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Ethereum is proving to be one of the most forward-thinking technology developments of all time. It was created in 2015 and is currently the second-largest cryptocurrency platform in terms of market capitalisation, just behind Bitcoin. Ethereum is currently used by over 91 million users and is a blockchain which features smart contract functionality. The cryptocurrency generated by Ethereum is called Ether. It is generated by miners conducting computations and solving riddles in order to secure the blockchain. When you buy Ethereum through a wallet or platform, you are actually investing in the network itself, and placing money into the open-source platform with the belief that this blockchain has some of the greatest applications still to be launched.
Some say that the digital coin ether could be speeding up the decentralisation of the world economy, and has the potential to influence many other industries. Ethereum is backed by a variety of Fortune 500 companies, who met in 2016 to discuss and join forces on developing Ethereum’s network technology. The price of Ether can be volatile, which can bring heightened opportunity, as well as heightened risk. It is this price that you can trade here at AvaTrade against the USD.
Ethereum Classic is the original version of the Ethereum blockchain from which the newer version was adapted. The newer version adopted the name Ethereum. The blockchains are not compatible, and updates on one do not affect the other. These changes also paved the way for the creation of the new crypto coin with a different name, leger, price and market cap.
What is Ethereum (ETH)
Ethereum was created and introduced to the world in 2013 by Vitalik Buterin, and went live in July 2015. Developers were looking for a way to differentiate from the Bitcoin currency, and make a product and accompanying digital currency that would stand-alone and work on fixing the imperfections in Bitcoin. They developed a new approach, with a new platform and a more common script language. Their software allows customers to run any programme, which makes the Ethereum blockchain process and applications much more efficient than ever before. With Ethereum, developers can build a new type of software called a “decentralised application”. This coding technology is not controlled by any individual or central system.
What are the advantages of Trading Ethereum with AvaTrade?
When you trade ETH with AvaTrade you can find advantages that you wouldn’t necessarily find when working with an exchange. These include:
- Short selling – With most investment types like stocks you would BUY low and Sell high for a profit. With short selling you are shorting the asset, which means SELL high and BUY low. This allows a trader to trade in bearish markets (falling) too. In other words, short selling is driven by the belief that a price index will decline, allowing it to be bought back at the lower price to profit.
- Lower capital requirement – Rather than buying the ETH itself, you are speculating on its price movement. This means that you do not need such a large sum to gain exposure to the asset. In fact, with AvaTrade you can trade ETH and other cryptocurrencies with just $100 to start.
- Leveraged trading – This is a major advantage commonly used by professional traders. It allows you to open a much larger position than your capital would dictate. Leverage can magnify your potential profits, and at the same time, can magnify your losses.
- Auto trading – This refers to using software called Expert Advisors that creates automatic orders and submits them to a market exchange. These systems can perform repetitive tasks at high speed. It can also come in forms of social trading via AvaSocial and copying the positions of experienced traders with a proven success record, like Zulutrade does.
- Regulation – Most exchanges are not regulated, which means no protection for you as a user. AvaTrade gives you the knowledge that you are working with a transparent, secure brokerage firm when you trade Cryptos and other CFDs.
Trading Ethereum with AvaTrade doesn’t require a wallet, since the trades are performed though our SSL secured online trading platform, this is a big advantage in avoiding potential hackers and theft. From the same platform you can trade Forex pairs and other assets as well.
Why Trade Crypto CFDs With AvaTrade?
- Uncompromised Safety – With seven regulatory authorities and segregated accounts, your money is protected at all times.
- Many Cryptos to Choose From – Trade on the wide variety of cryptos available on our trading platforms.
- No Hidden Fees – We offer zero commissions and no bank fees on transactions!
- Crypto Never Goes to Sleep – AvaTrade is one of the few brokers offering around-the-clock service and support in 15 languages.
- Generous Leverage – Increase your initial capital with generous leverage and get far more exposure to trade using your account balance. Up to 2:1 (for EU residents) 25:1 (for non-EU residents).
- Limit Your Risk – You can preset profit and loss levels by using stop losses or take profit limits when you trade. Determine the maximum amount you are prepared to risk when speculating on the price, or set a price at which you want to take profits. Future orders like Buy Stops and Buy Limits are also available.
- Trade Cryptos Against Fiat Currencies – Unlike many exchanges out there, who are restricting their clients to trade only Crypto to Crypto, our clients can trade Cryptos against Fiat currencies (USD, EUR, JPY etc.), as well.
What are the Advantages of Ethereum Technology?
- The app can never be turned off
- Applications are protected against fraud and hackers due to the secured cryptography
- It cannot be censored, since the apps are based on the principle of a group decision- making process
- A third party cannot make changes to any of the data
- Ethereum has more applications than Bitcoin does
Mist browser is the interface and digital wallet for Ethereum users. With it people can store, trade, and manage their contracts. Mist and MetaMask (another browser) help make blockchain-based applications easily accessible. Ethereum is moving forward with its user-friendly platform, which enables people to make use of the blockchain technology.
Ethereum Price and Market Factors
Ethereum and ETH is considered much more than just a digital asset. Its value lies in the powerful blockchain programming language called Solidity. Its goal is to become something totally different from all other coins. With its increased application, there is a rise in demand by developers for “Ether”. The price of Ethereum has soared and has been reaching all-time highs. Bitcoin has also been surging, and when that happens it does boost investors desire for other cryptocurrencies where gains can be acquired. Since Ethereum and Bitcoin are not competing, both can benefit when one rises. Random events can happen to affect Ether’s price rise or fall, such as the flash crash of Ethereum’s value overall, which took place in June 2017. The Ethereum news and crash happened within a very short span of time, literally seconds after a major sell off prompted other traders to liquidate their digital currency. However, in that situation within seconds computer algorithms were buying again and the price was recovering.
As you can see the volatility of the digital currencies alters prices within second. The general public and investors all had the same questions when this happened as to how the rebound could have taken place so quickly. Any strong value increase can eventually lead to a price correction. As with the cryptocurrency trading market or any market in general, the momentum can slow down at any point. A more recently introduced altcoin named EOS was named as the biggest potential competitor for Ethereum. Thirty big banks, tech giants, and other organizations including J.P. Morgan Chase, Microsoft, and Intel are uniting to build business-ready versions of the software behind Ethereum. Its ability to record and execute transactions without the need of a middleman is making this blockchain technology more popular amongst businesses.
Ethereum Trading Conditions at AvaTrade
- Competitive Spreads
- Minimum Trade Size 1
- Up to 2:1 (for EU residents) 25:1 (for non-EU residents).
- Trading Hours 24/7
- MT4 Symbol ETHUSD
When trading with AvaTrade you are trading on the price changes of the digital coin, and not physically purchasing it.
The maximum accumulated position size for Ethereum is $400,000 notional value, details in our Conditions and Charges page.
Ethereum Trading FAQ
- What are some of the challenges faced by the Ethereum network?
Ethereum is second only to Bitcoin as the most capitalised, and in-demand digital currency. However, challenges remain. Between 2% – 5% of Ethereum transactions on decentralised exchanges fail, due to insufficient gas prices, or slippage. Other issues include the network’s inability to scale effectively to meet demand. The scalability challenge is largely due to the innate properties of ETH mining. With 7-15 TPS (transactions per second) compared to Visa at 45,000 TPS, it’s clear that much work needs to be done. Possible solutions include state channel, sharpening, and plasma, but in-depth study of these solutions is needed.
- How will EIP-1559 impact demand for Ethereum?
Ethereum’s upgrade to Ethereum 2.0, a.k.a. EIP-1559 represents an overhaul of the transaction-fee system for the digital currency. The fee is no longer paid to Ethereum miners, but to the network itself. The new system may result in a decreased supply of Ethereum. Vitalik Buterin co-founder of Ethereum joked that if there is decreasing supply, does that make Ethereum ultrasound money? The new network upgrade recently approved by developers could decrease Ethereum supply and prop up its price. With demand at high levels, and supply at lower levels, prices may rise. EIP-1559 (Ethereum Improvement Proposal 1559) was packaged with the London hard fork.
- Should I use leverage with Ethereum trading?
At current price levels, Ethereum is largely out of reach for many retail traders. As a South African trader of Ethereum CFDs, costs can quickly spiral. Fortunately, leveraged trades of up to 20:1 are possible for certain classifications of traders. Provided you conduct the requisite research, stick to a trading strategy, and carefully manage your investment funds, you can benefit from leverage. The volatility of crypto markets should always be borne in mind when trading derivatives. Since the CFD price is derived from the price of Ethereum, leverage can amplify your gains, but it can also multiply your losses.