How Can I Invest in Ethereum?

I realize that Bitcoin is all the rage right now, but I am also aware of the existence of other cryptocurrencies. I am particularly interested and curious about Ethereum. I am led to believe that there are certain factors that might make Ethereum a better investment proposition compared to bitcoin. I would like to know how a small investor, such as myself, can invest in Ethereum?

— Difference Between Ethereum and Ether —

Before we can explain how to invest in Ethereum, it is important to make one clarification. Ethereum is not a cryptocurrency, it is a blockchain. A simplistic description of a blockchain is to see it as a decentralized platform that facilitates and logs digital transactions. Ethereum is not in and of itself a digital currency the way that Bitcoin is. The proper name for the digital currency that runs on the Ethereum platform is Ether. While this may sound like simple semantics, you will see how this is an important distinction — especially when you are planning to invest.

— Investing in Ether —

There are three ways to start investing in Ether. The most straightforward approach requires you to purchase Ether through a digital currency exchange. These platforms operate online and include such names as CEX.io, CoinMama, and Changelly.

These digital currency exchanges allow you to purchase Ether with your credit or debit card. They also present you with a cryptocurrency wallet in which you can safely store your Ether. When you wish to convert your Ether back to traditional currency, these exchanges facilitate the selling of your ether as well. Digital currency exchanges cover all the needs that you have as an investor in Ether. They facilitate the purchase, safe storage, and divestiture of Ether — a real one-stop shop, so to speak.

Another way to invest in Ether involves utilizing the services of an online retail broker that allows you to trade CFDs and ETFs. These are derivative investment vehicles that allow you to invest in the value of Ether without directly owning the cryptocurrency yourself.

Even though these derivative products do not give you direct possession of Ether, they do mirror the movement in the market value of the digital currency. Some individuals that have a more advanced knowledge of trading use these types of accounts to profit on both rises and falls in the price of Ether. This is made possible because with these types of derivative products allow you to open “long” and “short” positions. In a “long” position, you profit if the value of Ether rises. In a “short” position, you profit if the value of Ether drops.

The other way to invest in Ether is by mining for it yourself. Similar to Bitcoin, you can mine for Ether by setting up mining rigs that provide a portion of the computing power required for the Ethereum blockchain to function.

— Why Invest in Ethereum? —

If you have already done your homework and you feel comfortable with the future prospects of Ether, you are not alone. Even though Bitcoin is currently the largest cryptocurrency in the world, Ether is catching up fast in recognition and usage.

This is due to the fact that its blockchain, Ethereum, can be used for much more than just serving as the digital ledger of all Ether transactions. Examples of this include everything from using Ethereum as a platform to build and run software and apps, to housing and processing smart contracts and other types of transactions. Some analysts believe the Ethereum blockchain to be superior to that of Bitcoin and therefore view Ether as a worthier investment.