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Ethereum

The second-largest cryptocurrency by market capitalization

What is Ethereum?

With the rise of Bitcoin (BTC), the cryptocurrency market has been validated. Because of this, new cryptocurrencies or coins have tried to penetrate the market and grab a slice of the pie. Ethereum is Bitcoin’s strongest competitor. It currently holds the second largest market capitalization, recently tying with Bitcoin for first, before dropping back down to second place.

 

ethereum

 

Differences between Ethereum and Bitcoin

 

Both use Blockchain

As cryptocurrencies, Ethereum and Bitcoin both share a lot of commonalities. Most importantly, both ETH and BTC run on the blockchain network. This is part of the value in these cryptocurrencies, as well as what provides the security needed to manage the digitized currency.

 

Number of Confirmations

When cryptocurrencies are transferred, the blockchain network must confirm the transaction. The number of required miner confirmations for each cryptocurrency is different. Bitcoin will generally require a lesser amount of confirmations than ETH, because of several factors, as listed below:

 

Time per Confirmation

ETH’s infrastructure allows confirmations to happen quicker and more often than Bitcoin. Because of this reason, 3-10 ETH confirmations can occur for every BTC confirmation.

 

ETH’s Open Source Coding

Because ETH’s blockchain network is open sourced, companies can build API’s and other applications directly on top of an ETH network. This means that online shops or other types of utility can be connected directly to Ethereum, and ETH can be used directly.

 

Where to Buy Ethereum?

Because ETH is relatively newer than Bitcoin, there are fewer avenues to purchase it. That being said, Ethereum is still openly traded and not hard to get your hands on. You have the following options:

  • Dealers
  • Exchanges

Dealers offer to sell or purchase ETH just like any other currency exchange dealer. They make a profit from the difference between their buy and sell price, which are often slightly different from the market. In trading with a dealer, you are foregoing a small premium in your sale or purchase, but have the liquidity to purchase immediately. Examples of dealers are CEX.io and Coinbase.

Exchanges are automated marketplaces that automatically connect buyers with sellers. This works when a buyer’s buy price matches a seller’s sell price. If no prices match, no trades occur. Thus, there is lower liquidity in exchanges as compared to dealers. CEX.io has both a dealer feature and an exchange feature. Other exchanges included Kraken and Quadriga.

Bitcoin traders have the option of purchasing BTC locally through local forums, but Ethereum local trading websites are not yet as popular.

 

Ethereum’s Value

As Ethereum becomes more commonplace in the cryptocurrency market, and later on, in the currency market, its value increases. The blockchain security and the demand for ETH both increase its value. As of writing this article, ETH is currently trading at $305 USD per ETH on CEX.io. ETH’s all-time high was approximately $450 USD.

 

Alternatives to Ethereum

The natural alternative to Ethereum is Bitcoin. However, there are several other younger cryptocurrencies that are also growing in popularity. These include Litecoin, Dash, and Ripple. All of these coins are known as alternative coins or Altcoins.

 

Read more:

We hope you have enjoyed reading CFI’s guide to Ethereum. To learn more about financial markets, the following resources will be helpful:

  • Debt Capital Markets
  • Debt Schedule
  • Treasury Stock Method
  • Technical Analysis – A Starter’s Guide

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