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Which Digital Asset is Right for You? Part 2: Ethereum

Estimated reading time: 2 minutes, 40 seconds

In Part 1 of our series on digital assets, we discussed the granddaddy of them all, Bitcoin. The cryptocurrency’s meteoric rise to prominence in this decade has blown away investors in both the traditional and alternative investing space. The same can be said for others like Ethereum, Ripple and Litecoin.

With so many digital assets available for investment, it may be difficult for some to even get started with digital asset investing. And while we can’t give advice on what you should invest in, Kingdom Trust can distinguish between them for your due diligence efforts.

So on to Part 2 of our series, focusing on the second-largest digital asset, Ethereum.

EthereumEthereum is currently the second-largest from a market cap perspective. It also runs on blockchain technology, but the main purpose of the digital asset is not to become an alternative payment method. In fact, with Ethereum and others, the applications of this technology actually go way beyond just peer-to-peer digital currency.

Ethereum would not be around without the first-mover, Bitcoin. Like Bitcoin, Ethereum has no physical tokens or notes to hand to others for payment, is procured by mining and is also decentralized. Transactions are also recorded on a public blockchain network. Ethereum keys are also stored in wallets and the currency is similarly traded on exchanges.

But Ethereum is also different from Bitcoin, including the below key points and features:

  • Fuel: Ether (ETH) powers the Ethereum network. It is intended to be treated as “crypto-fuel” to pay for computation in the ecosystem. It is a digital asset bearer and not intended to be used as or considered a currency.
  • Smart contracts: The Ethereum blockchain enables the facility of money, property, asset, or other value exchanges via computer programs called “smart contracts.” Computer code automatically executes once specific conditions are met or triggering events occur. The contracts run as programmed and seek to avoid downtime, fraud, interference or other malicious intent with the contract.
  • Decentralized applications (Dapps or DApps): A Dapp is one or more smart contracts that collectively make up an application. From platforms trading precious metals to next-gen social networks to investment fund management platforms, many Dapps have been envisioned or are in various stages of completeness. The Ethereum ecosystem itself can be considered a Dapp.
  • Unlimited supply (for now): Unlike Bitcoin, there is currently no hard cap on the total Ether supply. However, some suggest the supply may cap at some point in the future.

For more information on Ethereum beyond this broad introduction, speak with a broker or dealer well-versed in digital assets.

As with any investment, digital assets come with risk, including volatile price swings. Ensure you invest in assets and strategies you understand, and conduct proper due diligence on any asset prior to investing.

Are you a fund manager looking for secure custody solutions for digital currency investors? If so, schedule a call with Business Development today. We look forward to working with you!

Or are you an individual investor considering your digital asset investment options? If so, contact Kingdom Trust today. We lead the way in digital asset custody and were the first in our industry to allow digital assets to be held directly in an IRA. We are happy to walk you through the process from account opening to investment and beyond!

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