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Ethereum is a decentralized, open source blockchain network that enables users to connect with 1 another using reliable, tamper-proof smart contracts. Though Ethereum is commonly compared to Bitcoin, Ethereum’s network greatly expands upon Bitcoin’s technology, enabling users to create their own decentralized applications.
Ethereum’s network is powered by Ether, the token that rewards users for connecting their computers to the blockchain and enabling more transactions. When you visit a cryptocurrency broker and purchase Ethereum, you’re actually investing in the Ether token.
Most investors believe that the only way to make money using Ethereum is by purchasing the Ethereum token and waiting for it to increase in value over time. While this is definitely a viable method that can earn you money using Ethereum, it’s far from the only value that the token has.
Interested in learning more about how to make money from Ethereum? Our guide to making will help you understand a few different methods you can use to generate Ether tokens — and earn money.
Why Does Ethereum Have Value?
Ethereum’s technology is creating exceptionally exciting new developments in the practical uses of cryptocurrency in everyday life. The primary value provided by Ethereum is the ability to create decentralized applications, which allows users to connect with 1 another without relying on a middleman to facilitate the transaction.
If you own a smartphone, you’re probably familiar with the concept of applications or apps. Applications are programs that serve a singular purpose — from banking to sending messages, there are thousands of uses for applications.
The vast majority of applications on the internet right now are “centralized” applications. Centralized applications are controlled by a singular party, which means that they provide a single point of failure. This makes centralized applications very susceptible to hacks, data leaks and misuses of customer and user data.
The Ethereum network enables decentralized applications. Instead of a single authority responsible for maintaining all client data and funneling transactions and connections through itself, the Ethereum network is made up of thousands of volunteers’ computers all around the world. With no singular point of entry, decentralized applications are significantly more difficult to hack or abuse. Users’ personal information also stays directly on their computers, which makes transactions performed through a decentralized application more secure.
Like Bitcoin, Ethereum verifies transactions on its network using blockchain technology. The blockchain is a public ledger that is impossible to edit, which prevents users from “double spending” on the Ethereum network. To reward operators who facilitate transactions on the Ethereum network, node operators and miners can earn Ethereum’s token, Ether.
Ether acts as “fuel” for applications on the decentralized network. If a user on the Ethereum network wants to change a decentralized application or initiate an action, they must pay a small amount of Ether to “gas” the transaction. This gives Ether an inherent value to everyone using decentralized applications on the Ethereum network.
Ethereum’s crypto token Ether is produced through a process called “mining.” During the mining process, computer operators compete with 1 another to solve computational problems to add blocks to the Ethereum blockchain.
Consistently adding blocks to the blockchain makes decentralized application functionality possible. Miners are a backbone of the Ethereum network — and they are rewarded with Ether tokens.
If you know anything about mining on the Bitcoin network, you’ve probably heard that mining requires a massive amount of computing power. While this is true on the Bitcoin network, Ethereum’s mining network is much more efficient. For example, the average block mining takes around 10 minutes on the Bitcoin network, while Ethereum network’s proof-of-work algorithm adds 1 block every 12 seconds.
This doesn’t mean that you’ll be able to gain 1 Ether every 12 seconds. Remember that you are competing with thousands of other miners for these tokens. At the average difficulty level, it’s possible to mine 1 Ether every 41.5 days. Mining also requires specialized machinery and a large amount of technical knowledge to begin.
Trading Ether is a method you can use to make money from Ethereum with a much lower entry bar. Trading Ether is similar to buying and selling shares of stock.
To get started, you’ll open an account with an exchange that supports the purchase and sale of Ethereum. Fund your account with fiat currency. When you believe the price of Ether is low, convert your fiat currency into Ether. Traders then convert their Ether back to fiat (or to a stablecoin like Tether) when the price of Ether rises again.
Like all cryptocurrencies, Ether can show exceptional volatility. This allows traders to capitalize on small, short-term price movements throughout the month or day. The specific analysis and charting tools will vary depending on the broker you choose and the broker’s unique trading platform.
If you do decide to take a short-term approach to trading, you should also be mindful of fees and commissions, which can quickly cut into your profits.
Is Ethereum a Good Investment?
Ethereum can be a good investment, but remember, it is a speculative investment. Like any speculative investment, you might lose your money.
The overwhelming performance of Ethereum has attracted traditional and institutional investors alike. Ethereum and other cryptocurrencies provide you with the following advantages over traditional investments:
- Liquidity. Ethereum is arguably 1 of the most liquid investment assets due to the worldwide establishment of trading platforms, exchanges and online brokerages. You can easily trade Ethereum for cash or assets like gold instantly with incredibly low fees. The high liquidity associated with bitcoin makes it a great investment vessel if you’re looking for short-term profit. Digital currencies may also be a long-term investment due to their high market demand.
- Lower inflation risk. Unlike world currencies — which are regulated by their governments — Ethereum has a transparent inflation plan and is subject to less risk. The blockchain system is infinite, and there’s no need to worry about your cryptos losing their value.
- New opportunities. Ethereum and cryptocurrency trading is relatively young — new coins are becoming mainstream on a daily basis. This newness brings unpredictable swings in price and volatility, which may create opportunities for massive gains.
Best Cryptocurrency Brokers
There are a wide range of brokers offering access to the cryptocurrency market. As 1 of the most well-known cryptocurrency networks, almost every broker that offers access to the crypto market will allow you to buy and sell Ether. Some brokers (like Coinbase and Binance US) specialize in offering you a wide range of cryptocurrencies beyond Ether, while others (like Robinhood and Webull) allow you to trade major cryptocurrencies alongside stocks and funds.
The broker you choose will dictate your trading platform, fees and the assets you have access to. Not sure where to begin your search? Consider a few of our favorite brokers that support Ether below.
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- No charges to open and maintain an account
- No account maintenance fees or software platform fees
- Intuitive trading platform with technical and fundamental analysis tools
- Only offers 14 coins
Founded in 2015, Exodus is a multiasset software wallet that removes the geek requirement and keeps design a priority to make cryptocurrency and digital assets easy for everyone. Available for desktop and mobile, Exodus allows users to secure, manage and exchange cryptocurrencies like Bitcoin (BTC), Ethereum (ETH) and more across an industry-leading 10,000-plus asset pairs from a beautiful, easy-to-use wallet. The noncustodial functionality is encrypted locally on users’ own devices, ensuring privacy, security and complete control over their wealth. Exodus is on a mission to empower half the world to exit the traditional finance system by 2030.
- Newcomers to the cryptocurrency world
- Ease of use
- Trezor integration
- Huge selection of cryptocurrencies
- Excellent 24/7 customer support
- No personal info needed
- FTX app not available on the mobile app
SoFi takes a modern approach to personal finance. It recently created buzz with the release of SoFi Crypto, a way to trade cryptocurrency on the app. The platform allows investors to familiarize themselves with crypto. It offers a high level of security, great customer support and an intuitive interface. However, it does have shortcomings with the number of cryptos offered and geographic restrictions.
- Centralization of your money
- Charges low or no fees for some functions within the interface.
- Relies on Coinbase, a very secure platform, to process transactions.
- Presents a low barrier of entry — you only need $10 to start trading.
- Currently only offers 28 coins.
eToro is headquartered in Cyprus, England and Israel. A major eToro plus is its social trading operations, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its underwhelming research and customer service features.
- Investors looking to CopyTrade other traders
- Simple user interface
- Several major cryptocurrencies and altcoins
- Expansive network of social trading features
- Large client base for new traders to imitate
- Only 29 coins available
Gemini is a cryptocurrency exchange and custodian that offers investors access to over 100 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
- New investors looking for a simple mobile and web app
- Day traders looking to use technical analysis tools
- Users looking for a 1-stop-shop to buy, sell and store all of their cryptos
- Easy and quick signups — can get started in as little as a 5 minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
When you initiate a transaction on the Ethereum network, your transaction is only finalized after it is recorded on the blockchain. To prevent double spending, your transaction must be verified by the proof-of-stake network, which involves multiple computers on the blockchain confirming your transaction before the transfer is finalized.
Staking is the act of putting up your own Ether as collateral in order to verify transactions as a validator. You can stake by yourself or by pooling your Ether together with other owners in a pool.
As a validator, you are responsible for storing data, processing transactions and adding new blocks through mining. In exchange, you’ll earn a small percentage of the “gas” fee that users pay to initiate actions on the blockchain.
In order to become a validator, you must already own some Ether. Staking is not risk-free — you may lose the Ether you put up as collateral if you fail to validate legitimate transactions, validate illegitimate transactions or put the pool at stake by going offline.
An Ethereum faucet is a reward system that allows you to earn Ether for completing online tasks. These tasks are usually very simple — for example, solving CAPTCHA problems. In exchange for completing tasks, you’ll be rewarded with a small amount of Ether. An Ethereum faucet can allow you to earn Ether without an expensive mining rig or spending hundreds in increased electricity costs.
Ethereum faucets are funded by companies that gain ad revenue from the pages offering these tasks. The company then funnels a portion of its advertising revenue back into the program to offer more Ether. Thus, the companies that fund faucets are the primary beneficiaries. Though there are very few start-up costs associated with using an Ethereum faucet, the amount of Ether you will gain will be very small.
Buy and Hold
The most popular way to earn money from Ethereum is through long-term investing. Long-term investing is similar to trading — you’ll watch the market and convert fiat currency into Ether when you believe the cryptocurrency’s token is undervalued.
You’ll then hold onto the cryptocurrency until the token rises in value, when you’ll convert the token back to your fiat currency of choice. The amount of time that you hold your cryptocurrency can vary from a few months to a few years.
If you do decide to take a long-term approach to investing in the Ethereum network, it’s a good idea to store your tokens on an off-broker wallet. A cryptocurrency wallet provides you with an enhanced layer of security for your tokens, as these wallets are significantly more difficult to hack when compared to a brokerage account.
Add Ethereum to Your Portfolio
With 1 of the 1st decentralized technology forefronts and an impressive infrastructure, an Ethereum investment can be a unique addition to your overall portfolio. However, it’s important to remember that the value of the Ether token is never guaranteed.
If you do decide to invest in the Ethereum network, its token should only make up a small percentage of your overall portfolio. Use our guide to get started making money with Ehtereum now.
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