Much of the luster has worn off of this first cryptocurrency, Bitcoin. It reached a peak of near 20 thousand dollars in December of 2017 and has been falling ever since. Is there anything else out there with as much potential as Bitcoin once had? The more I look at Ethereum, the more I think we may have a worthy successor to Bitcoin.

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The History of Ethereum

Ethereum is the brain-child of a Russian programmer/developer named Vitalik Buterin.

Vitalik hatched the idea for his project that was to become Ethereum in late 2013, about four years after the launch of Bitcoin. His idea was to build new infrastructure using the concepts of the blockchain and decentralization. In other words, his project would not be just about currency.

After pushing his ideas, Vitalik was able to raise money to fund his project in July and August of 2014 through an open funding appeal. This new currency was ready to be released on July 30 of 2015 with 72 million Ether to be distributed amongst interested buyers. Ether (ETH) is the name of the cryptocurrency supported by Ethereum. There are aspects of Ethereum that make it more special and revolutionary than Bitcoin.

What is so special about Ethereum?

Ethereum was always meant to be about more than just Cryptocurrency.

The Ethereum platform supports something called Smart Contracts.

A contract is an agreement between two or more people to cooperate or interact in some way. This cooperation typically sees the transfer of money between parties in exchange for the provision of goods or services.

Lawyers and the Court system are third parties that exist to enforce contracts. The idea behind Smart Contracts is to make these third parties redundant. With Smart Contracts, Lawyers and Courts should no longer be needed because the contract is automatically enforced via computer code.

A Smart Contract is a program that can be uploaded to the Ethereum network and is distributed to all the nodes on the network. Because it is distributed there are copies everywhere and it is virtually impossible for the program to be lost. Also, an important aspect of Smart Contracts is immutability. Once these contracts are uploaded, like everything that is recorded in the blockchain they can not be changed.

When you think of how these Smart Contracts work, think of a vending machine. A vending machine is programmed to take certain inputs and distribute a product. These inputs are in the form of a certain amount of money being deposited into the machine and a selection being made. If the money input matches the cost of the selection that is made, that product is dispensed.

Smart Contracts work the same way. If the conditions of the contract are fulfilled by two or more parties the code automatically causes the terms of the contract to be fulfilled. We see this process already at work in today’s economy.

There are major cities with bike rental kiosks. These kiosks are accompanied by bikes in special locking bays waiting to be rented. All one needs is a credit card or debit card to insert into the kiosk. So long as you are able to pay and fulfill the conditions of the rental contract, the kiosk will unlock one of the bays for you use a rental bike. These kiosks could well be connected to the Ethereum network and a smart contract.

Besides Smart Contracts, Ethereum supports gaming. Game developers can upload their games to the Ethereum network. Anyone who has produced a game or has a stake in the game design can earn money as players use the uploaded games.

Given that the commercial applications of Ethereum are so plentiful it is only natural to believe that the Ether is a cryptocurrency whose value has yet to spike. We ought to remember that Bitcoin had been around for more than 8 years when it spiked to its highest point.

The Ether has not been trading for even 5 years and the Ethereum platform is much more advanced in its capabilities of supporting commerce than was the Bitcoin platform. The Bitcoin platform is lacking compared to the ways that the Ethereum platform supports the Ether.

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About Ethereum

  •  Conceived by  Vitalik Buterin.
  • Ethereum has yet to see its peak in value.
  • Ethereum doesn’t simply validate money transactions, its blockchain allows smart contracts and video games.

Buying Ether (ETH)

Due to the nature of cryptocurrency and the role it may play in money laundering and other criminal activities, verifying the identity of each and every holder is of critical importance.

Before you will be accepted on a platform to purchase cryptocurrency you must provide a valid form of Identification. If you are in the US you must supply a Social Security number for tax reporting purposes. You must also verify your email and provide and verify your phone number.

After all ID requirements have been met, you fund your account. This was usually done by a transfer from your bank. Even then the link between the cryptocurrency platform and your bank must be verified unless you wanted to send in a check. This link verification is done by the transfer of small amounts of money and you verify the amount and dates of these transfers.

There are many payment methods available now compared to the early days of cryptocurrency. To buy Ethereum with PayPal used to not be much of a thing, but that is changing. More platforms than ever are warming up to PayPal as a source of funding accounts. This article seeks to introduce you to four such platforms that use PayPal to make funding your cryptocurrency trades easier.

Buying ETH Using LocalCryptos

LocalCryptos is a site on which you can purchase just two cryptocurrencies for now. According to the website IOS.iO (IOS), Dash and Litecoin are about to be introduced on this platform. Right now only Bitcoin and Ether can be bought or sold.

From the LocalCryptos introductory page click on “View the Marketplace” to get to a page showing buyers and sellers.

Buy Ethereum on Localcryptos.

On this page, it is very intuitive as to what to do if you want to buy Ether. At the top of the page are four menu selections. The first determines whether you want to buy or sell. The next menu item determines the cryptocurrency you want to buy or sell.

Buy Ethereum on Localcryptos second step.

The third menu item concerns how one wishes to pay. There are many methods to choose from. You can choose PayPal if you wish.

Buy Ethereum on Localcryptos third step.

The final menu item is for your national identification. For US citizens, the United States is an available choice. So if you indicate that you want to buy Ethereum (Ether) using PayPal in the United States, a list of individual sellers will come up after you press the search button. After you have registered with LocalCryptos you can purchase from any of these sellers.

Buying Ether with LocalBitcoins

Technically, LocalBitcoins is only for buying Bitcoin, but there is a way around this to obtain Ether. That is because LocalBitcoin is both a buying and selling platform. When you go to the LocalBitcoin website you will notice very simple formatting.

First, you click on the tab that says you are a buyer.

Buy Ethereum on LocalBitcoins, first step.

On the menu above you indicate the currency (including FIAT) and the amount that you wish to spend. There is another menu for how you intend to pay where you can select PayPal.

Buy Ethereum on LocalBitcoins, second step.

Click on any seller that you prefer. Read the terms of sale for that seller. If everything is agreeable you may purchase Bitcoin.

Once you have the Bitcoin in your digital wallet you can turn around and become a seller yourself. Only this time in your terms of sale you will indicate that you only wish to sell your bitcoin for Ether. Eventually, some buyer who holds Ether will be willing to buy your bitcoin. Bitcoin will be transferred out of your digital wallet and Ether deposited.

It ought to be noted that under the LocalBitcoin help tab is a “Frequently Asked Questions” (FAQ) selection. One of the questions on this FAQ is highly relevant to our topic. It asks why it is so expensive to buy Bitcoin with PayPal or with a Credit Card. Although using PayPal is highly convenient, the potential excess cost is a major disadvantage

If a seller of Cryptocurrency accepts payment via PayPal, that payment may be withdrawn or frozen if the purchaser owes an unexpected debt that PayPal is responsible for collecting. Meanwhile, the seller’s transfer of cryptocurrency cannot be reversed. It is gone for good. That is just the way cryptocurrency works. To account for such possibilities sellers often expect a premium on their sales of cryptocurrency via PayPal.

Buying Ether with Etoro

Buy Ethereum on eToro. Perhaps the most difficult thing about using Etoro is registering and verifying your identity. Once that is done Etoro is remarkably easy to use. This platform just opened up operations in the United States in March of 2018. It is fully regulated and has ten million users.

Once you are all signed up to use Etoro, from the trading page you will see a green button in the lower-left corner that you click on to fund your account. This will bring up a box on which you will enter the amount to transfer to your Etoro account. You will also be given a funding option. From this option, you can choose PayPal if would wish to fund with PayPal.

You will click the button on the box to fund your account and be taken to a PayPal sign-in page. After entering your email and password on this page you will have verified the funds’ transfer from PayPal which should take just a few minutes to complete.

When the funds show up in Etoro, simply go to the cryptocurrencies page and click on the buy button for Ethereum. Another box will appear on which you will enter the amount of Ethereum that you wish to purchase. Hit the button to complete your purchase and it should go through immediately.

 

Using Xcoins to Obtain Ether

The Xcoins website is another one of those sites on which you may only purchase Bitcoin. Xcoins is interesting not for that reason, but due to the fact that you can use Xcoins to be either a lender or a borrower. If you are a borrower you could possibly benefit from a price drop in Bitcoin and either stability or a price increase in Ether, and you can use PayPal to pay the lender collateral for the Bitcoin you borrow plus a fee.

Let’s look at an example of how this would work. As of the writing of this article, according to Coinbase one Bitcoin is trading at $7,234.72 and one Ether is trading at $127.59. If you contact a lender on Xcoins you may decide to borrow one Bitcoin from that lender in anticipation that the price will go down.

Let us assume a 2 percent fee on this transaction. Based on the above Bitcoin price that fee is $144.69. The total you will pay the lender for the one Bitcoin lent to you will be $7,379.41. You will sell the Bitcoin you are loaned.

Let us assume for this transaction minus fees that you clear $7,150.00. With this money, you will purchase Ether on some other exchange. Let us assume you are able to purchase 55.86 Ether. At the end of the term of the loan, Bitcoin has declined in value to your target price of $6,850.00 while Ether has climbed to $135.00.

You will then sell your 55.86 Ether at the above higher price. Assuming you must pay a 2 percent commission you will get $7,390.00 in net cash. You will use this cash to purchase one Bitcoin at the above noted reduced price.

Assuming, another 2 percent commission you will purchase this Bitcoin for $6,987.00. You will return the Bitcoin to the lender and get back your collateral minus the fee for $7,234.72. If you subtract the price for purchasing Bitcoin from the price that you sold Ether you have a gain of $403.28.

From the above amount, you must also subtract your original fee of $144.69. Your net profit on this trade is $258.59. That is 3.5 percent on what you originally spent. Depending on the time period of the loan this could be a very good trade indeed.

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Where to buy Ethereum

The following exchanges allow you to purchase Ethereum with PayPal:

Conclusion

It is becoming ever easier to buy Ethereum with PayPal. For a strait purchase of Ethereum, it seems to me that either LocalCryptos or Etoro is the way to go. If you want to profit by betting that Bitcoin will go down and Ether will rise then Xcoins is right for you.

Crypto trading has entered a new age and PayPal is a part of that.

Alex Promising Trader

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