Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
You’re likely on this page because you’ve heard about Ethereum, a crypto network that is best known for its ability to run smart contracts, bits of self-enforcing code that automatically execute when certain conditions are met. To run a smart contract on the Ethereum network (or make any other type of transaction), you are charged a “gas fee.” That fee is paid in Ether (ETH), the native coin of Ethereum.
If you want to participate in any smart contracts — or even just hold ETH as a speculative asset — you’ll need to buy some. The first step in doing that is finding the right crypto platform (no surprise, we like Wealthsimple) and deciding how much money you want to invest.
To help you make the best decision for you, we’ll walk you through a few of the most popular options below. But before we get to that, we’ll also give you a bit of background on the network and the coin. Because the more you understand what you’re investing in, the better investor you’ll be.Buy and Sell Bitcoin, Ethereum, and dozens more cryptocurrencies with Wealthsimple. Sign up and Trade here.
What is Ethereum?
Ethereum is an open-source network based on a blockchain. It’s similar to Bitcoin but with some very important differences that we’ll get into in a section below. If you want to sound like you know what you’re talking about, just call it ETH, pronounced like “teeth” without the first “t.”
The Ethereum blockchain runs decentralized applications (also known as dApps) with the help of smart contracts. Its digital currency, Ether, powers the transactions needed to run those contracts.
As of May 2022, ETH continues to be the second-largest cryptocurrency after bitcoin, based on market cap, or the total value of coins in existence. App developers use ETH to pay for services provided by the network.
ETH is tradable, but it’s important to note that it’s more than just a simple cryptocurrency; it’s a feature of a larger project that aims to create a global, decentralized blockchain network.
What to consider before buying ETH
First, you should familiarize yourself with the basic principles of investing, especially on the centralized crypto trading platform. Ensure you have enough money saved and your financial well-being won’t be put at risk by your investments.
Second, and this one is important: cryptocurrency is a high-risk investment. It often fluctuates by huge amounts within a short time. Make sure to do your own research about the various crypto projects — most have something called a white paper that lays out how the system works — and invest only what you can afford to lose.
Also remember that you’re on your own in the crypto world. Government investment protection for cryptocurrency trading is minimal, at best. Right now, you are your best defense against scams.
Another big decision that affects where you’ll buy ETH is why you want to buy it. Three of the biggest options include using the Ethereum network (make sure to check the gas fees beforehand, because if you can’t afford those, you can’t afford to use the network), holiding as a long-term investment, or trading it against other cryptocurrencies.
How to buy ETH
First, you’ll need a wallet. There are two types of wallets, hardware and software. (Many online platforms, including Wealthsimple, provide built-in software wallets to hold your investments.)
Though they can be quite pricey, hardware wallets are the best option if you intend to purchase a large quantity of ETH (or any crypto). One of the most popular wallets, the Ledger Nano X, costs CAD $199 on Amazon. Ledger’s smaller, cheaper option, the Ledger Nano S, is CAD $89. Alternatively, the Trezor One is available from CAD $151.80. Why the extra money? A color screen.
Software wallets are more affordable, and there are a range of choices. For a good list of options, head to Ethereum’s website.
This type of wallet is best suited for making small investments, primarily because, as an online product, they’re always going to be more susceptible to hacking. But they’re also easy to use, free, and quick to set up. One more little plug, if you’ll indulge us: the wallets provided by Wealthsimple are highly secured and don’t cost you anything.
Where to buy ETH
Whether you’re looking to get ETH as an investment or to pay gas fees, you can find it in many places. Here are the biggest.
Centralized crypto trading platforms
The easiest way to buy Ethereum is via a centralized cryptocurrency trading platform. Most list hundreds of coins, including — almost always — ETH.
Crypto trading platforms tend to offer a range of payment methods, including bank transfers, credit/debit cards, wire transfers, and PayPal. The platform will usually charge a deposit fee, which tends to be lower with wire transfers and higher with credit cards.
The preferred currency is U.S. dollars, although most centralized crypto trading platforms also accept euros. A smaller number also accept the British pound sterling or Japanese yen. The ones that do accept only U.S. dollars will typically offer to convert your currency into U.S. dollars. For a fee, of course.
Be aware: some centralized cryptocurrency trading platforms are regional rather than global, meaning they won’t work for you if your country isn’t supported. For instance, there are a few Canadian crypto trading platforms and investors who don’t have a Canadian phone number won’t be able to register.
Peer-to-peer crypto trading platforms
Peer-to-peer crypto trading platforms, such as LocalCryptos, offer more anonymous trades. The platform works as a market, where you offer your local currency and trade it for ETH. These transfers can be accomplished using credit or debit cards, bank transfers, Paypal, and even other cryptocurrencies, such as bitcoin.
Fees are generally between 0.25% and 0.75%. (Buyers typically pay a higher fee than sellers.) Transaction time can vary from 30 minutes to a few hours.Buy and Sell Bitcoin, Ethereum, and dozens more cryptocurrencies with Wealthsimple. Sign up and Trade here.
Ethereum ATMs are perfect for buying small amounts of ETH in the real world. They have low fees and generally do not require identification. What you do need, however, is an Ethereum wallet. (To find one, use websites like coinatmradar.com.)
To use an ATM, scan the QR code in your wallet with the ATM’s camera. Complete the purchase by putting in your money and confirming the quantity of ETH with the machine. Your ETH will then be sent to your wallet, though you might have to wait a few hours.
Exchange-traded funds (ETFs)
You don’t have to sign up to a centralized cryptocurrency trading platform in order to buy Ethereum ETFs. Instead, you can simply register for a brokerage account (maybe on, say, Wealthsimple? Just an idea.) and trade these ETFs on traditional platforms.
You can also purchase ETFs via tax-advantage accounts like TFSA and RRSPs. And there’s no need for a crypto wallet.
How to improve your chances of buying ETH safely
As with anything crypto, it’s important to protect yourself. Here are a few safety points to keep in mind:
Double-check any addresses used in transactions.
Only use trusted platforms.
Use hardware wallets for large amounts of ETH.
Transfer your ETH from centralized crypto trading platforms to hardware wallets if you aren’t going to trade it.
Don’t share your private key or seed phrase.
Use multi-factor authentication and favor trading platforms that use extensive identity checks.
What is the difference between bitcoin and ETH?
The ground-breaking feature that differentiates ETH from bitcoin is smart contracts, which were introduced on July 30, 2015, when the first version of Ethereum — known back then as Frontier — was released. Smart contracts are self-executing contracts with the terms of the contract written into the code. This way, instead of a middleman to oversee all agreements (and take their cut), the code does it for you. This makes smart contracts trustless and transparent. Smart contracts in ETH can be used to automate the execution of traditional contracts or to create new applications.
With the help of smart contracts, ETH can be used in a wide range of applications in gaming, web browsing, finance, and much more. These contracts are written in the programming language Solidity, which was designed for Ethereum. Smart contracts in Ethereum are gaining in popularity due to their ability to automate transactions. Thousands of dApps have been built on the Ethereum network.
Another big difference is that bitcoin has a fixed supply of 21 million coins. Not a single bitcoin can be mined after that. On the other hand, ETH doesn’t have a fixed supply. Its circulating supply is still increasing.
You can’t buy ETH directly on the Toronto Stock Exchange (TSX), but you can buy an Ethereum ETF, which at least gives you exposure to it. As of February 23, 2022, there are four Ethereum ETFs currently trading on TSX: CI Galaxy Ethereum ETF (ETHX), Purpose Ether ETF (ETHH), Evolve Ether ETF (ETHR), and 3iQ CoinShares Ether ETF (ETHQ).
You can’t directly hold ETH in your Tax-Free Savings Account (TFSA). This means that you can’t just go on a crypto buying platform, buy some ETH, and put that in your TFSA. However, there are a few Ethereum ETFs that you can buy with TFSA that will give you exposure to the price. The top four Ethereum ETFs in Canada are CI Galaxy Ethereum ETF (ETHX), Purpose Ether ETF (ETHH), Evolve Ether ETF (ETHR), and 3iQ CoinShares Ether ETF (ETHQ).
Crypto brokerages like Wealthsimple and centralized trading platforms offer most of the popular payment methods, including credit or debit cards and bank transfers. If you want to buy ETH with cash, find an online trader or use an Ethereum ATM. You can also try out P2P crypto platforms, which are useful for buying ETH in your local currency.
The cryptocurrency market is extremely volatile. There’s always a great risk in buying ETH, but also a great potential return. There’s a saying in the crypto world that you shouldn’t forget: never invest money that you can’t afford to lose. If you’re a new crypto investor, start with something small and only use reputable and secure crypto trading platforms.
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