How To Buy Ethereum

How to buy ethereum - a complete guide

Learn how to buy Ethereum (ETH) with a Debit / Credit Card. Quick and easy. Lowest fees. Follow our step-by-step instructions and get started in 5 minutes.

how to buy ethereum

One of the most ambitious cryptocurrencies to date, Ethereum (ETH), launched in 2014 with the mission to decentralize products and services in a broader way than use cases beyond money.

Ethereum is referred to as the “world computer”, a software that enables new types of applications to run on its network. The concept is that all programs on the system cannot be censored or limited as it is distributed and run through the global Ethereum network.

This global network enabled hundreds of new cryptocurrencies and applications to launch as part of the Ethereum network itself, some projects being MakerDao and Uniswap.

For those of you who are new to the world of cryptocurrency and Ethereum, this complete guide will teach you how to buy Ethereum, what exchange to use as well as some history behind the currency itself.

Buy Ethereum in 4 steps

Ethereum is a cryptocurrency that you are bound to come across as soon as you dive into the world of cryptocurrencies. It is, as of 2021, the worlds second-largest cryptocurrency and is both faster and more versatile than its big brother Bitcoin. In this chapter, you will learn how to buy Ethereum safely, fast, and in our opinion, the easiest way.

1. Decide where to buy Ethereum

Because of the sheer size of Ethereum, nearly all cryptocurrency exchanges currently offers it on their platforms. The first step is to find an exchange that accepts fiat money, such as US dollars or the British Pound.

We recommend that you open an account on the Binance exchange. Follow this link, enter your information, and click on “Start Trading“! →

There are also several other cryptocurrency exchanges to choose from. Many will charge a percentage of the purchase price, often referred to as a fee. We suggest that you do your due diligence to find the right one for you. Some of the best Ethereum exchanges include:

There are also several other cryptocurrency exchanges to choose from. Many will charge a percentage of the purchase price, often referred to as a fee. We suggest that you do your due diligence to find the right one for you. Some of the best Bitcoin exchanges include:

  • Etoro: The best crypto exchange on the market. Etoro offers both a secure, easy to use interface, 24/7 trading and some of the lowest fees on the market. It also only takes 3 minutes to get started! (Read our full Etoro review.)
  • Coinbase: This is a popular choice for bitcoin, in part because you can quickly link your bank account. Coinbase also offers access to other cryptos such as Ethereum, Litecoin and Bitcoin Cash. On each transaction, Coinbase charges a spread of about 0.5%, plus a fee. The fee is the higher of a variable percentage based on region and payment type. (Want to know more? Read our Coinbase review.)
  • Binance: One of the world’s biggest crypto exchanges by volume for all cryptocurrencies, Binance charges a 0.1% fee for all crypto trades, plus a fee on withdrawals. (Read our Binance review.)

Once you find an exchange that meets your requirements we recommend that you double-check the security credentials on your account and the platform itself. What is the location of the exchanges assets? Do you have two-factor authentication activated? Is it covered by insurance? Keep in mind that, unlike stockbrokers, cryptocurrency exchanges do not normally have insurance to protect investors in the event that the exchange fails.

best bitcoin exchange

2. Where to store your Ethereum

Your Ethereum can normally be stored at the exchange where you purchased them. The majority of assets are now stored offline by reliable exchanges, making them difficult to steal for hackers. However, there is always a risk, and hackers have previously successfully targeted various exchanges. Unlike the money you have in the bank, recovering any cryptocurrency that has been stolen is extremely difficult if not impossible. That is the reason why many crypto investors hold their money in so-called cold wallets.

You need a cryptocurrency wallet if you don’t want to hold your Ethereum on the exchange. The keys to digital currencies are similar to your bank account number and PIN. A wallet keeps your keys safe, as well as your valuables.

There are two kinds of wallets, cold wallets like we just mentioned and hot wallets. Cold wallets are physical hardware wallets that are not connected to the internet and usually cost anywhere between $60 to $120. These are generally considered the most secure way to store your cryptocurrency.

Hot wallets are internet-connected wallets that provide quick access to your Ethereum. Most hot wallets are free to download, but they may charge transaction fees if you want to switch to other cryptocurrencies. Hot wallets are a great option to hold crypto if you plan to access it on a daily basis and use it for daily purchases or day-trading.

Be aware of fraud whether you keep your Ethereum in a wallet or on an exchange. Anyone who asks for your account details should be avoided and ensure you always keep your accounts safe. Instead of clicking on suspicious links sent via email, type the URLs directly into your browser. Always double-check spellings, names and other information to ensure that you are always on the right site when accessing or trading your crypto.

cold wallet vs hot wallet

3. Make your first Ethereum purchase

You’re now ready to buy Ethereum! Every exchange provides a “Buy crypto” option of some sort. You can then enter the amount you wish to spend and see how much Ethereum you’ll get in return. The value of Ethereum can fluctuate a lot, so do not be surprised if the conversion changes slightly. Congrats, you now are an owner of Ethereum! Now, don’t forget to keep track of your crypto investments because you’ll have to pay taxes on them.

buying your first ethereum

4. Manage your new Ethereum investment

If you like the idea of day trading, one option is to buy Ethereum and then sell it if and when its value increases. It might sound easy on paper, but keep in mind that day trading requires a lot of experience, capital and does come with the added risk of losing your investment. If you see a future for cryptocurrency and Ethereum as a digital currency, perhaps you should buy and hold it for the long haul.

manage your ethereum

What Is Ethereum?

Ethereum (ETH) is a cryptocurrency used on the Ethereum network. Like Bitcoin, Ethereum runs via a decentralised blockchain network that is supported by private individuals and companies that keep the network running. In short, Bitcoin is used to track the possession of currency, while the Ethereum blockchain concentrates on running the programming code of any decentralized application using its network.

These applications on the network can include security programs, voting systems, cryptocurrency exchanges and methods of payment. Like bitcoin, ethereum also operates outside of central authorities such as banks and governments.

The idea behind ethereum was created by Vitalik Buterin. He launched the first version of ethereum in 2015, with the guidance of several co-founders. Since its creation, Ethereum has grown to the second-largest cryptocurrency and helped spark the development of hundreds of new currencies based on the Ethereum network.

Is Ethereum a Cryptocurrency?

This might come as a surprise but ethereum itself is not a cryptocurrency, the word Ethereum instead refers to the digital platform itself. The actual currency (used for payment on the network) is called ether. In other words, ether is the cryptocurrency for the ethereum network. When it comes to trading ethereum, you will often see that ether is referred to as ethereum but the prices you see will refer to ether currency.

Is Ethereum a Cryptocurrency

How does Ethereum work?

Similar to Bitcoin, the Ethereum network lives on thousands of computers worldwide, thanks to users contributing their computing power to the network, rather than a centralized server. This is what makes the Ethereum network decentralized and very resistant to external attacks while also making it near impossible to take down as a result. If one computer goes down, it doesn’t matter as thousands of others are still keeping the network running.

Ethereum is in short a single, decentralized system that runs a computer named the Ethereum Virtual Machine (EVM). Each user contributing to the network holds a copy of the EVM, meaning that any interactions must be verified so all contributors can update their copy.

Network interactions are considered “transactions” and are saved inside blocks on the Ethereum blockchain. The contributors (Also referred to as miners) verify these blocks before sending them to the network, serving as transaction archives or digital ledgers. Mining to verify transactions on the Ethereum network is known as the proof-of-work agreement method. Each block of transactions has a unique 64-digit code identifying the block itself. Miners then commit their computing power to locate that code, confirming that it’s unique. The computer power is “proof” of that work, and miners are compensated in ETH for their efforts.

Similar to Bitcoin, all Ethereum transactions are completely public for everyone to see. Miners send the completed blocks to the rest of the network, validating the change and adding the blocks to everyone’s copy of the ledger. Approved blocks cannot be tampered with, serving as a complete history of all network transactions ever performed on the network.

how does ethereum work

Advantages of Ethereum

Aside from decentralization and anonymity, Ethereum has several other advantages, such as a lack of censorship. For example, if someone tweets something offensive, Twitter can easily remove the tweet and ban the user from using the platform. If the platform would run on the Ethereum network, actions like this would only happen if the community votes to do so. In practice, this would allow users with different viewpoints to discuss as they see fit, giving the people the power to decide what should and shouldn’t be allowed to be said.

Control by the community itself would also stop bad actors from controlling the platform. Someone with harmful intentions would need to control at least 51% of the network to have enough voting power to take control of the platform.

Ethereum also offers smart contracts, which automate several of the steps practised by central authorities on the regular web. A freelancer on, for instance, Fiverr must use the platform to find clients and set up payment contracts. Fiverr’s business model takes a percentage of each contract to compensate its workers, server costs, marketing expenses etc. The smart contract would allow a client to write a smart contract that states, “If the project is completed by X date, the payment will be made.” The rules are then hard-coded on the contract and cannot be modified by either party.

Disadvantages of Ethereum

While it might seem like Ethereum is an ideal platform, it does have several key issues that need to be worked out.

The first issue is scalability. Vitalik Buterin envisioned Ethereum to work similarly to how the internet works today, with millions of users interacting all at once. Due to the PoW consensus algorithm, such interactions are currently limited by the block validation times and expensive gas fees. Moreover, decentralization is a barrier, a central entity, like Visa, controls everything and has perfected the transaction process with years of experience.

Second, there are problems with Ethereum accessibility. Currently, the cost of developing an application on the ethereum network requires a big initial investment which makes the technology impossible for most people to use. Additionally, the technology is complex, often take extra unnecessary steps and require the user to be familiar with its functions, making it hard for the average person to feel comfortable with the technology.

The Ethereum platform does have some well-written documentation on the subject and is another key way to bring in more users. But the act of really using Ethereum needs to be streamlined.

advantages and disadvantages of ethereum

What are Ethereum forks?

A fork is the name used when there is a modification made to a cryptocurrency’s protocol. There are both “soft forks” and “hard forks.” Soft forks describe minor changes, while hard forks are large-scale developments. Soft forks usually go into effect with little display, but hard forks are sometimes associated with disputes and issues.

Ethereum’s first hard fork resulted in the Ethereum community dividing into two separate teams. When developers realised that hackers had stolen funds from the Decentralized Autonomous Organization (DAO), they moved in and adjusted the Ethereum protocol to stop the hack.

The move was successful, but not without consequences. Hardliners believed that the developers had broken the rule of what it means to have a decentralised network. They stated that the developers should have let the hack run its course. As a result, they refused to accept the new protocol and continued using the original Ethereum protocol. The blockchain running the original protocol is now under the name Ethereum Classic while the blockchain with the hard-forked protocol kept the name Ethereum.

About the author

Gustav Eriksson

Gustav Eriksson

Gustav Eriksson is a cryptocurrency investor and founder of KrispCrypto. He has been a cryptocurrency investor for over ten years and loves personal finance.

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