After Bitcoin, a number of different cryptocurrencies and altcoins have emerged in the market. Some have acquired notable popularity while others have either disappeared or haven’t gained any recognition. But, amidst all of them, one cryptocurrency which has gained supreme regards, following bitcoin, is Ethereum.
A decentralized cryptocurrency based on blockchain technology, Ethereum, holds the second largest market capitalization in the crypto market. Established in 2013, by a Candian-Russian programmer named Vitalik Buterin, it has achieved a high adoption rate as well as recognition in the blockchain sphere. The rise of Ethereum is because of the distinctive offerings that the platform provides.
Unlike bitcoin, the use case of Ethereum is not limited to money transactions. The ethereum platform offers a unique way of building decentralized applications and smart code contracts on top of it.
Decentralized applications or Dapps are basically open-source platforms, which are distributed across a network of computers instead of centralized servers. Furthermore, these apps do not have a central body that essentially controls or monitors the operations. Such features make decentralized applications more transparent, secure, and resilient as compared to our internet-based centralized applications.
Dapps are hosted on the ethereum network in exchange for a service fee. This service fee is paid in the form of Ether(eth)- the native token of ethereum.
Another unique innovation that the ethereum platform provides is creating smart contracts. Ethereum enables developers to build smart contracts through its programming language solidity. Written in the form of codes, smart contracts are basically terms that are executed automatically when specific predefined conditions are met.
Imagine an HR department, which pays salaries and bonuses to its employees via such smart contracts. The pre-defined conditions such as attendance, grades, and completion of tasks are fed to the contract. In turn, the contract automatically calculates and releases the amount to their respective bank accounts or cryptocurrency wallets.
Our point is that the ethereum platform is far more advanced along with providing multiple use cases, which makes Ether currency more valuable. In some instances, even more valuable than Bitcoin.
How to Trade Ethereum in UK
Before we discuss how to trade ethereum in UK, let’s first take a look at what are the different ways through which you can own or trade Ethereum.
Owning or Trading Ethereum Options
There are 4 major ways, in order for you to be involved in owning of trading Ethereum.
- Ethereum Mining - A relatively simple and easier way, compared to others, with which you can own Ethereum is Mining. It is a method through which new coins are generated as well as keeps the network honest and running.
- ICO/ IEO - ICO’s, and now IEO’s, are another way to trade ethereum cryptocurrency. Startups and exchanges issue their own tokens through an ICO or IEO, in exchange for popular cryptocurrency Bitcoin or Ether. In turn, if the value of these native digital tokens increases, you can gain profits by selling them.
- Staking - Currently, the ethereum platform runs on the ‘Proof of Work’ (POW) model. However, in the near future, the working mechanism of ethereum will shift to ‘Proof of Stake’ (POS). Staking is one of the methods through which you can own ether in the POS-based method. Through staking, you can take part in Ethereum network as a validator node (validating honest transactions) and in turn, receiving rewards in the form of Ether
Trading Ethereum - This is one of the fastest, and also emerging, option to get returns with ethereum cryptocurrency. There are different parameters of trading ethereum and distinctive platforms like Monfex have emerged, especially in UK, that give attractive returns on cryptocurrencies like Ethereum.
Now, let’s further understand Ethereum trading in detail.
Before you start to jump on to ethereum trading, by listening to your friend who made thousands of Euros through it, you need to thoroughly understand the options that you have and also the risks associated with it.
There are 2 ways by which you can either buy or trade ether:
Buying Ether - The first option is to buy ethereum from a cryptocurrency exchange, and holding it in your wallet. You can sell your coins when the price increases to receive returns. But, as you are buying from an exchange account, you will need to pay the whole price upfront.
Leverage Trading - Another method of buying ether is through leveraged trading. The advantage of opening a leveraged account, such as one on Monfex, is that you don’t need to pay the whole price upfront. You can choose to pay only a fraction of the price of ether but can enjoy the benefits of the leveraged trading amount.
Such kind of leverage trading is provided by a Cryptocurrency for Difference (CFD) broker. If you want to buy or trade ethereum, specifically in UK, you will have to use a crypto exchange or CFD broker like Monex. Much like the conventional stock exchange, a CFD offers to trade in cryptocurrency. A CFD in cryptocurrency is attractive because you can enjoy the price changes of the underlying crypto without owning the actual amount.
Further, we are going to discuss the steps involved in leveraged trading for ethereum cryptocurrency.
How to Trade Ether on Ethereum Trading Platform
- Open an Account on the Trading Platform
If you want to buy ethereum for leveraged trading, you first need to create an account on an exchange that offers leveraged trading services. Monfex, backed by a team of finance and tech experts, offers a platform for you to get involved in leveraged trading for Ethereum.On this platform, traders are in fact offered leverage as high as 50 times, when others CFD offer a maximum leverage of 20 or 30 times.
You can set up your account in minutes and you are good to go! In comparison, opening and setting up an account with a cryptocurrency exchange takes more time and is a lengthy process.
- Form a Trading Plan
The cryptocurrency market is extremely volatile and you can lose money fast if you don’t play tactfully. The first rule is only put in what you can afford to lose. Before placing any trade, you need to create a trading plan and keep track of it.
We have listed out a couple of points that you need to keep in mind while devising a trading plan
- Set your weekly and monthly trading goals
- Keep a track of all your trading activity and keep on updating it.
- If you want to trade ether, do thorough research on the particular crypto before investing.
- Determine your ROI as well as risks associated with the trade.
- Research Strategies and Invest Intelligently
Do not start trading ether just because your friend suggested or benefitted from it. Conduct your own research by studying different strategies and price movements. For example, MACD is a momentum indicator that can help spot a trend in ether prices. Also, staying up to date on the latest news and analysis, following the forecast and research experts in the field of cryptocurrency, and understanding trends are some of the necessary steps to undertake before you get ready to make your first trade.
- Placing a Trade
You can now choose to place your trade on ether. If you are doing it on an ethereum trading platform like Monfex, you can even place leverage trades of 30 to 40 times the ether that you invested.
You can select the size of your trade, set any limits that you want to and hit enter. Now keep an eye out for your trade placed.
Cryptocurrencies like Bitcoin and Ethereum have gained unmassed popularity and rise in prices in a very short span of time. However, you must also remember that trading or buying cryptocurrencies is a risk as they are extremely volatile. Only after doing your thorough research and understanding the risks and rewards pertaining to it, you should consider getting involved in such activities.
With the rise in cryptocurrency adoption, other methods of buying and trading cryptocurrencies are quickly evolving. Just like our present stock market, the cryptocurrency industry has also started giving multiple options like leveraged trading for anyone who wants to invest or trade in cryptocurrencies.
A current issue faced by the crypto sphere is that there are different rules pertaining to exchanges in different jurisdictions. Hence, while platforms of leveraged trading like Monfex work well in UK, in other countries they cannot open shops due to a ban or cryptocurrencies or any activity concerning it.
Overall, as the crypto and blockchain adoption rate increases, eventually, it is going to impact each and every parameter, including but not limited to, prices, regulations, use cases and applications. With this, eventually, the volatility of prices in crypto is also bound to decrease.