In recent years there has been a lot of talk about cryptocurrencies. Ethereum is one of them and is one of the most famous, given its high capitalization.

She was born in 2013 from Vitalik Buterin, a Russian programmer and has immediately had a huge success. Many argue that Ethereum is a great revolution. It was developed to guarantee a new platform and a more common script language. The software allows customers to run any program, making Ethereum's block chain and applications more efficient than ever before. Many economists have predicted that its value may exceed that of Bitcoin. Now we will analyze this digital currency better.

Ethereum: how it works

Ethereum is not only a cryptocurrency, but also a decentralized platform in which smart contracts, generated through programming language, can be used. These contracts are concluded automatically and are finding different applications.

The decentralized platform in question is not controlled by any central institution or bank. The basic technology is the block chain, the protocol used to build a distributed database that does not reside on a single server. Through it, transactions with smart contracts are performed exactly as they were planned, thus avoiding fraud or interference from third parties.

Ethereum also allows you to make payments, without any central authority exercising control over them. Despite this, automated mechanisms ensure great security because once the programmed processes have started, no one can stop or modify them.

Ethereum vs Bitcoin

Decentralized currencies allow people to send money instantly to anyone in the world with the payment of a tiny commission.

Unlike Bitcoin, Ethereum is not designed to function like a global digital currency. Ethereum is a platform created specifically to help people develop decentralized applications, which can be used in a multitude of sectors, such as insurance and real estate.

Both Bitcoin and Ethereum use the same technology, i.e. the block chain. However, Ethereum's was designed to be fully programmable and is economically more efficient than Bitcoin's. These are basic requirements for the long-term convenience of a heavily trafficked block chain. It is also more scalable, since it is not focused on carrying out financial transactions. The purpose of the Ethereum block chain is therefore different from that of Bitcoin.

Technically in Ethereum there are no limits to the size of a block and the system adjusts dynamically as a whole. In addition, Ethereum continues to work to improve the aspects relevant to scalability and this will have the direct benefit of lowering the overall transaction costs.

Bitcoin allows users to make use of a peer-to-peer system to transfer funds. Ethereum instead allows users to execute the source code for each decentralized application together with other features for trading using its currency, the Ether.

Ethereum has many more advantages than Bitcoin, such as its smart contracts and the so-called Ethereum Virtual Machine.

The Ethereum Virtual Machine (EVM) is of fundamental importance, since it provides the ideal environment for executing the code of decentralized applications.

How to buy Ethereum

With Ether you can mine, just like with all other cryptocurrencies. Just use an Exchange to buy the cryptocurrency. At this point it will be possible to create your own wallet and start using them to make purchases or investments.

The best way to earn through Ethereum is certainly online trading. However, it must be said that digital coins are very volatile instruments.

For this reason, care should be taken when taking and leaving the position. In addition, it is always recommended to trade with reliable brokers, which respond to a number of characteristics.

The first is to boast a CONSOB license, the highest Italian authority in charge of supervising financial markets. It issues licenses to operate in our country to those brokers that reflect certain characteristics of transparency in favor of customers.

In addition, a broker must offer a demo account to allow the novice trader to practice without risking real money. It must also not include commissions and must have convenient spreads.

It must offer ongoing training and customer service. The graphs must be clear and the information on the main news of the stock exchange day must be updated.

Having said that, it is not convenient to buy the cryptocurrency, since the gains would only come if its value increased and in addition they would become real only if they decided to sell. It is more convenient to take advantage of CFDs, or contracts for difference.

A CFD is a financial instrument that tracks the market trend by replicating its price in real time.

Through CFDs you can bet up or down, thus having a profit both when the value rises and when it drops. In addition, they are regulated and easy to use.

Ethereum: Risks

By investing in digital currencies you can run into some risks. It is important to know them in order to manage them better and to be able to choose the investment strategy that best suits your needs.

A great danger is given by the Exchange. Many of them conceal real scams and scams. In the past, many customers have lost all their money due to the sudden closure of some of them. Exchanges are also subject to attack by hackers. The advice is therefore to keep your cryptocurrencies in a special physical wallet, not connected to the Internet.

One of the big risks is the possibility of incurring scam sites. They use the name of Ethereum for their purposes, thus taking advantage of its success.

One of them is The Ethereum Code. This is obviously a scam, which uses the name of Ether to convince people to invest. The problem is that this system promises high and safe profits without doing anything and this is impossible.

Needless to say, those who tried to use it, not only did they gain nothing, but they also lost everything they deposited. We must also be on our guard from the forums, which often spread false or misleading information. Most scams use forums to advertise themselves.

Another risk is the volatility of cryptocurrencies and therefore their value can fluctuate strongly. For this reason, it is not recommended to use them as a payment currency. However, it must be remembered that volatility is the engine of the financial markets and without it there would be no gain. To protect yourself from this danger, you can resort to graphic patterns and technical analysis. All this always by adopting a conscious and wise management of one's capital.

Conclusions

Ethereum is therefore a real revolution. Its peculiarity is that of being able to enter into binding contracts in a secure way and this is because they are performed on the block chain, without the possibility of outside interference. It is therefore possible to carry out transactions in total anonymity, thus protecting your privacy.

Needless to say, it is transparent. The block chain ensures that every movement of money is public and certified.

However, it is very important to remember that only authorized and regulated cryptocurrency platforms allow you to have a guarantee against scams.

Having said that, it is essential to be well informed before implementing any type of investment strategy.