Ethereum is a public open-source computing platform that is based on blockchain technology. It provides a decentralized Ethereum Virtual Machine, or EVM, which executes scripts utilizing an international network of public nodes. Ethereum is also in the cryptocurrency business, and features a token known as ether. These ether tokens are used to compensate network participants for work performed and are transferable between accounts.
Ethereum is rooted in a paper that was written by a programmer named Vitalik Buterin. When the project was officially announced, Buterin and a group of associates made up the team. Once actual development of the technology commenced, it was performed through a Swiss company called Ethereum Switzerland GmbH. At the same time, the Ethereum Foundation was also formed as a non-profit. Interestingly, the project was financed by a public crowdsale in the summer of 2014, and those who wanted to participate purchased the ether token using another cryptocurrency, Bitcoin.
Ether tokens are of finite supply, and that supply as well as the rate of issuance was set during its 2014 presale. 60 million ether were created for contributors of the presale, while an additional 12 million were created to compensate early contributors and developers of the technology. Anything left over was to go to the Ethereum Foundation. New ethers are also created when blocks are mined. Total issuance of ether is limited to 18 million per year, and absolute issuance is capped. The limited supply of ether has the potential to have a significant effect on Ethereum prices.
Ether, like Bitcoin and other cryptocurrencies, is a potential alternative to traditional payment methods such as cash, credit card, debit card or bank wire. Opinions may vary on the long-term viability of cryptocurrencies, but many people are looking for ways to invest in these new forms of money. While some are trading digital currencies actively, others are interested in investing for the long run.
Cryptocurrencies can have a number of potential advantages compared to other payment methods. Some of them include added convenience, lower fees, ability to send funds internationally with low fees and no need for foreign exchange as well as the possibility of lower fraud risk. Some merchants have begun accepting ether, and it is likely that more and more merchants will begin accepting the cryptocurrency as it becomes more popular and has an established track record of reliability.
If you are looking to invest for the long run in ether, you may want to consider an Ethereum IRA account. This is a self-directed IRA account that enables the account holder to purchase asset classes outside of traditional stocks or bonds. An Ethereum IRA can have several advantages. Some of the potential benefits include tax-deferred growth on any gains made and a possible tax deduction on contributions.
Gains made within a self-directed Ethereum IRA are non-taxable until distributions are taken provided all rules and guidelines have been adhered to. If you are interested in the long-term possibilities of Ethereum, then an Ethereum IRA account may be the way to go. Of course, tax related or eligibility questions should be directed to your tax professional.