Is It Still Profitable To Invest In Bitcoin Or Ethereum
Analysis of the two most popular blockchain projects
2018 was not a good year for the Bitcoin. By December 2017, the cryptocurrency had peaked and was worth almost $19,000. At the beginning of 2018, it still stood at more than 17,000 US dollars at times, but in December it was only worth around 3,200 US dollars in some cases. Will the exchange rate recover and if not, in which crypto currency should one invest in 2019?
Should you even invest in cryptocurrency at all?
Before turning to the question of which cryptocurrency to invest in in 2019, let’s briefly ask whether someone should do this at all. Because there are several reasons against such an investment.
There is no “real” value behind a cryptocurrency, i.e. no machines, patents and land as with a stock corporation. A problem that also affects all traditional currencies. If people lose confidence in the euro, a 100 € bill will eventually be nothing but paper.
However, the Euro is clearly less volatile than the Bitcoin and other crypto currencies. A large danger is thereby the fact that more than 95 per cent of the Bitcoins only approximately 4 per cent of the users belong to. These players therefore have gigantic market power. They have a self-interest in not letting the currency fall too strongly, but under circumstances they could also take high losses in order to secure their profits before a further price decline also eats them up.
Bitcoin and its potential
Did you know?
Why were Bitcoins invented?
Since the Internet was invented in the 90’s, access to this medium has grown tremendously. The door to the virtual world and thus a worldwide trade is open. The worldwide trade with different currencies makes payment transactions more difficult, as often high fees and a processing time of several days are not uncommon.
With Bitcoins, these worries are a thing of the past. With the virtual currency it is possible to send a transaction from Germany to Japan within a few minutes for an incredibly low fee. Here no intermediaries like banks and the state are needed, but it can be sent directly from a wallet (“virtual purse”) to a destination address of another person.
The disadvantage of this, of course, is that an Internet connection must be available, regardless of whether it is provided via the laptop, the tablet or your own mobile phone. Furthermore, crypto currencies are popular attacks for hackers. It was not uncommon to read in the headlines that large crypto exchange exchanges such as Coinbase or Poloniex had stolen considerable amounts of money. This makes it all the more important to have a hardware wallet. This means that you carry your current account balance on a USB stick or other storage device including your passwords.
The acceptance of Bitcoin increases
Irrespective of which heights the Bitcoin shoots to during the next run: The still enormous market capitalisation of the coin of over 60 billion euros speaks for itself. The investor base does not intend to say goodbye to Bitcoin as soon as possible. Many people continue to believe that the Bitcoin Market is still unfolding its potential and that the market is still at its beginning.
Also for new price increases speak the many positive signals, which pulled themselves in the past weeks and months by the news: the acceptance of cryptocurrencies rises — also with the regulatory authorities. Bitcoin Investment Trusts are no longer a rarity. Possibly the next price increase is even imminent.
Good time for BTC Investing?
Which brings us to the benefits: Investing in Bitcoin 2019 can pay off extraordinarily right now, because: The general scepticism towards BTC Investing is great. With a little luck, those who invest now will be among those who got on board before the next big hype — and will be happy about big profits after a while. Expressly: That doesn’t have to happen, but it can.
The advantages of blockchain technology cannot be denied: Bitcoin is a decentralised, digital currency that passes over the middleman (financial institutions and banks) and makes it possible to participate in trade worldwide even without a bank account of one’s own: a democratic currency model in the best sense of the word that can hardly be stopped. Because it is not considered possible to manipulate the Bitcoin with a hack using the current technical means. Bans can still become seriously dangerous for Bitcoin: As long as only a single computer mint the Bitcoin, it remains tradable.
Ethereum the not so silent competitor
While Bitcoin is a pure crypto currency, Ethereum can do more. Ethereum intends to use its technology to replace third parties who store our personal information. Ethereum’s goal is to decentralize our personal information.
Here is an example: Some of us may use online document services or online work platforms to work together on projects. Others store their information such as photos, insurance letters, invoices, etc. in the Microsoft or Apple cloud. We therefore transfer our data to third parties and trust both the data protection and the integrity of the data.
Whether this is really guaranteed cannot be checked by us. Ethereum’s vision is that the same functionality that Google, Apple and Facebook offer will be created through new distributed applications based on Ethereum technology that will return control of our data to us, the owners of the data. No one but the owner will be able to access or modify the data. More about this and the technical background later.
Ether and Ethereum — the technology of the future?
For many, ethereum is the successor to Bitcoin. This can be seen, among other things, in the fact that the market value is already (currently) about half of the Bitcoin. Whether and when the Bitcoin can be overhauled and the so-called “flipping” is achieved is difficult to predict. From our point of view, Ethereum provides a technology that will be groundbreaking in the future. However, both Ethereum and the crypto currency Ether are still in a relatively early development phase. So there are still some important challenges to overcome before a stability similar to that of the Bitcoin is achieved.
As the number of Ethereum-based applications increases, the question arises what happens to poorly programmed smart contracts that disrupt the network or, in the worst case, block it. How does the Ethereum Virtual Machine deal with this? Due to the decentralized leitmotif, manual intervention is not possible. This contradicts the nature of the blockchain, which is supposed to be unchangeable.
Another, so far unsolved topic is the total number of tokens. Bitcoins are limited to a maximum of 21 million tokens. Nothing will change here. With the ether, however, it is not yet clear how many tokens there will be. Currently there are over 80 million tokens, 72 million of which were created in the Genesis crowdsale. Moreover, the “Difficulty Bomb”, which is supposed to prevent inflation, is only just beginning to take effect. This means that the more the computing power in the network increases, the more difficult the cryptographic computing tasks that the miners have to process become. Whether the difficulty bomb of the ether “works” or whether the slowdown reduces production too much (due to a lack of financial incentives for the miners) remains to be seen.
Another problem that has arisen due to the rapid growth of the ether is scalability. Thus, the Ethereum network has to cope with rapidly increasing user numbers. On the day before the crash, 20.06.2017, more than 300,000 ether transactions were carried out, a record for the only two year old crypto currency.
For all open questions: Ethereum is only at the beginning, in its second of four phases, and thus has enormous development potential. It has the chance to become the programmable money of the future. For this, however, the tasks described above have to be solved. In addition, there is a need for strong cohesion in the community, which must support the changes to be implemented. The potential is there in any case.
Good time for Ether Investing?
As paradoxical as it may sound: Above all the great scepticism of the present gives rise to the hope that a current investment can pay off properly — at least in the long run. Those who invest now may be among those who profit from the next big hype — provided they interpret the signs correctly and get out again, while everyone else invests excitedly.
So much for the theory. The advantages of blockchain technology are numerous and you probably already know them: Ethereum is a largely decentralized, digital currency that bypasses the middleman (financial institutions like banks) and allows people all over the world to develop dApps on the Ethereum ERC20 standard. Because investments are also possible without a bank account, people who do not have a bank account are given the opportunity to participate in an investor market for the first time. At the same time, the Ethereum blockchain can hardly be manipulated by a hack due to its technical architecture. At least with the currently available technical means this is almost impossible.
Earning with Ethereum: numerous possibilities
There are many different ways to earn money with Ethereum. Investing in Ethereum 2019 is possible through Ethereum Investment Trusts, but also through Banking on Ethereum. Alternatively you can trade Ethereum derivatives — or simply buy Ethereum’s crypto currency Ether directly.
If you buy Ethereum or invest in Ethereum shares, your investment in Ethereum will depend exclusively on the market price. The situation is different with Ethereum derivatives trading with crypto brokers such as eToro: here you can still earn with Ethereum even if Ethereum falls. When trading with CFDs you speculate directly on the price behaviour of Ethereum without buying the crypto currency yourself.
Bitcoin and Ethereum are still good option to invest. The bull market of the last weeks only confirms this. But before you invest please always do your own research and do not just jump on the hype train like everyone in 2017. Think about your decisions and take a profit from it.