The second largest cryptocurrency by market cap, Ethereum is among the most popular names when it comes to the world of cryptocurrencies. Having been around for quite some time now, Ethereum has attracted millions of backers who invest regularly in the platform as well as in the ETH cryptocurrency.
The Ethereum platform is different than most other cryptocurrencies. While most blockchain systems are built to transfer payments or tokens, the Ethereum blockchain also allows running of decentralized apps built using Solidity as well as the execution of self-executing smart contracts. There are two ways to obtain Ethereum - you can either mine for it, or directly purchase it or trade other currencies for it.
Each of the aforementioned ways to acquire ETH cryptocurrency has its own pros and cons. Let us take a closer look at Ethereum Mining as well as Ethereum Trading and analyze which of the two is a more suitable means of acquiring the currency in 2018!
‘Mining’ for cryptocurrencies is basically the process using which new cryptocurrencies are created. Millions of people around the world are mining for Ethereum. Up until now, it was only possible to mine Ethereum with the help of GPU based processing. However, recent reports indicate that Bitmain, the world’s leading cryptocurrency mining equipments manufacturer, has designed an ASIC miner for Ethereum.
Mining is an investment-heavy activity. GPU mining rigs have to be set up which cost thousands of dollars each. In addition to that, a high amount of electric power is also consumed in the mining operations and a certain amount of cost also goes in keeping the mining rigs cool. With cryptocurrency prices going very unstable of late - mining can be a very risky operation.
Before you enter Ethereum mining, you must make use of an Ethereum Mining Calculator which will help you calculate the amount of profit that you would make, as well as how long will it take for you to break even in this mining operation. These Ethereum Mining Calculators consider various factors such as the price of ethereum, the mining power and the hash rate of your miner, the cost of electricity in your region, etc and provide you with a very accurate figure.
However, with Bitmain having developed ASIC miners for Ethereum mining, they have bought a gun to a knife fight. This will surely affect existing miners as once a mass adoption begins, GPU mining may become ineffective in the long run. However, it would take 4 to 6 months to see if the markets are favouring Ethereum mining with ASIC devices.
While mining is supposed to be an operation of obtaining cryptocurrencies which pays off for itself in the long run - trading is basically an investment which needs constant monitoring. Trading for Ethereum is similar to trading any other cryptocurrency such as Bitcoin and has pretty much the same rewards vs risks scenarios.
Ethereum trading can take place over various trading platforms or on cryptocurrency exchanges. There are some platforms which offer direct purchases of Ethereum in exchange for your local cryptocurrency. In some platforms you need to convert your currency to USD and then there are other platforms where you can buy Ethereum in exchange for other cryptocurrencies such as Bitcoins. These ETH cryptocurrencies that you buy can be traded directly for cash, or for other cryptocurrencies if the platform offers ETH based trading pairs.
While the arrival of ASIC Ethereum miners can be a risk for Ethereum miners, it is certainly a benefit for those trading. The current market expectations are that ASIC mining would help boost the prices of Ethereum.
However, while trading involves lesser investment compared to mining for Ethereum, the fact of the matter is - that there are a number of risks associated with trading too. The biggest risk would be that of the price volatility of cryptocurrencies. Ethereum prices, which reached over $1400 at one point of time - are currently down to $400. Hence those trading in Ethereum may incur serious losses too!
To conclude, it is hard to say which is a better option - to trade or to mine, as a number of factors influence the decision making processes in both these options. However, as a basic rule of thumb - if you want to obtain Ethereum and have a limited amount of funds, the best option would be to trade. If funds are not a concern, mining can be a considerable option - but it is best advised to wait for a while and observe how the markets react to the Ethereum ASIC mining devices.