to think and contemplate your trading ahead of your trading time. You also need to consider the likely outcome of your trades, how much profit you would make, and, sadly, how much you can afford to lose. Keep in mind that failing to quit the market at the right time can cost you your trading capital.
- Be Cautious. If you are very familiar with the cryptocurrency CFD market, you would observe that so many online brokers now allow traders to trade on margin. Trading on margin implies that your trades may result in nasty losses/gains if the market goes south or profits.
How To Trade CFDs Ethereum With 101investing?
Below are the steps on how to access ETH CFDs on our platform:
- Once you are on our homepage, you can click the account sign up button.
- Fill the application form using your correct details.
- Verify your identity and proceed to the next step.
- Fund your trading account. We support a wide range of deposit methods. Choose a deposit method that you are comfortable with.
- Download the MT4 terminal on your trading device.
- You can also make use of our WebTrader version through your web browser.
- Login to access your trading dashboard
- Once you are on your dashboard, navigate to the underlying assets you can find available
- Start trading.
Why Trade Ethereum With 101investing
- Regulation Adherence. 101Investing is operated by FXBFI Broker Financial Invest Ltd, the company is regulated by the Cyprus Securities and Exchange Commission (CySEC), under license number 315/16.
- Trading On Margin. At 101investing, we provide trading on margin for Ethereum traders. In fact, we give traders’ access to the ETH via CFDs. As a CFD trader, you can trade long or short and even set a stop-loss order, as long as it aligns with your trading objectives.
- All-round Trading Analysis. The 101investing platform gives traders flexibility to adapt their market sentiment and enter the market with technical indicators. We provide several chart formats and live market updates. Our trading platform is available on iOS, desktop, and Android.
- Many Cryptos To Trade. At 101investing, we support many cryptocurrencies for you to choose from. Aside from cryptocurrencies, we also support currency pairs, commodities, indices and other trading instruments to trade with CFDs.
- Cryptos Against Fiat Currencies. Traders on the 101investing platform can trade CFDs on digital currencies against fiat currencies, unlike other online brokers who only restrict their traders to crypto-crypto transactions. With 101investing, you can trade CFDs on ETH against USD, GBP, and EUR with no hidden fees.
Frequently Asked Questions
Is Ethereum a good investment?
As of the time of writing this article, Ethereum has outshined crypto giants like Bitcoin and other digital currencies due to the recent DeFi bandwagon. Hence, we can say that Ethereum is a good investment in the cryptocurrency market. If you start now to invest in ETH, you may reap the reward later in the future if the market doesn't go south.
You can now see that Ethereum trading with CFDs is an alternative way to access the crypto market. Due to the recent upsurge of the DeFi bandwagon, Ethereum is now one of the best crypto investments to consider.
Ethereum trading requires the ability to follow with discipline and requires a high level of meticulousness. In short, trading Ether requires a robust understanding of the market. You need to know exactly when to open and close a trade position so that you don't get caught in the market risks.
Once you create a trading account, you can test platform features with a demo account before you start trading. We have a user-friendly demo account that you can take advantage of. Our demo account is very similar to a live account. A demo account can give you the confidence to trade in a live trading environment.