Ethereum is More Than Just a Cryptocurrency

Ethereum blockchain was launched by Vitalik Buterin in 2015. Its design is quite similar to that of Bitcoin. One of the biggest differences is that the cryptocurrency (which is actually called Ether, whereas Ethereum is the name of the whole platform) is inflationary in nature compared to the deflationary essence of Bitcoin. Another important aspect of Ethereum is that it provides smart contract functionality via its Ethereum Virtual Machine. Proponents of Ethereum consider it a great advantage and a step ahead compared to Bitcoin.

The Ether currency does not have its own ISO code, but a common trading symbol for it is ETH.

Ethereum is proving to be one of the most favorable technology investments of all time. It was created in 2015 and since then has grown by over 1000%. To better understand what it is, Ethereum is an open source network, much more than just a digital currency. Therefore, when you purchase Ethereum you are investing in the network, and placing money into a unique transformational platform, with many of its greatest applications still to come.

The digital coin of Ethereum, known as “ether”, could be speeding up the decentralisation of the world economy, and has the potential to influence many other industries. Ethereum is backed by a variety of Fortune 500 companies, who met in 2016 to discuss and join forces on developing Ethereum’s network technology. The Ether trading coin can be volatile, which can serve as an asset for traders.

Ethereum Classic is the original version of the Ethereum blockchain from which the newer version was created. The newer version adopted the name Ethereum. The blockchains are not compatible, and updates on one will not affect the other. These changes led the way for the creation of the new crypto coin with a different name, leger, price and market cap.

What is Ethereum (ETH)

Ethereum was created and introduced to the world in 2013 by Vitalik Buterin, and went live in July 2015. Developers were looking for a way to differentiate from the Bitcoin currency, and make it to be exclusive with properties stand out in a market of its own.

They developed a new approach with a new platform and a more common script language. Their software allows customers to run any programme, which makes the Ethereum blockchain process and applications much more efficient than before. With Ethereum, developers can build a new type of software called “decentralised application”. This codes technology is not controlled by any individual or central system.

Advantages of Ethereum Technology

  • The app can never be turned off
  • Applications are protected against fraud and hackers due to the secured cryptography
  • It cannot be censored, since the apps are based on the principle of a group decision making process
  • A third party cannot make changes to any of the data
  • Ethereum has more applications than Bitcoin

Mist browser is the interface and digital wallet for Ethereum users. With it people can store, trade, and manage their contracts. Mist and MetaMask (another browser) help making blockchain-based applications easily accessible.

Ethereum is moving forward with its user-friendly platform, which enables people to make use of the blockchain technology.
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Ethereum Price and Market Factors

It has been noted that Ethereum can be far more than a digital asset. Its value is in the powerful blockchain programming language called Solidity. Its goal is to be something totally different from all other coins. With its increased application, there is a rise in demand by developers for “Ether”.

The price of Ethereum has soared recently and has been reaching all-time highs. Bitcoin has also been surging, and when that happens it does boost investors desire for other cryptocurrencies where gains can be acquired. Since Ethereum and Bitcoin are not competing, both can benefit when one rises.

Random events can happen to affect the ether price rise or fall, such as the flash crash of Ethereum’s value overall, which took place in June 2017. The Ethereum news and crash happened within a very short span of time, literally seconds after a major sell off prompted other traders to liquidate their digital currency. However, in that situation within seconds computer algorithms were buying again and the price was recovering.

As you can see the volatility of the digital currencies alters prices within second. The general public and investors all had the same questions when this happened as to how the rebound can take place and its timeline. Any strong value increase can eventually lead to a price correction. As with the cryptocurrency market or any market in general, the momentum can slow down at some point.

Thirty big banks, tech giants, and other organizations including J.P. Morgan Chase, Microsoft, and Intel are uniting to build business ready versions of the software behind Ethereum. Its ability to record and execute transactions without the need of a middleman is making this blockchain technology more popular amongst businesses.

What is Bitcoin and how does Bitcoin work

It was the first cryptocurrency. Bitcoin was devised in 2008 by Satoshi Nakamoto. It is based on a blockchain, a publicly distributed decentralized peer-to-peer electronic ledger, which was launched in 2009. Bitcoin dominates the cryptocurrency scene in terms of adoption, market capitalization, and development.

Bitcoin’s ISO code is XBT, but most trading venues list pairs using BTC ticker. Therefore, you will most likely see BTC/USD, and BTC/ETH when trading Bitcoin.

Its widespread adoption means that when trading Bitcoin on exchanges, you will be getting the highest liquidity of all cryptocurrencies, and when trading it as a CFD, you will be getting the lowest spreads.

How Bitcoin Became So Popular

Bitcoin was the first digital currency to be created. It is also the most respected, capitalized and traded cryptocurrency in the world. Bitcoin trading is booming, and a big reason for this is the volatility of this cryptocurrency. Currency trading allows for maximum yield when it is volatile – lots of ups and downs. This is precisely the reason global traders enjoy trading Bitcoin. Plenty of profitable opportunities are available when markets are volatile, and Bitcoin ranks highly with currency traders.

The media plays a big part in the volatility of Bitcoin. Whenever a breaking story surfaces, Bitcoin volatility increases, and traders cash in. History has shown that Bitcoin traders and speculators routinely push this digital currency to the forefront of CFD trading. It is increasingly being used as the preferred payment option at merchants, for money transfers and for trading purposes. More traders are turning to Bitcoin trading than ever before, and that is why this cryptocurrency is inherently valuable. It is a high demand financial trading instrument, despite no association with governments or central banks.

Bitcoins are mined with powerful computer hardware and software. A maximum of 21 million Bitcoin will be available, after which no further bitcoins will be produced. The algorithm which governs the production of Bitcoin limits the quantity that will be produced, and the rate at which they will be produced. It is a finite commodity – there is a fixed amount, and that ensures that greater demand will always prop up the price. In this way, it is similar to other finite commodities such as crude oil, silver, or gold.
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Bitcoin’s Rise to Prominence

Around 2008, Satoshi Nakamoto founded Bitcoin. At the time a paper was published through the Cryptography Mailing List. The first Bitcoin software client was released in 2009, and he collaborated with many other developers on the open-source team, careful never to reveal his identity. By 2011, the enigmatic Bitcoin founder had disappeared. His peers understood how valuable this cryptocurrency was, and worked feverishly to develop it to its maximum potential.

By October 2009, the world’s first Bitcoin exchange was established. At the time, $1 was the equivalent of 1,309 Bitcoin. Considering how expensive Bitcoin is today, that was a real steal. Bitcoin traded at a fraction of a penny for quite some time, however things changed in 2010. As the distribution of Bitcoin increased, the digital currency became inherently more valuable. Demand increased, and this reversed the exchange rate accordingly. In early 2010, the currency was gaining momentum, and so the distribution of the Bitcoin started to increase along with its demand, by November of that year 4 million Bitcoins had been ‘mined’. And so the rise of the Bitcoin began…

Cryptocurrencies in Forex Trading, How to Trade CFDs on Cryptocurrencies

Cryptocurrency is a digital currency designed to act as a medium of exchange, a unit of account, a store of value, and to serve a range of other purposes, all with the aid of cryptography.

Although greatly varying by design, cryptocurrencies are usually based in electronic networks of nodes, which are often structured as peer-to-peer (P2P). Each participant of the network may perform the functions necessary for the cryptocurrency to operate. This is done using automated software via dedicating a part of the participant’s computing power.

Cryptography is used to ensure proper generation of the cryptocurrency units, to secure transactions, and the overall functioning of the underlying infrastructure.

The most famous example of a cryptocurrency is Bitcoin. It is customary to call all other cryptocurrencies altcoins (alternative coins).

In Forex trading, cryptocurrencies are used both as a method of payment (to deposit and withdraw funds) and as a trading instrument, forming pairs with other cryptocurrencies and currencies.

Why FX Brokers Don’t Accept USA Clients

It is a common known fact that the Forex market trading goes on 24 hours a day, 5 days a week. This happens due to the fact that there are multiple centers all over the world where the currencies are traded. Yet, even though the New York session tends to have the most significant impact on currency rate fluctuations, the amount of US based retail traders tends to be quite small.

If you are from the US you can be quite puzzled by the amount of brokers that are offering the services throughout the world, but are still not present in the States. Even though the US is the major market for various goods and services, for some reason FX trading for individual investors is not so common.

US residents can trade Forex

Before we move on any further, it is vital to state that Forex trading in the US is not prohibited. A trader from the US can trade FX online as easily as a person living in Europe or Australia. However, the main difference lays in the variety of brokers a trader can choose from.

There are a few reasons why the amount of FX brokers is very low, let’s examine each of them below.

Licenses and Regulations

When it comes to the brokers that operate in Europe, the regulatory environment is rather simple. Once a broker has obtained a license from one of the European regulators, it can easily accept traders from all EU countries. In other words, a UK Financial Conduct Authority regulated broker can accept traders from Germany, the Netherlands, Bulgaria and other EU member states.

However, when it comes to the US, European licenses simply do not work. A broker that wants to have traders onboard from the US has to be regulated by the NFA, National Futures Association. At this point you may ask, there are brokers that have multiple licenses, like CySEC, FCA, ASIC and more, why would they not get another one to provide services in the US? The reason for this is quite simple – capital requirements. While a broker has to have around $100,000 – $500,000 of locked capital to obtain one of the European licenses, NFA requires quite an enormous amount of capital to be able to operate in the US – 20 million dollars.

This amount of money only corresponds to a deposit that a broker has to make and does not include any legal fees associated with obtaining the licenses, employment of lawyers to be placed on the register and executives. In other words, the US market is an expensive market to operate on.

Even though some brokers make profit enough to afford it, 20 million dollars is quite a large sum to allocate just for a license. On average, the world’s 15th largest broker would hardly earn 10 million USD in profit annually, hence allocating a profit of 2 years for the privilege to work in one country is an extremely serious investment.

The situation with capital requirements was quite different back in 2008 and at that time there were quite a few brokers that accepted US clients. However, today the amount of US friendly brokers is just less than five.

Profitability

Now you may wonder, if there are only a few brokers in the US, why are more brokers not trying to penetrate the market? There are over 300 million people living in the US and it is quite hard to believe that there are no more brokers that could actually afford the NFA licensing. Well, the truth is that, although more brokers could deposit 20 million to operate, not every broker will find it profitable.

As you know, FX brokers earn from the volume traded, hence the higher the trader’s volume is, the more profit a broker makes. However, unlike European countries where a trader has access to the leverage of 500:1, in the US it is only possible to supply 50:1 leverage on majors and 20:1 leverage on minors. This means that a broker can expect to receive some 10 times smaller profit in the US than in Europe, provided that it has the same amount of traders with the same amount of deposits in the two regions.

Furthermore, yet needless to say, wages in the US tend to be quite high, so the whole process of financing the US-based operations is not cheap at all.

Regulator’s attitude

Even though it is already quite hard for some brokers to start operating legally in the US and then to become profitable, historically US authorities have also been seen as a hindrance.

Quite a few brokers have been heavily fined by the NFA for malpractice. While the impact of the reasons behind the fines could be quite insignificant, the fines tend to be heavy: ranging from $200,000 to $2 million.

In other words, a broker may spend a year working hard, and by the end of the year its profits (or even more) can be simply taken by the regulator as a result of certain misconduct.

Indirect competition

US traders have also been much more inclined to stock trading, this is why they often choose to acquire shares over currencies. In most cases, trading stocks is actually more expensive for traders (or more profitable for brokers) than Forex. This is why US based brokers not only have to compete against each other, but also in order to take a slice of the stock brokers’ pie by increasing the awareness about online currency trading.

Conclusion

The limited amount of FX brokers in the US is certainly caused by the heavily regulated environment that requires brokers to deposit a substantial amount of funds and, at the same time, decreases brokers’ profitability by limiting leverage.

This also results in a few unregulated brokers offering their services in the US as they can better meet the needs of the traders, while their legal and operational costs are minimal. However, unregulated brokers that accept US traders should never be your choice.