Your money-making expert. Financial journalist, TV and radio personality.
As you know, Ether is the coin that works on the Ethereum network. It is the second most valuable, and most popular cryptocurrency after Bitcoin. In fact, it’s often referred to as the ‘silver’ to Bitcoin’s gold.
But it is a lot less valuable than Bitcoin. Around 6-7% as valuable in fact. But recently it has jumped in price (as has Bitcoin) and it’s quite possible that this ‘bull run’ will continue. However, nothing is certain with any cryptocurrency, so don’t rush to buy just because I’m adding to my holdings.
However, I consider that Ether’s value will continue to increase, which is why I’m buying some more right now. Here are the reasons why.
I’m going to talk about Ethereum (the platform) primarily as that is what makes Ether (ETH), the coin, particularly popular.
Ethereum is an open-source software platform that any developer can use to create cryptocurrencies and other digital products (it can be used for business transactions, voting, records and all sorts of applications). It’s a blockchain technology – a decentralised distributed ledger that records all transactions.
Ether is the currency (or the token) that runs on the Ethereum blockchain. As with Bitcoin (which operates on the Bitcoin blockchain), the Ether currency is “mined” through powerful computers solving very difficult puzzles, or cryptography
It’s the Ethereum technology’s ability to run clever applications that makes it particularly popular with investors who see it as having more of a future than Bitcoin. It is particularly well known for what are called ‘smart contracts’ which enable applications to be built that have particular functions. So, for example, developers can create currency that can only be used in certain places or for certain things and within a particular time-frame.
Over the past year, Ethereum has grown in popularity with individual and institutional investors. It can also be used at a growing number of online and offline businesses. Transaction times are faster than for Bitcoin too.
It is getting even more popular! Its price surged to a record high of $3,400 at the beginning of May 2021. This represented a quadrupling in its value since the start of the year.
Also, a recent proposal by the Ethereum leaders called Proposal EIP1559 has indicated that they are planning on reducing the emissions created by mining Ether (this is a criticism that has been levelled at cryptocurrencies generally – that they use too much energy and produce high emissions). They will also reduce the rewards offered to the miners and, crucially, will reduce the supply of Ether. This could make it more valuable as the supply will be more limited, like Bitcoin.
Currently its ‘market capitalisation’ is around $350 billion which puts it on a par with huge, multinational companies such as PayPal and Bank of America. To put it into context, Barclays has a market capitalisation of just $44.32. So already Ethereum is about seven times as valuable as that!
Some crypto enthusiasts say that it could become the dominant cryptocurrency in the world, outstripping Bitcoin.
Not only is there the prospect of limiting the supply, but Ethereum is already proving its use-cases in real-world transactions.
Not everyone believes it has a future, though.
Charlie Munger, business partner of Warren Buffett at Berkshire Hathaway has described cryptocurrencies generally as “disgusting and contrary to the interests of civilisation.” Pretty strong words from a very wise man!
AJ Bell’s Laith Khalaf agrees that Ether is currently strong but he is very cautious: “Ether, or Ethereum, is more flexible than Bitcoin because it is programmable according to use, so it can be used to verify business transactions or contracts as well as make payments” he says. “However, the value of that asset is still only what someone else will pay for it, and while that might be quite a lot right now, once crypto fever has died down, it may not be worth the code it’s written in.”
Ethereum is easy to buy on one of the main cryptocurrency exchanges.
As i’ve said before, it’s important to use a well-established, secure exchange. There are a number of new ones around and I would avoid them. Some are simply not secure enough and could be hacked at any time. Others are just criminal and will steal your money. Sorry, but that’s the crypto space right now!
So sign up to one of the following, if you haven’t already…
Once you have got through the ID process, transfer money from your bank account, or debit card, into the exchange, click the ‘buy/sell’ button and make sure that you are buying Ether (you should see ETH in the list). Click buy and it should appear in your account.
Although it’s delightful to see cryptocurrency holdings going up so quickly, they can crash down just as fast.
So make sure that you only put a small percentage of your cash into Ethereum or any other cryptocurrencies. I personally think that cryptocurrencies are the future of money, but I could be wrong. It could be nothing more than a flash in the pan, so don’t put any money in that you can’t afford to lose.
None of the above should be taken as investment advice. It is information only. Do your own research before investing in any of the products mentioned in this article.