Investing in Ether: A Guide to Purchasing Ethereum
In the ever-evolving world of digital currencies, Ethereum stands out as a significant player, offering faster transactions, greater scalability potential, and significantly reduced energy consumption compared to Bitcoin.
Launched by Russian-Canadian software developer Vitalik Buterin in 2015, Ethereum is a digital platform and network that utilises blockchain technology, providing a platform for users to conclude digital contracts, known as smart contracts. It is also the currency of the Ethereum network, with each unit called Ether (ETH).
Ethereum currently handles around 30 transactions per second (TPS) with block times of 10 to 15 seconds. Post-upgrade to Ethereum 2.0, which includes the Beacon chain and introduces shard chains—smaller groups of nodes processing transactions in parallel—Ethereum aims to scale up to around 15,000 TPS, matching or exceeding many centralized payment systems.
While Bitcoin prioritises security and immutability, it struggles with lower throughput, averaging just 7 TPS. Ethereum, on the other hand, boasts faster transactions, finalising in about 5 minutes compared to Bitcoin's 40 minutes. Scalability improvements are underway, with solutions like MegaETH demonstrating the potential to process 130 million transactions daily.
In terms of energy consumption, Ethereum has made a significant leap by moving away from the energy-intensive Proof-of-Work (PoW) consensus mechanism to a much more energy-efficient Proof-of-Stake (PoS) model, drastically reducing energy consumption. Bitcoin, however, remains energy-intensive due to its PoW mining.
The Ethereum Merge, which occurred in September 2022, significantly reduced energy consumption by up to 99.95%.
For those interested in investing in Ethereum, it's essential to note that purchasing Ether involves fees to the trading platform, which can range from 0.1% to 2.50% depending on the provider. Ethereum-ETPs or ETNs are not available in Germany due to European regulations prohibiting ETFs with a single component.
Ethereum can be purchased on specialized crypto exchanges like Binance, Coinbase, eToro, Stuttgart Digital Exchange (BSDEX), and Bitvavo powered by Hyphe. Alternatively, trading platforms such as Trade Republic, JustTrade, finanzen.net ZERO, and eToro also offer Ethereum for purchase.
When you invest in Ethereum and purchase Ether, these are stored in a digital wallet. It is not directly possible to buy Ethereum via PayPal in Germany, but it is feasible in the USA and the UK.
Scalable Capital advises caution when dealing with Ethereum and other cryptocurrencies. When buying Ether, you have three options: buying real Ether, Ethereum derivatives, or Ethereum ETPs.
Ethereum's potential expansion includes its use in smart contracts and Non-Fungible Tokens (NFTs), which could be expanded in the future. Whether you're a tech enthusiast or a seasoned investor, Ethereum's scalability, energy efficiency, and programmability make it an exciting addition to the digital currency landscape.
[1] https://www.investopedia.com/terms/b/bitcoin.asp [2] https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/ [3] https://www.investopedia.com/terms/e/energy-consumption.asp [4] https://www.investopedia.com/terms/p/proof-of-stake.asp [5] https://www.coindesk.com/business/2021/09/08/ethereum-2-0s-mega-eth-demonstrates-the-potential-of-massive-scalability/
- With Ethereum's transition to the Proof-of-Stake (PoS) consensus mechanism, it has significantly reduced energy consumption compared to Bitcoin, which remains energy-intensive due to its Proof-of-Work (PoW) mining.
- For those interested in investing in Ethereum, whether as a tech enthusiast or a seasoned investor, Ethereum's potential expansion, such as its application in smart contracts and Non-Fungible Tokens (NFTs), makes it an exciting addition to the digital currency landscape, but it's essential to consider purchasing fees and available options like purchasing real Ether, Ethereum derivatives, or Ethereum ETPs.
