How To Invest In Ethereum Classic - Step-by-Step Guide
Its story is connected to a hacker attack. The hacker attack tried to steal all the funds and some members of the Ethereum team attempted to save the cryptocurrency by hard-forking it.
From this event, Ethereum, as we know it now, was born, but many users kept investing in the original Ethereum Classic. Despite these events, the original Ethereum is still embraced by a relevant number of followers.
Table of Contents
Invest in Ethereum Classic in 3 Steps
Get an Ethereum Classic wallet
To start buying/selling Ethereum Classic you should start by having access to some kind of wallet. The options, in this case, can be either a cold or a hot wallet.
Wallets come in different forms, such as smartphone apps, desktop apps, tokens and other hardware wallets. Many wallets also come in the form of mobile apps. In this case, you can have access to your favourite cryptocurrency directly from your phone.
Join an Ethereum Classic exchange
To start buying/selling Ethereum Classic, you can join an exchange that will allow you to purchase/sell this digital money with fiat currency. It is common for apps to offer both trading and wallets on the same platform. You will need to register and verify your identity before you can exchange your fiat currency with Ethereum Classic.
Invest in Ethereum Classic
Now that you are able to buy/sell Ethereum Classic, you will have to verify your identity and select your payment method. This is the last step before you start investing your money in this cryptocurrency.
Investing in Ethereum Classic Explained
A good habit when starting to trade a cryptocurrency is to get informed on the tools and systems you will be using.
Probably, the most essential tool you will need is a cryptocurrency wallet, because it allows you to store your assets and keep them safe. The two main types of wallets you can choose from are "cold" wallets and "hot" wallets.
The first type of wallet is called cold due to the fact that they keep your cryptocurrency away from the internet. If you plan to go for a long-term investment, you should consider this type of wallet, given that hot wallets may be exposed to hackers, just like anything else connected to the internet. You should really consider this option also if you plan to invest a significant amount of money. In the cold wallet group, you can find hardware wallets that offer the best security but are also expensive.
Hot wallets, on the contrary, are thought to keep your cryptocurrency in an easily accessible place. Hot wallets are ideal for users who trade frequently and need easy and quick access to their assets.
Other than these tools, smartphone apps nowadays are undoubtedly the easiest option. Having the market in the palm of your hand is the best way to control your investments and quickly act when trades change.
Various protocols are in place to ensure security on platforms trading cryptocurrency.
Most platforms use multi-factor authentication, which is the most commonly used method of verification among the world's major financial institutions. The user is expected to share several contact channels during the registration process. This is because the app will ask you for your chosen password first, and send you a message, an email, or a phone call after to ensure that you are the user trying to access the account.
This is necessary because if someone with bad intentions tries to steal your money, you will prevent them from accessing your account.
The Know Your Customer (KYC) technique is another security measure. This type of monitoring is used to verify the identity of a user and to prevent corrupt organisations or individuals from gaining unauthorised access to financial services.
When it comes to asset allocation, you must consider whether you want to be very aggressive on the exchange and trade in response to small market volatility, or whether you want a long-term strategy that does not require you to spend a lot of time on these platforms.
In the following sections, we will go through various strategies and how to use them.
Where Can You Invest in Ethereum Classic
The focus of our team is to offer the best options available on the market to our readers, in order to help them make the best choices for what concerns their investments. Below is a shortlist of our selection of some of the most popular platforms for investing in ETC.
A comprehensive set of payments are available when you are investing in Ethereum Classic. Most of the platforms where you can buy this cryptocurrency accept payments from your bank account and credit card.
The process to define your payment methods usually takes place during the registration process, because the provider needs to verify you are the owner of your bank account or credit card.
To complete the verification, you will need to send a small amount to your account on the platform. Another standard method used to verify your payment is the one that involves your provider charging a small amount on your bank account. You will be then asked to insert the amount that was charged on the platform. The whole verification process can take up to some days depending on what provider you are working with.
Now that you have verified your payment method, you will be free to start making deposits.
Ethereum Classic Investment Strategies
We will now go through some of the most recognized strategies to help you receive the maximum benefit from your investment in Ethereum Classic.
Buy and 'Hodl'
What is it?
The name of this strategy is related to a joke concerning the 2013 recession of cryptocurrency prices. Due to the Chinese crisis, the whole market went crazy and everybody started selling all their investment in cryptocurrency. GameKyuubi, a user posted "I AM HODLING".
He explained that he considered himself a bad trader and it made him realise that the best decision was to avoid selling. His reason was that big parties in the market could only take his money if he sold.
Hodling is a long term investment strategy that ignores short term price fluctuations. A Hodler needs to have a lot of patience and must not be swayed by emotions.
How to use this strategy
It is quite simple to use this strategy: you should invest in Ethereum Classic and then hold still even if the trend is going down. After the storm is passed, you will have your asset worth as much as before, if not more.
When to use this strategy
The best moment to invest in this strategy is during a low moment. Considering the Ethereum Classic price trend, its all-time low reached $0.615038. The all-time high, instead, hit $44.34. Considering these two boundaries, you can make your best decision about when acting in the market.
It is very common for cryptocurrency to have high volatility, so the best moment could actually be very soon. It also should be considered that these types of assets can increase their value very quickly, as it happened for other cryptocurrencies that are now trading at thousands of dollars. If you see it from this point of view, even the highest price reached by Ethereum Classic can be a great deal!
Buy Fractional Ethereum Classic
What is it?
This technique is most often used for cryptocurrency that has reached an extremely high valuation that not all traders can afford. When we say fractional, we are referring to a strategy in which the aim is to purchase a small fraction of cryptocurrency rather than an entire unit.
How to use this strategy
This approach is beneficial and realistic because it allows everybody to compete in the market. For example, a trader can accumulate a significant investment by setting aside a small sum per month.
The point of investing small sums each month is that the investment is very likely to increase in value over time; so even though you spend $50 per month, you might end up with way higher funds at the end of the year.
When to use this strategy
To invest in Ethereum Classic by using a fractional strategy, start with a small amount and gradually increase your earnings over time.
Long Position on Ethereum Classic
What is it?
This strategy entails buying an asset like Ethereum Classic in the hopes of making it rise in value in the future. This is the most famous technique, which is the polar opposite of the short position.
These types of strategies are quite used in the marginal trading environment, a practice that involves investing borrowed funds. Of course, you should take into consideration that a certain degree of knowledge is needed to trade without actually owning your funds. Significant losses can occur after a wrong move, and you should be able to afford any accident before starting trading with some type of leverage.
Going long with Contract for Differences (CFDs) is another type of long position strategy. CFDs are a type of derivative financial product whose value is determined by the underlying asset, in this case, a cryptocurrency investment. When trading CFDs, keep in mind that you never own rights to an asset; it is just a way to value your contract.
Going long is a strategy in which you use your CFD to profit from an asset's price rise. This is the same situation as if you had purchased the financial product and the profit or loss was determined by the difference between the entry and exit prices. As a result, the expression "contract for differences" was coined.
How to use this strategy
This approach, which entails investing in a bull market, can be conveniently implemented on any trading site. The term "bull market" refers to a market in which you can invest your cryptocurrency in the hopes that its value will continue to rise in line with the bullish trend.
When to use this strategy
When the economy is growing, this strategy pays off. The increase may be attributed to favourable economic news, positive political developments, or merely a pattern spread by more influential traders. It is definitely a smart idea to stay up to date with what is going on in the cryptocurrency community since a lot can happen in these volatile markets in a short time.
Benefits of Investing in Ethereum Classic
- Smart Contract- These contracts have the virtue of self-regulating, making it difficult for either party to defraud the other.
- Peer-to-Peer- This technology allows the system to operate in a decentralised manner while maintaining the highest level of security, considering the whole process is monitored by the entire community.
- Proof-of-Work (PoW)- Proof of Work is the most common verification system used by cryptocurrencies that ensure their safety. The algorithm used by ETC is Ethash.
Disadvantages of Investing in Ethereum Classic
- Spread FUD in its community- Because of its sibling Ethereum ETH, many investors are afraid this cryptocurrency may just be shut down.
- Hacker attacks- Unluckily, this cryptocurrency is still subject to some hacker attacks, and this may discourage some investors.
Other Ways of Investing in Ethereum Classic
We looked at various ways to exchange Ethereum Classic in the parts above, but there are other ways to trade this cryptocurrency.
Face-to-face transactions are a choice if you meet other people who are investing in this cryptocurrency. If you are thinking of meeting with an anonymous vendor, make sure you organize the meeting in a secure location and have some background details on them before you meet. Peer-to-Peer exchanges provide an easy way to meet prospective users and some exchanges also provide escrow services to ensure greater safety.
Trade Ethereum Classic on Leverage
Leverage is a strong tool when it comes to trading Ethereum Classic. As a result, it should be carefully assessed. This method is especially helpful in the short term when we anticipate a promising trend and want to capitalise on it. When you trade with leverage, you are given more control on the market than you would otherwise, and this puts you in the position of much more significant losses. Leverage means borrowing assets from the platform but the downside is that the platform could liquidate your holdings if the trade does not go your way.
Leverage is possible on brokerage platforms such as eToro, Skilling, and Plus500. Still, it is usually not a default option and requires careful verification from the system, considering that putting this tool in the wrong hands would mean putting the investor in a dangerous situation. For this reason, it is also advised to only invest funds you can afford to lose. Leverage is usually used by experienced users and new investors must gain some experience before using leverage.
Invest in an Ethereum Classic ETF
Another option for trading Ethereum is to use ETF (Exchange Traded Funds). If you want to invest in Ethereum Classic or combined funds but are not sure you will be able to keep up with the price monitoring process, this method may be useful. An ETF is a comparatively less risky alternative and is recommended for new investors who may not have sufficient technical knowledge about cryptocurrencies.
Investors may prefer this method because it allows them to be passive while still receiving a profit. This is a more comfortable and faster way to trade Ethereum Classic without engaging too much in the whole process.
Mine Ethereum Classic
The network has a low degree of difficulty, so it is not so hard to find new blocks. At the same time, hacker attacks can significantly reduce the speed of this process, making the whole operation more complex. The block confirmation increases were set in order to stop these attacks. However, it is still not considered a secure and stable system.
Frequently Asked Questions
Yes. A wallet is required to store the token. Most platforms provide an in-built wallet but for long term secure storage, a user should select a cold wallet. Leaving funds on an exchange wallet is risky.
It will depend on local laws. Most countries are in the process of formulating taxation laws for cryptocurrencies.
This cryptocurrency was created by Vitalik Buterin.
Yes. Most regulated and reputed platforms will insist on identity verification as it helps to verify the user’s identity and provides a secure environment to the users.
A user should invest through a regulated platform that insists on KYC. Additional security measures such as 2FA can also be used to secure the account.