Launched in 2015, Ethereum has quickly become the world’s second largest cryptocurrency. It runs on a technology called the ETH blockchain, from where the currency takes its name. Many people would suggest that it was inspired by Bitcoin, and they would be partially correct. The currency creator Vitalik Buterin used to work as a programmer for Bitcoin. However, the framework and the potential applications of ECH go well beyond just supporting the digital currency. The ledger technology and blockchain are considered to be highly innovative and much more intuitive than the basic Bitcoin blockchain.
The unique Ethereum framework has received considerable publicity, and attention from prominent figures, including Vladimir Putin, Bill Gates (Microsoft) and Samsung. It is the robust blockchain that primarily controls the currency, that has attracted the most interest; as it allows companies to build new decentralised applications on top of it.
At TheDailyFX we have chosen to use the term Ethereum when we are talking about the cryptocurrency. Officially, this is the name of the blockchain, and the actual currency is called Ether. However, the broader description is more commonly used, as the technology is applied to so much more than just control of the Ethereum price. When we talk solely about the blockchain itself, then we will be specific and clarify it.
Ethereum has already had a significant influence on how the payment industry is developing online and has made a deep impression that will help shape our future. Throughout this article, we are going to review everything that concerns the second largest cryptocurrency in the world. Among other things, we will talk about its history and development, the fascinating blockchain, the Ethereum chart, and how it serves as a basis for an investment opportunity in the UK market.
Ethereum – History And Development
The idea behind Ethereum was established in 2013 by Vitalik Buterin, a programmer who previously worked with Bitcoin. Following a crowdfunding campaign in the summer of 2014, the concept and development of the new currency began. One year later at the end of July 2015, the launch of the first batch of 11.9 million coins was born. Today you can buy Ethereum just as you would Bitcoin.
The reason Vitalik decided to create Ethereum was that he proposed building a script for Bitcoin to simplify the development of the currency. His proposal was denied, so he chose to develop his own currency with the unambiguous scripting language. The result was, of course, the innovation that has seen Ethereum value rise to its current day position.
Since its launch in 2015, Ethereum has been upgraded four times, with the last two updates being considered “stable” and more or less free from bugs. At the time of writing, the current version of Metropolis (Byzantium) was introduced on October 16, 2017. Two more hard forks are scheduled, but it is unlikely to affect the upward trends, the value, or the opportunities to trade Ethereum.
Like the rest of the digital currency market, Ethereum has gained a massive boost in popularity over the past year. People that mine Ethereum have seen a rise in the currency value from £8 to over £400 in less than six months. As a company that has very few assets, they have achieved far more than anyone could have imagined.
Ethereum’s Chain Of Blockchains
Unlike the Bitcoin blockchain, which is a definite block and node system, Ethereum can be compared to a global supercomputer. It can be used to send information and ownership of data between many different users. The blockchain is an open, decentralised platform which has been developed specifically to eliminate downtime, censorship, fraud and any third party involvement.
Because the system is so remarkably secure, adaptable and flexible, many technology giants like Samsung and Microsoft have shown an interest. Russia’s president is even considering launching a Russian digital currency based on Ethereum’s blockchain. In Japan, a similar system is being planned in conjunction with the Tokyo 2020 Olympics. Get ready to see Ethereum as a nation-based digital currency in the real world very soon.
Even the big US bank, JP Morgan Chase, whose CEO articulated negative feelings about Bitcoin, is developing a payment system based on the benefits offered by the Ethereum blockchain.
Vitalik succeeded in improving the idea behind cryptocurrencies to include much more than just a means of payment. Ethereum can be adapted and applied to many other technical systems and digital infrastructures. In fact, the potential uses are far too many to mention in just one article.
All transactions with Ethereum are implemented through peer to peer users employing so-called “smart contracts”. These smart contract systems can be challenging to maintain, and according to many experts, these contracts are Ethereum’s only real weak point.
Ethereum Variable Exchange Rate
Ethereum’s exchange rate is entirely based on demand, so it is extremely volatile. Since it is not backed by a central bank or authority, the primary risk is that it loses its entire value in a very short period. At the same time, the Ethereum price can also rise exceptionally quickly, as it did in spring 2017.
At BullMarketz.com you can find all the latest price developments related to Ethereum and other cryptocurrencies. We offer the price of digital currencies in real time; which is an extremely useful tool for anyone interested in investing. The same option can be used to study how the price has changed over time, which can give you an idea of what to expect in the future. Just do not forget that the exchange rates are variable, and the investment risks are higher than with normal currencies.
Ethereum As An Investment
Like Bitcoin and other cryptocurrencies that have risen in value sharply lately, Ethereum offers excellent investment opportunities. However, the growth in price development has stagnated a little after the first half of 2017, and the short-term opportunities are not quite as dramatic as they used to be.
Having said that there are excellent opportunities for long-term investment and long-term returns. This can be achieved with several different forms of investment, including refined currency trading, binary options and personal trading with Ethereum.
Buy Ethereum Via An e-Wallet
The usual way to purchase and store virtual currency is through the use of an e-wallet, which is an online payment service with many similarities to a bank. The most famous e-wallet is PayPal, which unfortunately can not be used for cryptocurrency like Ethereum. However, there are many other options available for UK investors.
If you want to buy and sell Ethereum via e-Wallets, you can use the following options:
- Coinbase: Web Wallet
- Jaxx: Web Wallet
- KeepKey: Hardwall
- Ledger Nano S: Desktop Wallet
Because many of these companies charge fees for trading in cryptocurrencies, this option is best suited for longer-term investments. Those who want to invest for over six months or use Ethereum as a means of payment online will be best suited to this method of transacting.
Buy Ethereum With Markets.com
If you, like us, are more interested in doing fast transactions with cryptocurrencies, then you will need to use an online broker. Markets.com currently offers one of the best and most reliable ranges of services on the market. With a trading account at Markets.com, you can even buy Ethereum as a currency pair on the global market.
Alternatively, you can speculate on Ethereum’s price using binary options, through a broker who specialises in Ethereum.
We usually recommend combining both long-term investments and day trading, especially when it comes to cryptocurrency. By investing in Ethereum with goals that span months or years into the future, while also speculating in the short term when the market allows it, you can maximise your opportunities.
Buy Ethereum In The UK
Of course, it is not a problem to buy Ethereum in the UK. Just always ensure that you use an e-wallet service or reputable broker that holds the licenses required to operate. All the services that we recommend are approved for UK citizens and can, therefore, be used with confidence.
If you want to place a longer-term investment in Ethereum, we recommend using Coinbase or Jaxx. These are two of the most well-known and reliable players in the market today.
For those involved in day trading, we recommend Markets.com. Their services are of the highest quality, and their offerings with cryptocurrency are impressive, even though they are relatively new. We use Markets.com for our trading and could not be happier with the products on offer.
Buy Ethereum With GBP
Unless you are an expert in this field and topic, it is always best to use a broker to purchase your cryptocurrency, Ethereum included. This is new and innovative technology, and as such, utilising a broker at the beginning of your journey will help you learn more and access greater information.
Do I Pay Taxes On Cryptocurrency?
The short answer is: yes, you do pay taxes on Ethereum. The longer answer is that it entirely depends on how you trade the currency and how much your return is.
According to the UK Tax Agency’s rules, all UK citizens are obliged to pay 20% capital gains tax on their profits from investments, whether shares, binary options, currencies or Ethereum. You are also allowed to deduct your losses from your gains. When it comes to the VAT, HMRC has stated that gains from mining are not within the scope of VAT because mining is not currently considered as an economic exercise.
What is crucial for you to understand is that you have to declare all the transactions you have made with cryptocurrency during the past year. To report your profit in Ethereum, you can use the respective form from the UK Tax Agency, or retain the help of a tax agent that is familiar with cryptocurrency tax law.
Should you have any questions regarding tax on Ethereum, we suggest that you contact your local UK tax office.