What is the use of Ethereum coin

CryptocurrenciesEthereum is chasing after Bitcoin

In the past few months and years, an imminent end has been prophesied several times for cryptocurrencies. But the swan song has always proven to be wrong. On the contrary: true to the motto “dead people live longer”, Bitcoin recently achieved a rapid rally, improved its record several times and gained more than 300 percent over the year. A growing number of institutional investors are building their first positions, as a look at the development of accounts with at least 1000 Bitcoins shows. In particular, the announcement by PayPal that it will also support crypto currencies in the future has recently provided fresh momentum.

Bitcoin course (Bitcoin / Dollar) cryptocurrency

Course provider: Bitstamp

So far, the party with digital coins has been limited to Bitcoin, whose market share of the entire crypto universe has recently increased to 70 percent. Here parallels to the stock market can be seen: While the tech heavyweights in particular benefited on Wall Street last year, a lot of risk capital is currently flowing into by far the largest coin with cryptos. It is also true, however, that the stocks in the second row usually offer better returns when the environment is right. The MDax has been developing better than the Dax for years, and the US second-tier stocks have recently gained more strongly than the blue chips. So is it worth getting into altcoins?

The prospects for returns are of course tempting. But more performance also means more risk. Daily fluctuations in Bitcoin in the double-digit range are not uncommon, and after the rally, setbacks of 20 or 30 percent would not be a surprise. This applies even more to the smaller altcoins. A sad example was recently provided by XRP. The long second and third largest coin sagged by more than 60 percent in the past 30 days after allegations by the US Securities and Exchange Commission against Ripple emerged.

Ethereum performs better than Bitcoin

The situation with Ethereum looks a little different. With the jump of almost 50 percent on a weekly basis, the market capitalization climbed back over the threshold of 100 billion dollars. The price is gradually approaching the all-time high of $ 1,400 that was reached around three years ago.

ETH / USD (Ether, Ethereum / Dollar) cryptocurrency

Course provider: Bitstamp

Important to know: Unlike Bitcoin, for example, Ethereum is not a pure cryptocurrency, but a digital platform. A comparison with an industrial metal of the crypto markets would be more appropriate. Because developers can create their own programs on the Ethereum blockchain, so-called “Distributes Apps” or dapps. Especially the decentralized financial applications (DeFi), which have been booming for months, are generating a lot of imagination. Unlike in the past, middlemen are no longer required for financial applications such as insurance, betting or credit. Transactions are executed automatically as soon as the specified conditions are met. An example would be if a friend receives 100 euros if the Dax is quoted over 14,500 points on the last trading day in January and at the same time the temperatures in Munich are below 0 degrees according to wetter.com. Such, also much more complex applications can be recorded in smart contracts.

In the meantime, Ethereum has risen to become the largest blockchain network and, with the transition to Ethereum 2.0 in December, laid the foundation for further growth. The advantage: While the network's transaction capacity was previously limited to around 15 transactions per second, several thousand per second will soon be possible. Ethereum has therefore also developed significantly better than Bitcoin in the past few weeks and months. The recent decision by the CME to introduce an Ethereum future on February 8th was also positively received.

No introductory courses at the moment

If you want to gamble here, you should always ask yourself what is already included in the prices. Both the potential of the Ethereum platform and the transition to Ethereum 2.0 have long been known. The introduction of the futures also harbors risks: when the first Bitcoin future was launched in mid-December 2017, the Bitcoin also almost reached its top level and a long downward phase began. This does not necessarily have to be the case with Ethereum. However, the price has risen sharply recently, and the flagpole is reminiscent of the situation three years ago. If anything, setbacks to $ 800 or $ 700 are an option to get started.

The final question that remains is where you can trade Ethereum at all. In Germany, the issuer Vontobel repeatedly offers products in the certificate sector. Among the brokers, Etoro was the first in the crypto sector and has since expanded its range significantly. Continuous tradability and the avoidance of trading failures are always important, which can be decided positively for both companies. Anyone who uses leverage in Ethereum, but also Bitcoin, should always consider that the leverage works in both directions and consider beforehand what losses you might want to bear. Because volatility is likely to remain high.


Daniel Saurenzruns the stock exchange portal Feingold Research with his team. It offers a daily stock market letter that you can test free of charge for 14 days. Sign in at [email protected] or try the stock exchange service under this one link out. You can find training days and coaching at NEW under feingold-academy.com