Ether is the most popular cryptocurrency, as well as the second-largest blockchain network in existence. It has undergone several name changes since its inception, including “Ethereum Classic,” after a disagreement between developers led to a currency fork. Since then, many people have used “Ethereum” to refer to both currencies: Ethereum, run by the development team now known as Ethereum Foundation, and Ethereum Classic.
Ether is traded on several exchanges, and its value is determined by supply and demand. Ethereum has enjoyed some success, with the currency rising from $1 in February 2016 to over $14 in June 2017. Currently, it is trading at around $100. The ability to instantly transfer funds between different parties makes Ether very attractive to those who work on projects that need to be funded quickly and without many regulatory hurdles.
The cryptocurrency was created by Vitalik Buterin, a Russian computer programmer born in Canada. Buterin has since had a falling out with members of the Ethereum Foundation, which currently manages Ether’s development. Buterin created the currency to be a more flexible version of Bitcoin. While transactions are recorded in Ethereum using its blockchain technology, those records are kept by independent parties using Ether to pay for services or trade them with other currencies.
Is it possible to invest in cryptocurrencies without putting money at risk?
Investors need to understand that all investments carry risks, especially when dealing with small amounts of money. Investing in cryptocurrencies is even riskier because they are so new, volatile, and open to crime.
The best way to invest in a cryptocurrency is to buy it right after you have invested directly in a company already doing business. That way, you aren’t investing money that you need for the present or future, and the value of the investment isn’t tied to wild swings due to hacking scandals or other incidents.
Some cryptocurrencies don’t require you to buy them through a person or company, making them safe for individuals to invest in without putting any money at risk.
Ether is an example of this type of cryptocurrency. You can buy Ether using Bitcoin and trade it with currencies like Bitcoin and Litecoin. Governments or banks don’t regulate these currencies, so they are used with no risk. To buy ether, you must have an Ether wallet set up.
The bottom line: Cryptocurrencies are a hazardous vehicle for investing money. They are not regulated by governments like other currencies and can be used for legal and illegal activities.
If you want to invest in cryptocurrencies, proceed with caution and keep your eye out for red flags like hacking scandals or others engaging in questionable activity surrounding the currency or the company offering it.
The risks of investing in Ether
Despite the cryptocurrency’s success and the trust many people have placed in it, there are still significant risks of investing in Ether. They include:
It’s a highly speculative investment. Like all cryptocurrencies, Ether is very volatile and is affected by any major news about cryptocurrencies. A big exchange like Coinbase going offline for maintenance, for example, can cause it to drop significantly. It’s also affected by changes in regulations and laws that affect cryptocurrencies, such as when it lost about half its value after China banned cryptocurrency exchanges.
Like all cryptocurrencies, Ether is very volatile and is affected by any major news about cryptocurrencies. A big exchange like Coinbase going offline for maintenance, for example, can cause it to drop significantly. It’s also affected by changes in regulations and laws that affect cryptocurrencies, such as when it lost about half its value after China banned cryptocurrency exchanges. It’s a currency of choice for hackers.
The open nature of Ethereum is attractive to those looking to engage in illegal activity because they can move funds around using the currency anonymously. This has led to the currency being targeted by hackers and thieves. In May 2017, for example, millions of dollars worth of Ether were stolen after the DAO (Decentralized Autonomous Organization), a virtual organization built on Ethereum, was hacked. The hackers are still at large, and authorities are investigating the incident.
The open nature of Ethereum is attractive to those looking to engage in illegal activity because they can move funds around using the currency anonymously. This has led to the currency being targeted by hackers and thieves. In May 2017, for example, millions of dollars worth of Ether were stolen after the DAO (Decentralized Autonomous Organization), a virtual organization built on Ethereum, was hacked.
The hackers are still at large, and authorities are investigating the incident. Its value is tied to the success of Ethereum. Since Ether’s success is tied to the success of Ethereum, it’s tied to its development team’s ability to make changes and develop new applications. They cannot meet their goals if the team doesn’t have the same expertise or resources.
Even if hackers don’t target Ethereum, its market value is still very volatile because it’s used as a method to invest in other projects. It’s common for investors to want a piece of the action when demand is high, but that means their investments are vulnerable if those projects fail.
The bottom Line:
Ether is a cryptocurrency created by the Ethereum Foundation to allow anonymous transactions, which is attractive to those involved in illegal activities. Because it’s so dependent on other cryptocurrencies and the developer team, it’s also subject to several risks.
