Cryptocurrency gives people full control of their money. It does so by bypassing traditional currency exchanges, wallets, and finance megacorporations like Visa and Paypal. Bitcoin is the best known cryptocurrency, but Ethereum is nudging it for second place. Ethereum now trades at about $328.46 per coin up from 40 cent value at the Initial Coin Offering (ICO).
What is an ICO?
ICO stands for Initial Coin Offering. In the world of cryptocurrency, it is equal to an IPO (Initial Public Offering) for a publicly traded company’s stock. Basically, an ICO is how a new cryptocurrency raises funds. Bitcoin Magazine describes an ICO as, “A … mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether.” In early 2014, Ethereum’s $18 million ICO shattered the record. Today, however, ICOs can raise tens of millions of dollars in under one minute, thanks to the global reach of cryptocurrency investment. When Ethereum launched its DAO (decentralized autonomous organization), the ICO raised $150 million. Hackers leached funds out of the system, though, leading to new questions about its stability and security.
What is Ethereum? How has it made a difference in the cryptocoin world?
Brought to life by Vitalik Buterin, a 19-year-old math whiz, Ethereum innovated on Bitcoin’s original blockchain concept with its Ethereum Virtual Machine (EVM). The EVM made creating dapps (decentralized applications) easier and more dynamic than ever. It also made possible smart contracts based on Ethereum. Smart contracts automatically perform transactions on the Ethereum Blockchain. Unlike Bitcoin, Ethereum could trade in the real world. That means it has greater potential for disruption than the early cryptocoin blockchains.
What kind of game did Ethereum bring to investing?
Ethereum brought a real-world legitimacy to what had been the murky side of internet trade. It could do so thanks to private and government investors who want access to the technology that underpins its smart contract system. By bridging the gap between the blockchain miners and traditional currency investors, Ethereum changed who buys cryptocurrency–and why.
How could Ethereum be an easy way to scam novice bitcoin investors?
As an internet currency, Ethereum is still a risky business proposition. The $55-million DAO hack in 2015 demonstrated that Ethereum’s vaunted security isn’t invincible. Furthermore, no one protects cryptocurrency investors from hackers, phishers, scammers, and click-happy investors. It’s easy, therefore, for scammers to rip off prospective investors by selling fantasies during an ICO. That’s why anyone entering the cryptocurrency universe should do research in advance and invest with intelligence instead of emotion.
With investing available to everyone to literally anything, how could this affect the demand for cryptocoin, especially Ethereum?
Cryptocoin, especially Etherium, is changing how the world does business. In an era of increasing scrutiny on cybercrime, blockchain technology offers security and internet democratization. Investors with an eye toward a digitized future will increase the demand for cryptocoin. So will consumers and businesses who want to protect both their cash and their privacy.