The second largest cryptocurrency after Bitcoin is Ethereum. Ethereum is a unique cryptocurrency with its goal aimed more for developers than simply being a coin to buy and sell. It’s got a lot of potential so if you’re looking at how to buy Ethereum and why you should, you’ve come to the right place!
How To Buy Ethereum: Quick Overview
Just like all cryptocurrencies, learning how to buy Ethereum requires a little bit of setup so you can buy and store your Ethers.
You will need to:
Create an Ethereum wallet
Verify your identity on your platform of choice
Select and set up your payment method, such as VISA, debit card, or PayPal
Purchase your Ethers!
We will give you a quick background into the cryptocurrency and then go over these steps in detail so you’ll know exactly what you need to do.
What is Ethereum?
Ethereum was launched in July 2015 as an operating system and distributed computing platform. Based on the same blockchain model as Bitcoin, Ethereum uses this technology to create smart contracts that facilitate credible transactions without the use of a third parties.
One of the founders, Vitalik Buterin, described its goal for building decentralized apps through blockchain technology.
Ether (ETH), Ethereum’s cryptocurrency, works as the public ledger recording transactions permanently into its blockchain. So when you learn how to buy Ethereum, you are actually buying its cryptocurrency token, Ether (ETH). Here’s a quick summary table about the features of Ethereum:
|Supply Style||Inflationary (No Set Amount)|
|Coin Cap Limit||18 Million ETH / Year|
|New Token Issuance – Time||Every 10 – 20 seconds|
|Block Reward Details||5 ETH / new block|
|Initial Reward||5 ETH|
|Current Block Reward||5 ETH|
|Fiat Price Value||1 ETH = 400 USD (July 2018)|
|Utility||Designed for creating dApps (decentralized apps) on the Ethereum blockchain.|
|Goal||A token created to facilitate the creation of Smart Contracts.|
What makes Ethereum different from other cryptocurrencies is that it operates uniquely on an inflationary scale similar to fiat currencies. So if you’re looking at Ethereum and are interested in generating or mining coins, this could be a great opportunity.
Setting Up a Wallet to Buy Your Ethereum
For any form of online work, whether as someone carrying out tasks for a company or investing in cryptocurrency, you need to make sure that you are secure when money is exchanged.
The first priority of business with Ethereum is to set up an online wallet where you can move your Ethers from a cryptocurrency exchange to storage for safe keeping.
Coinbase and MyEtherWallet are popular online wallet choices. Or, you can even register for an Ether online wallet through Ethereum’s website! Once you open your online wallet and learn how to buy Ethereum) through an exchange, you can move your purchases to the wallet for storage.
It’s recommended that on top of registering for an online wallet you also invest in an offline software wallet or hardware wallet for safe storage of your Ethers. While online wallets are generally secure, keeping a wallet that takes your Ethers off of internet storage ensures protection from possible hacks.
So when you use your online wallet, only keep what you need to buy and sell on this type of wallet. You can then move the majority of your Ether investment to an offline or hardware wallet for safe keeping.
Popular wallets for ways to store Ethers offline include Exodus, or the hardware wallet Ledger Nano S. You can read our full guide on how to store cryptocurrency and what type of online, offline or hardware wallets would work best for your needs.
How to Pick a Trading Platform for Ethereum
After setting up your wallet, the next step in buying Ethereum is to register for an exchange. While there are many international exchange platforms on the market, depending on which country you are in, there may be a preferred exchange for purchasing your cryptocurrency of choice.
Be sure to look into this as this may be more compatible for your needs. Otherwise, there are a few options with how to buy Ethereum:
This option usually includes you purchasing Ether from a seller directly and without a middleman such as an exchange. Here, the seller will sell Ethers at an exchange rate set by him or herself and you would have to agree (or disagree) on the price. From there they will transfer the designated Ethers to your wallet directly.
Usually, people who opt for this know someone who they can purchase from. In some cases, there may be countries with certain regulations on the buying and selling of cryptocurrency, making direct trading the most viable option.
While the downside of direct trading is that the buyer doesn’t have as much control on the exchange rate for Ether, there is also no transaction fee from a middleman making the process the most straightforward.
For those learning how to buy Ethereum but not wanting to jump head first into a full marketplace, cryptocurrency brokers provide an easy medium to get started.
Unlike a trading platform where buyers and sellers list their bids, cryptocurrency brokers list one set exchange rate based on what the buyers and sellers agree to. Do keep in mind that cryptocurrency brokers will charge a premium between 5% to 10% of a transaction, so you’ll need to weigh this cost against the other options.
While cryptocurrency brokers don’t provide as much pricing flexibility as trading platforms, they can take some of the complications out of the process as well.
That is the premium you’re paying for. With it being a more straightforward option, many people learning how to buy Ethereum may choose this route and register for popular brokers like Coinbase to start.
Trading platforms like Kraken are generally seen as the marketplace for buying, selling, and making money with cryptocurrency: This is where buyers and sellers can make bids on their desired trading price, either a specific price or a range of prices depending on the market value of cryptocurrencies like Ether.
Here, you may have to wait a few seconds to several minutes for someone to match your bid price to make the sale. By using trading platforms, you also can get a sense of how much people are willing to pay for cryptocurrencies like Ether from a play-by-play perspective.
For both brokers and trading platforms, you can purchase Ether through trading other cryptocurrencies like Bitcoin, Litecoin or Ripple. You can also attach a debit or credit card, bank account or maybe even a PayPal account so you can purchase Ether directly from a fiat currency.
One thing to note about learning how to buy Ethereum are the transaction fees involved: Usually with a trading platform, the fee is listed in cryptocurrency. Make sure to compare the cryptocurrency value to a fiat currency value to make sure you agree to the fee.
You don’t want to trade $80 worth of Ether with a transaction fee of $30!
This is an extreme example. But, it is important to always check the value of the trading platform transactions fees before proceeding.
Tips for Purchasing Ethereum
There are a few safety tips and tricks to keep in mind while learning how to buy Ethereum. Remember that while buying, selling and trading with different ways of making money online like cryptocurrency and Ethers can be exciting, you don’t want to have your accounts compromised or lose your cryptocurrency investments!
Add security to your wallets and exchange accounts
When you first set up your accounts, add any security options available to you so you can keep your account safe.
This includes regularly changing your password. It’s recommended to do this every month. It’s also highly recommended that you only access your wallets and trading platforms in a private setting. While this may sound like overkill, these are steps you can take to ensure the safety of your investments!
Many online wallets, offline wallets, hardware wallets and exchange accounts will also have a 2-factor authentication option. Enable this as an extra layer of security at login so anyone who may try to access your account will still need authentication from your mobile or other computer to confirm a login request.
Backup all of your wallets and enable recovery options
In addition to adding security measures when possible, make sure to backup all wallets and enable recovery options for offline or hardware wallets.
While all wallets and exchanges aim for the best security possible, there is little you can do if your computer or hardware wallet is affected by malware, damaged, stolen or lost. By making backups of your wallet and enabling recovery options, you can regain access.
Even though scenarios like these sound a little far fetched and maybe even near impossible, do what it takes to keep your Ether investments safe.
Confirm your identity with the exchanges
Most trading platforms and brokers will let you register for an account for free. But, you won’t be able to buy and sell Ethers or any other cryptocurrency until you confirm your identity.
Most exchanges will require 2 things to confirm your identity: a copy of a current ID and a current photo. They may have specifications like having the name of the exchange written on a piece of paper next to you.
In any case, after you submit both for review and the application is approved, you will have full access to the exchange platform. You can then add a payment option and learn how to buy Ethereum through experience!
Ether is the second largest cryptocurrency traded on the market today. With its structure based on app development, there is only room for Ethereum to grow. Learning how to buy Ethereum can open up all sorts of investment opportunities and provide you with a good income. So what are you waiting for? Buy some Ethers today!