Much like Bitcoin, Ethereum is one of the most popular cryptocurrencies in the world, and it offers so much more than just digital currency transactions. As a decentralised platform, Ethereum enables smart contracts and decentralised applications (dApps) to – hopefully – revolutionise all sorts of industries, from finance to digital art and beyond.
If you are looking to explore the potential of cryptocurrency investments, Ethereum is an intriguing pathway to diversifying your portfolio. In this guide, we’ll walk through the most important steps on how to invest in Ethereum in Australia, how to trade Ethereum, and give you an overview of the benefits, risks and investment strategies that could help you get the most out of Ethereum.
What is Ethereum?
Ethereum is a blockchain-based platform that supports dApps and smart contracts. While Bitcoin is primarily a store of value and medium of exchange, Ethereum goes beyond just that by helping developers build apps on top of its blockchain. These smart contracts are self-executing agreements with the terms directly written into code – in other words, they allow transactions to take place automatically without any third-party involvement.
There’s a currency that powers the Ethereum network – called Ether (ETH) – which is used to pay for transactions on the Ethereum network, as well as incentivise developers and support new dApps that are being created. This change of pace from more traditional cryptos has meant Ethereum tends to stand apart from many of its competitors; it’s a key player in multiple industries, including decentralised finance (DeFi) and non-fungible tokens (NFTs).
Why invest in Ethereum?
If you want to start investing in Ethereum, it’s a good idea to familiarise yourself with some of the top reasons why it’s become such a popular investment among cryptocurrency enthusiasts:
DeFi: Ethereum is the backbone of the DeFi ecosystem, letting users take advantage of financial services like lending, borrowing and earning interest – without the need for traditional banks.
Smart contracts: Because Ethereum supports smart contracts, digital agreements are much more seamless, and there’s no need for intermediaries.
Strong community support: The Ethereum network is backed by a huge community of developers who continuously work to improve the platform. The result? Ongoing upgrades and plenty of innovation.
Ethereum 2.0 upgrades: Recent upgrades have transitioned Ethereum from proof-of-work (PoW) to proof-of-stake (PoS), meaning it’s more accessible, secure and scalable.
NFTs and digital collectibles: Many of the most active NFT platforms are run on the Ethereum blockchain. Whether you’re interested in digital art or in-game items, Ethereum is the workhorse behind it all.
Potential for growth: Given the wide-ranging use cases and continued development, many investors see Ethereum as having big growth potential over the long term.
Different ways to invest in Ethereum
There are several ways to gain exposure to Ethereum. It’s important to thoroughly research each option before investing, as they can carry varying levels of exposure and risk:
Buy Ethereum (ETH) directly: One way to invest in Ethereum is to purchase it directly through a broker like CMC Invest, allowing you to gain exposure to its price movements.
Ethereum ETFs (exchange-traded funds): Some countries allow you to invest in Ethereum ETFs, which means you can gain exposure to price movements with Ethereum through traditional brokerage accounts. A few of the more popular options include the Grayscale Ethereum Trust (ETHE:US), iShares Ethereum Trust (ETHA:US), and Fidelity Ethereum Fund (FETH:US). Be aware, though, that these funds come with their own set of risks, especially if there are major regulatory changes.
Invest in companies using Ethereum: Another way to get at least some exposure to Ethereum is by investing in companies that build on – or benefit from – the base underlying technology. Base by Coinbase (COIN:US) is one crypto platform that uses the Ethereum network to boost transaction speeds, broaden accessibility and more – all while reducing costs. Companies like Visa and Shopify have also been looking at integrating Ethereum technology – or have already done so – although the impact on their stock prices remains to be seen.
How to buy Ethereum in Australia with CMC Invest
If you’re an investor in Australia looking to buy cryptocurrency, CMC Invest offers access to Ethereum and a selection of other coins through its integrated investing platform, providing an accessible way to start investing. Below is a step-by-step guide for new and existing CMC Invest customers on how to invest in Ethereum:
Open a CMC Invest account: Get started by opening a CMC Invest account. You’ll get access to a wide range of investment products, including Ethereum and other cryptocurrencies like Bitcoin and Solana, as well as traditional asset types.
Opt-in for cryptocurrency investing: Once your account is set up, you’ll have access to over 45,000 stocks and ETFs as standard. If Bitcoin or other crypto interests you, you’ll need to opt-in to access unregulated blockchain assets like Bitcoin.
Research Ethereum: Before investing, you’ll want to give yourself a solid base of understanding Ethereum’s fundamentals and general market trends. CMC Invest has a range of educational resources and powerful charting tools to help investors make the best decisions for their portfolios.
Start investing in Ethereum: Once you’ve opted in, you can start buying Ethereum directly from the CMC Invest platform via the mobile app or desktop version.
Risks of investing in Ethereum
While Ethereum has plenty of growth opportunities, there are also potential risks to consider, including but not limited to:
Volatility: Ethereum’s value can fluctuate greatly over short periods of time, driven largely by factors like market sentiment, regulatory news, market cycles and even geopolitical events. Investors must be prepared for unexpected price swings, so consider whether you have the risk appetite for such volatility.
Regulatory risks: As Ethereum and other cryptocurrencies have gained popularity, they have faced regulatory scrutiny. Changes in regulations could impact Bitcoin’s price and long-term viability as an investment.
Speculative nature: Ethereum is still a relatively new asset, and its long-term role in the global financial system remains to be seen. As a speculative investment, you should only commit capital you are willing to lose.
Conclusion
Ethereum is a popular and highly innovative blockchain, with its native crypto Ether influencing a wide range of applications. It’s no wonder many Australian traders see it as a compelling investment to help diversify their portfolios.
To get started investing in Ethereum, sign up for a CMC Invest account today and see exactly how this innovative cryptocurrency can fit into your overall investment strategy.
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