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Eddy Zillan is an 18-year-old high school senior in Cleveland. He loves going to car shows and he plans to attend dental school after he graduates to become an orthodontist. In many ways, he’s like most students his age except for the fact that he’s made a fortune buying and selling cryptocurrencies.
“A portion of the money I received for my bar mitzvah, I used it to fund my investments,” he says in an interview on Nov. 30. “Also, I used to work as a tennis instructor and I invested that money as well.”
Chances are you’ve heard about bitcoin and its meteoric rise and wild price swings. Zillan looked into bitcoin years ago but decided to invest most of his cash in another, lesser-known virtual currency invented in 2013 by Russian Canadian Vitalik Buterin called ether.
Luckily for Zillan, ether has seen its price spike more or less in tandem with bitcoin’s. But the price of ether has gone up more than 5,000 per cent in the last year, while bitcoin’s price has shot up about 2,000 per cent.
“I don’t want to disclose the exact amount because its value is going up and down and some days it might increase a lot,” Zillan says. “But I would say just off of ether, I’ve probably made over half a million dollars based on its current price of $ 471.” (Ether’s price fluctuates and soared to as much as $ 479 and as low as $ 420 on Friday.)
Like bitcoin, it’s a decentralized cryptocurrency, meaning it isn’t backed by a government, central bank or some other authority. It’s supported by a network of sophisticated computer servers located around the world. Like bitcoin, it is mined by people who use computers to solve increasingly difficult math problems in order to earn a piece of the currency.
“People investing in bitcoin and Ethereum see them achieving different objectives and they see them both to be valuable,” says Hilary Carter. She’s the director of faculty at the Blockchain Research Institute in Toronto.
Carter says ether and bitcoin are both recognized as forms of payment. But where ether has the edge is its smart contracts. These allow the seller and the buyer of ether to attach conditions to payment.
A simple example would be using a smart contract that says if your dog walker performs the agreed-upon-service on specified dates, then they get paid a predetermined amount. But the potential applications go far beyond that.
But all of this is, for now at least, a concept. The technology is there, in its infancy perhaps, but it needs improvement and wider adoption. Carter says these question marks around ether and bitcoin are part of the reason their prices fluctuate so much.
“All cryptocurrencies have a tremendous amount of volatility about them. It’s just the nature of the beast,” she explains. “This is experimental technology and with that comes the ups and the downs.”
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