To the new user, it can seem difficult to invest in Ethereum. The knowledge required is basic, but it’s the knowledge of a new technology. That makes it hard to learn.
Bob has no experience investing in any cryptocurrency. After a quick google search, he comes across a Bitcoin investing article on AscendEX and found out all he needed was an account on AscendEX.
Here are the steps Bob takes to own his first ETH token:
The first rule to making any investment is due diligence, particularly through the research of an asset. Bob has a friend Charlie who bought his ETH during last year’s bull run and told Bob he regretted not “doing his own research.”
Charlie’s lack of diligence had him listening to random YouTubers who would use people like him for exit liquidity. Charlie would invest in things without knowing why.
Bob can learn from Charlie’s ignorance. With a quick search on AscendEX, he is able to find some basic articles on ETH. He also knows he has to dig deeper and not only read official documentation from ETH’s website.
Bob understands the importance of primary sources of information and the cross-referencing of secondary sources. Bob believes he has enough information to begin his investment.
Now Bob believes he is ready to purchase ETH, he has some disposable income and wants to get into the cryptocurrency world. There are two main ways of purchasing ETC and a bonus third way.
This is the best way to purchase cryptocurrencies such as ETH. There are a lot of them but all of Bob’s friends use AscendEX. Centralized exchanges act as a broker for trading assets safely and securely, offering a wide array of assets, especially ETH. Bob doesn’t want to deal with the other methods of purchasing ETH so he buys from AscendEX.
This is a tougher way to buy any asset. It requires basic technical knowledge. Bob has read about these and how there are a lot of people that use these places.
Ethereum was crypto’s first DeFi space and as such was outfitted with primitive financial markets such as Automatic Market Makers (AMM). This is a token-swapping protocol where users can trade assets from an asset pairing pool. This is much like asset pairing on AscendEX, except liquidity is provided by users as opposed to an exchange’s treasury.
Prices may vary more on decentralized exchanges than on centralized options. This is due to the fact that liquidity pools are balanced by an algorithm, which is based on the ratio of the assets in a given pool.
For now, AscendEX fits Bob’s needs perfectly.
Through some research, Bob comes across a fine art auction operated by Sotheby’s last year where ETH was an accepted currency for bidding on items. This is an example of an OTC trade (Over-The-Counter) where a crypto asset may be traded for either fiat or a commodity off-chain.
Bob can pay for services rendered with ETH. Inversely, he could provide a service for ETH.
The transaction occurs but the only record of the transaction on-chain is the sending of ETH to a wallet. Ethereum does have its virtual machine (EVM) in which a contract can be made to facilitate the trade when certain conditions are reached. For now, however, simply sending the asset to a wallet will suffice.
As Bob is going to find out, it is difficult to convert fiat into ETH. It requires stringent KYC (Know Your Customer) safety protocols to do this, depending on the country. This method, however, avoids the involvement of a third party.
To begin trading, Bob must deposit fiat currency into his exchange account. AscendEX offers many credit card options and debited methods of depositing currency.
An exchange like AscendEX offers pairs of assets that can be traded. If Bob holds a valuable asset, he can then trade that asset for ETH on an exchange such as AscendEX. They handle it all. Bob just needs to reap the gains from his trade.
Exchanges usually offer two main ways to interact with the market. Whether Bob intends to hold ETH or engage in price prediction for profit, Bob can trade his assets in either:
In a spot market, traders buy and sell assets at the current market price. They can acquire said asset into their custody or one of their choosing. Markets offer a trading pair, ETH/USDC for example, and facilitate supply and demand that is recorded in an order book. This is where the trade is executed when the trade conditions are met.
In a margin market, traders can receive loans based on an initial collateral deposit. These markets are for futures trading. Bob can take out a loan to either long an asset or short an asset at multiple times his collateral. Many traders on crypto Twitter love playing in this casino. It can be very profitable but higher risk.
The price of ETH changes from moment to moment depending on supply and demand. The best way for Bob views the most accurate price is from the markets on AscendEX.
Now that Bob has successfully purchased his ETH and held onto it, he notices the prices have increased from the initial purchasing price. He’d like to take some profit but how?
It’s as simple as buying the asset. Bob can offer his ETH on the market at a price of his choosing or the spot price and have his order fulfilled on AscendEX within seconds. Now his account no longer has ETH but USD.
And that’s it. If Bob can do it, you can too.
Users can sell their ETH in any market pairing on AscendEX.
Centralized Exchanges like AscendEX are the best way to purchase cryptocurrencies such as ETH.
It is OK to buy ETH. It is not only a store-of-value but also staking ETH to a node helps secure the network through Proof-of-Stake.
The prices vary depending on price oracles for exchanges or liquidity pool ratios on Automatic Market Makers.