How to buy Ethereum

How to buy Ethereum

How to buy Ethereum

A guide to buying ETH on the Ethereum network. Is it a good investment for you?

If you’ve heard of ETH or Ethereum, you likely know something of the part it plays in the creation and sale of NFTs. You may also know that it is currently ranked as one of the highest performing cryptocurrencies currently on the market. But what exactly is Ethereum, how does it differ from Ether, and most importantly, how do you buy it? 

What is Ethereum? 

Contrary to popular belief, Ethereum is in fact not a cryptocurrency. Ethereum is the name for the blockchain on which the native cryptocurrency Ether, or ETH, is held and distributed from. If you’re new to the world of crypto, a blockchain is a decentralised public ledger that exists to securely facilitate and keep a record of multistep transactions. These transactions are known as “smart contracts”. 

Smart contracts are created and issued by ERC-20 tokens. ERC stands for “Ethereum request for comment” and it is the standard token used for issuing smart contracts on the Ethereum blockchain.

Users of the Ethereum blockchain must purchase and spend Ether to make transactions on the Ethereum platform. This includes the purchase or trading of NFTs (though NFTs are now available on several blockchains). 

Users who wish to purchase and trade Ether must have an Ethereum wallet in order to do so. Ethereum wallets are secure and can be downloaded and set up onto a computer, smartphone or other mobile device.

What is ETH?

ETH is a decentralised cryptocurrency, launched in 2015, which is available on the Ethereum blockchain. It can be used as a purchasable investment and to trade via a centralised or decentralised market platform. The value of ETH, much like any other crypto, fluctuates in line with the current market. At the time of writing this article, the value of a single ETH is roughly $4,064 AUD, $2,960 USD, or £2,215. 

ETH is currently the second largest cryptocurrency after Bitcoin (BTC). This is largely due to the role it plays in the NFT market. Unlike BTC, however, ETH has a much larger circulation supply. While Bitcoin’s circulation will only ever be 21 million, ETH’s current circulation supply stands at 119.7 million. 

A number of renowned digital currencies use the ERC-20 standard. These include Augur (REP), Basic Attention Token (BAT), Maker (MKR), and OMG Network (OMG).

How do you buy Ethereum/Ether/ETH?

Buying ETH is much the same as buying any other cryptocurrency. Most exchanges, both centralised and decentralised, offer ETH on their platforms. 

In our last article “How to buy Bitcoin” I outlined a step-by-step guide to purchasing a cryptocurrency. Purchasing ETH follows the same steps:

  1. Choose an exchange

Opt for either a centralised exchange (CEX) such as Coinbase, eToro, Binance, or a decentralised cryptocurrency exchange (DEX) such as Uniswap, SushiSwap, or Bancor. 

There are pros and cons to each of these types of exchange, but the main difference between the two is that centralised exchanges are middle-man service providers and decentralised exchanges are peer-to-peer. 

In some instances, you may also be able to buy ETH directly via an Ethereum wallet.

Costs, such as service fees, will also vary between platforms. Therefore it’s worth doing your research and comparing exchanges to find the best fit for you.

  1. Create and verify an account

Once you’ve found the right exchange for you, you’ll need to set up an account. This process will vary from platform to platform, but usually only involves giving a few personal details to the service provider. 

You may also be required to verify your identity with the exchange platform. This might include submitting a photo of your driver’s licence or passport.

  1. Add funds to your account

You will need to link a bank account, or a debit/credit card in order to buy your ETH. If you already own crypto, you will also likely be able to trade your current crypto for ETH, depending on the currency you own and the exchange you are using. 

  1. Begin trading

Once your account is funded you will be able to purchase ETH and other cryptocurrencies via your chosen platform. Be aware that because of the decentralised nature of the currency, the price of ETH may vary somewhat between exchanges. Processing times may also vary. 

  1. Withdraw and store your ETH 

Once you have purchased your ETH, you will want to store it securely. You can do this in either a hot or a cold digital wallet. Centralised exchanges often offer to store your crypto for you. However, it’s a good idea to check the security of the platform in question before you decide whether or not you want to leave your money where it is. 

Is investing in Ethereum a good idea?

As mentioned earlier, ETH is, at the time of writing, currently booming across the crypto market. This is largely down to its necessity in the purchase of NFTs, it’s secure blockchain (and therefore more secure currency than most cryptos), and Ethereum’s role as a network hub for emerging markets. 

But does that necessarily make it a good investment? 

A potential downside to buying ETH and investing in the Ethereum blockchain could include it’s unlimited nature. Unlike BTC, ETH’s circulation limit is not capped. This means that it is still being produced, and this could, in theory, bring its value down, because it lacks scarcity. 

That being said, the uncapped nature of ETH is also a positive in some respects. Transactions come with practical utility, self-executing contracts and fast transaction times. ETH does not face the same constraints as Bitcoin or other limited currencies.

If you think that investing in Ethereum is right for you, it’s definitely worth considering the points outlined in this article, as well as doing your own research.

Leave a Reply

Copyright © 2022 Coin Oil