How To Make Money Trading Ethereum

How to Make Money with Ethereum: The Definitive Guide [2020]

While much of the focus in the cryptocurrency world is on Bitcoin, Ethereum has taken and held the second spot for its lifetime and has been an integral part of the cryptoverse.

Unlike many other cryptocurrencies, Ethereum has a rich background story, charismatic and well-lover creators, and have literally given thousands of projects the ability to come into existence by pig-backing off the Ethereum ecosystem.

And while the fundamentals of Ethereum are impressive, the world's number 2 cryptocurrency has also delivered some of the highest ROI's of any cryptocurrency, and today is itself widely traded to the tune of billions of dollars per day.

It's with this in mind that we've create this definitive guide on how to make money with Ethereum, covering what Ethereum really is, why it has value, strategies for trading Ethereum, and the best places online to use for Ethereum trading.

What is Ethereum?

Following the growing success of Bitcoin back in the crypto dark ages of 2013, a young enthusiast who had been covering cryptocurrency stories in the Bitcoin Magazine called Vitalik Buterin proposed a revolutionary new manifestation of blockchain technology called Ethereum.

Unlike all other cryptocurrencies at that point which predominantly focused ways to store and transfer value only, Ethereum was the first truly unique type of crypto to be created after Bitcoin in 2008.

Where Ethereum differed to others that came before it was that not only could users buy and sell Ethereum in order to transfer and store value, and to profit from speculation, but Ethereum also allowed users to write code that could be run on its blockchain.

This was the first time that a decentralized, financially-based turing-complete architecture had been created and Buterin's creation immediately garnered widespread interest and support as more and more people began to hear about Ethereum.

It was in late 2013 that Buterin first proposed the Ethereum concept in his Ethereum whitepaper, and in 2014 at a Bitcoin conference in Miami that he met with other crypto enthusiasts that would eventually become the founders of Ethereum.

This group destined for the creation of the world's number 2 cryptocurrency consisted of Vitalik Buterin, Joe Lubin, Charles Hoskinson, Gavin Wood, Anthony Di Iorio, Mihai Alisie and Amir Chetrit.

Why Does Ethereum Have Value?

Ethereum is the world's second largest cryptocurrency by total marketcap with that currently sat at around $14 billion. As well as this, Ethereum is the third most traded cryptocurrency behind Bitcoin and Tether.

So why is it that people buy, sell and use Ethereum, and what gives it its value?

Well for a start, like all cryptocurrencies Ethereum can be speculatively traded for a profit. This kind of value is not inherent within the design of Ethereum or its features, but instead is derived from the perceived value that Ethereum has based upon its unique selling points in the marketplace.

With the knowledge that many millions of people around the world consider Ethereum to be worth trading speculatively, you also can assume that this would potentially provide you with a valuable opportunity to profit from buying and selling it.

Secondly, Ethereum itself for use as a tool holds value.

Ethereum can be used to quickly, easily and cheaply create various different structures such as smart contract that are autonomously run, cryptocurrencies using the ERC-20 protocol and others, DAOs or decentralized autonomous organizations, DApps or decentralized applications and cryptocurrency token sale models such as ICOs, IEOs and STOs.

When you boil down exactly what being able to program a blockchain means, it essentially explains that users with a knowledge of languages like Solidity are able to create code that can be stored on thousands of servers around the world at once, and can execute complex processes that may include calculations and the transfer of Ethereum-based cryptocurrencies from one account to another.

Ethereum even has programs known as "oracles" which allow for information from outside of the Ethereum blockchain to be taken in and used as parameters to smart contracts.

Examples of how this can be used are things like a smart contract which can distribute winning from gambling on horse racing after getting the results of the race, without needing any outside input or control from humans.

Ethereum Trading & Investing

Ethereum can be traded and invested for profit with this being the predominant way that people around the world interact with Ethereum.

Because of the wild volatility present within crypto markets, assets like Ethereum can be traded with substantial profits being attainable for successful traders.

And while trading Ethereum and investing in Ethereum are both very similar, there are some distinct differences that are important to understand as well.

What is Ethereum Trading?

Trading Ethereum is the process of designing and executing a strategy where repetitive purchases and sales of Ethereum have the goal of generating profit.

Historically cryptocurrency trading has been extremely lucrative and has time has moved on crypto markets have become more and more sophisticated.

Traders will typically make a high frequency of traders with a relatively low duration for each of them. As an example, it would be completely normal for a trader to buy and sell Ethereum 10 times in one day at different times.

These kinds of strategies will typically incorporate trades that last from a few milliseconds up to a few days.

There are many strategies that Ethereum traders may employ, including day trading, arbitrage and automated bot trading.

What is Ethereum Investing?

Ethereum investing is similar to trading, however it differs in that the length and duration of trades are typically longer.

While a trader might make 10 trades in one day, an Ethereum investor might make one trade that last for 2 years.

Investors differ from traders in that they are seeking long term profits from movements in the trend over days, weeks, months and year, instead of seconds and minutes.

Investors may also have more of a consideration for fundamental factors like the number of daily users for a cryptocurrency, instead of technical factors like whether that crypto is overbought.

Who does this method of making money with Ethereum suit?

Ethereum trading and investing is suitable for those who have some funds that they are happy to buy ETH with, knowing that there is the potential to lose all or most of it.

While there are many stories about crypto millionaires floating around, there are even more about people that have lost cars, houses and huge amounts of money trading crypto.

In order to trade seriously time should be spent learning about markets and why they move the way they do.

Also a strong understanding of whichever cryptocurrency is being traded and factors that might affect price are critically important in order to be successful as a trader or investor.

What are the Best Places to Trade and Invest in Ethereum?

PrimeXBT

PrimeXBT is the world's leading multi-asset margin trading platform which lists a wide range of traditional assets and crypto-assets.

Since its launch the platform has grown exponentially to now hold a daily trade volume of up to $650 million per day, and is one of the largest crypto trading hubs on Earth.

As well as listing ETH with leveraging of up to 100x, PrimeXBT also lists other cryptocurrencies such as BTC, XRP, LTC and EOS, as well as a wide range of traditional assets such as the most popular stock indices, forex pairs, commodities and metals.

Growth at the platform has been fuelled by an ever-increasing feature set that now includes the unique ability for traders to be able to seamlessly create their own peer-to-peer investment fund.

As well as this, PrimeXBT has the lowest fees of any of the major exchanges that we researched, with some being up to 10 times more expensive than PrimeXBT's flat rate of 0.05% across all trades.

PrimeXBT's security is another major drawcard, with the platform never being breached by hackers and including cutting edge security facilities such as 2FA, mandatory Bitcoin address whitelisting, hardware security modules with a rating of FIPS PUB 140–2 Level 3 or higher and a full risk check after every trade executed.

Binance

Binance is another of the largest exchanges in the world, and has grown its reputation by continuing to provide a wide range of assets.

Initially Binance was created out of the hype surrounding 2017's ICO boom, and with the use of their own cryptocurrency, the BNB token, Binance grew its exposure and user base.

The platform provides limited margin trading of up to 3x on some assets, which could be increased to improve the services for their users.

Apart from this Binance is working to try to launch a decentralized exchange and doing other things that have kept them relevant where a number of other exchanges have fallen by the wayside.

Ethereum Mining

Like Bitcoin, the way that Ethereum is first created is via a process called "mining", which is essentially a cryptographic race between thousands of computers.

Code can be downloaded by anyone that would like to mine Ethereum which can then be installed on any computer, turning that computer into an Ethereum mining rig.

The computer will then take part in a global competition between thousands of computers to solve a complicated cryptographic puzzle every 10–20 seconds. The computer that solves the puzzle first is rewarded with an amount of Ethereum.

Like Bitcoin mining, Ethereum mining can be very profitable but also requires a significant investment into the required computing hardware and electricity costs which can run into the high thousands of dollars.

Saying this though, Ethereum mining is also potentially extremely profitable, as this is the incentive for miners to put the time, effort and investment required into setting us these operations.

Who does this method of making money with Ethereum suit?

This money-making Ethereum method suits people that have at least a few thousand dollars to invest in hardware and have the technical capacity to run an Ethereum node.

Programming is a valuable skill here, but even if you don't program there are many walkthroughs online where you can find information on how to mine ETH.

People should also have an appropriate place to set up a mining rig with things like the large amount of heat that is produced and the huge drain on electricity from running a rig 24/7 being super important to consider before becoming an Ethereum miner.

Ethereum Staking

Unlike Bitcoin, Ethereum is moving to a different consensus mechanism called "proof of stake" or staking.

The high electricity cost of mining means that alternatives are desirable if they can be more ecologically-healthy and less wasteful.

Staking is similar to mining in that users can compete against each other to get free Ethereum, although instead of investing into computer hardware to compete, stakers have to actually own some Ethereum which they then freeze for a period in order to be able to try to get more for free.

Staking is ecologically much better for the environment which is one of the main reasons that many are trying to move towards this and away from proof of work/mining.

Today more and more projects are moving across to proof of stake or are integrating this consensus mechanism from the beginning.

Who does this method of making money with Ethereum suit?

People who would like to mine, but really care about the potential damage being done to the environment should consider staking.

Staking requires an investment but does not require the computer hardware needed for mining and therefore is a favoured choice for many.

Staking can be somewhat of a complicated process however and so it's very important to ensure that you fully understand what is required and exactly how you can stake Ethereum.

Ethereum Referral Programs

Ethereum referral programs are ways for people to make money from Ethereum without having to buy and sell the cryptocurrency.

Instead participants are paid every time that someone finds their referral link on social media and then comes to the platform to sign up and use their services.

Some referral programs can be very lucrative and sometimes more profitable than trading.

A standout example of this is the PrimeXBT 4-Tier Referral Program, where the top 3 participants earned over $1 million in 2019!

There are a wide range of referral programs within the cryptocurrency space however, and it's worth deeper investigation to find out which ones have the best conversion rates and payouts.

Who does this method of making money with Ethereum suit?

People that either have a good following on social media, a large amount of contacts that are interested in crypto, or the ability to be able to use social media to gain attention should consider crypto referral programs.

Basically the key here is to be someone that knows how to spread information on social media effectively.

Referrers can increase their efficiency by knowing about how to automate the referral process with bots and so programming is another valuable skill here.

Ethereum Faucets

Like with many other cryptocurrencies, there are faucets available for getting free Ethereum which are essentially the easiest way possible to acquire this crypto for free.

Saying this, no one has ever gotten rich from using crypto faucets as the size of the reward is typically so small.

Faucets are sites where users can go and complete small, simple tasks in order to be given an amount of Bitcoin, Ethereum or some other cryptocurrency.

The kinds of tasks that may normally be required in order to get paid are clicking on links, visiting pages, posting comments on social media and similar.

Payments are typically a small fraction of $1 in value and can be repetitively completed with a required waiting time in between.

Who does this method of making money with Ethereum suit?

This method suits anyone that just wants to get crypto now, doesn't want to spend money to get it, and has a good amount of free time to put towards completing tasks.

Faucets have the lowest barrier to entry for all methods, but also have the lowest potential reward.

Saying this, many who work 7 days a week on faucets do make some good money, and there are some faucets that can pay out more than others so doing a good amount of research is important.

In Conclusion: Making Money with Ethereum

Like with many other cryptocurrencies, trading Ethereum can be highly profitable and has had a long history of delivering huge ROIs for investors.

But there are also many other ways to make money from Ethereum including Ethereum faucets, referral programs, Ethereum mining and Ethereum staking.

Depending on the people is question, some of these methods of making money with Ethereum may suit you more or less, but with the right amount of research almost anyone can learn to make money from any of them.

The most popular is undoubtedly Ethereum trading, and what is very important here is to do proper research into the various platforms available, and considering the kinds of points that we've raised when making our recommendations for the best 2 Ethereum trading platforms online today.