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.
The crypto market today is one of the most exciting, but frankly confusing, avenues for investment. Before deciding upon investing, you need to carefully research the coin you want to buy. You also need to find out how you can buy it. This article will illuminate that process by focusing on Ether, a cryptocurrency based on the platform Ethereum.
What is Ethereum?
Ethereum is an open-source network based upon blockchain, the same technology that Bitcoin runs on. What differentiates Ethereum is its purpose. Ethereum runs decentralized applications, and its currency, Ether, powers transactions. That means that, with Ether, application developers pay for services provided by the network. Ether is tradable, but it’s important to note that it is more than just a simple cryptocurrency: it is a feature of a larger project that aims to create a global, decentralized blockchain network.Wealthsimple Invest is an automated way to grow your money like the worlds most sophisticated investors. Get started and we'll build you a personalized investment portfolio in a matter of minutes.
History of Ethereum
Late 2013: Vitalik Buterin publishes the Ethereum whitepaper.
January 2014: Ethereum is announced.
July 2014: First Ether is sold in exchange for Bitcoin.
July 2015: First release of Ethereum: ‘Frontier’.
March 2016: First stable release of the Ethereum platform: ‘Homestead’.
2016: Ethereum splits into Ethereum and Ethereum Classic, as a result of a hack.
March 2017: The Enterprise Ethereum Alliance is formed, with members including Cornell University, Microsoft and J. P. Morgan.
February 2019: The ‘Metropolis Part 2: Constantinople’ as well as the ‘St. Petersburgh’ network upgrade is put into place.
Should You Buy Ethereum?
There are many things that you should consider before investing in Ethereum. First, you should familiarize yourself with the basic principles of investing. Ensure you have enough money saved away so that your savings won’t be put at risk by your investments. Don’t commit entirely to Ethereum, or cryptocurrencies in general; a diverse portfolio reduces risk, and could be much healthier for your finances in the long term. Government investment protection for cryptocurrency trading is thin to non-existent, so you must be responsible when trading.
It’s important to note the particular volatility of the crypto market. This may make it seem enticing—there’s the chance to win big—but it also means that you’re at risk of losing a lot of money. Take Ether as an example: In 2019, its value ranged between $83 USD and $348 USD, a significant range that highlights just how much the value of your investment might change.
You should also determine exactly why you want to buy Ether. You could buy it to use on the Ethereum network, to hold as a long term investment against the US Dollar, or to trade against other cryptocurrencies. How you intend to use your Ether affects the platform you will be using to buy it, so make sure you have a clear idea of your purpose before purchasing Ether.
How to Buy Ethereum
Here’s what you should know about buying Ethereum.
You will need an Ethereum wallet to receive your Ether. There are two options for this: one is to buy a hardware wallet, the other is to download a free software wallet.
Hardware wallets are more secure, and though they can be quite pricey, they are the best option if you intend to purchase a large quantity of Ether. For reference, one of the most popular wallets, the Ledger Nano X, costs $119.00 on Amazon. Ledger’s cheaper option, the Ledger Nano S, is $58.99. Alternatively, the Trezor One is available from $45.90. These wallets are more secure than their software counterparts, but the cost can be a deterrent.
There are a range of software wallets if you want a more affordable option. Exodus is one of the most popular desktop wallets, while for mobile you can use Edge. Freewallet is another good cross-platform option. These wallets are suited for making only a small investment into Ethereum. While they have lower security—you could always be hacked online—they’re easy to use, free, and quick to set up.
Places to buy Ethereum
The easiest way to buy Ethereum is via a cryptocurrency exchange. Exchanges like Binance and Coinbase list hundreds of coins and, given the popularity of Ethereum, it won’t be hard for you to find a viable exchange. This is a good option if you’re buying Ether to trade against other cryptocurrencies. To register on exchanges, you may need to provide proof of identity, such as a driver’s license or passport.
Exchanges tend to offer a range of payment methods, including credit/debit cards, wire transfers, and PayPal. The exchange will usually charge a deposit fee, which tends to be lower with wire transfers, and higher with credit cards.
The preferred currency of use is US dollars, although most exchanges will also accept euros. A lesser number accept alternate currencies such as the British Pound Sterling or the Japanese Yen. Make sure you check that your currency is accepted before completing any transaction. Often, exchanges will only accept US dollars, but will offer to convert your currency into US Dollars. This will incur further charges due to the exchange between your currency and the US dollar/exchange currency.
Finally, make sure your country is supported by the exchange you choose. Some exchanges are regional rather than global, meaning they won’t work for you if your country isn’t supported.
For beginners, Coinbase is a good choice. It offers two services. First, a brokerage service, whereby you purchase your Ether from Coinbase. Transaction fees include a small flat fee as well as a percentage fee that ranges from 1.49% to 3.99%, dependent upon the size of the flat fee applied. The second is Coinbase Pro, a cryptocurrency exchange where you can purchase Ether directly from other users.
Binance, one of Coinbase’s main competitors, is a Maltese-based exchange with a low minimum purchase of $1. One of its best features is the SAFU (Secure Asset Fund for Users), which covers users in the event of a hack. It also has its own coin, BNB, to allow users to save on transfer fees.
Bitpanda is an exchange based in Europe. Bitpanda accepts a range of payment methods, and charges 1.49% when buying Ether. The exchange charges 1.29% charge to sell your Ether. The minimum purchase is $25, so trading on Bitpanda requires a more significant investment than Coinbase.
Finally, eToro: on this exchange, you can copy other trader’s strategies, making it a great choice if you want to take a more laid-back approach to investing. Investing, however, requires a $200 minimum purchase.
Exchanges aren’t the only option for buying Ether though. If you’re less interested in crypto trading, these alternatives may be more suited to you:
Peer to Peer Exchanges
If you want a more anonymous method of buying Ether, consider peer to peer exchanges, like LocalEthereum. The platform works as a marketplace, where your local currency can be offered in exchange for Ether. These transfers can be accomplished using credit or debit cards, bank transfers, and Paypal. In addition, other cryptocurrencies such as Bitcoin can be offered for Ether.
Fees are generally between 0.25% and 0.75%, and buyers pay at the higher rate. Transaction time can vary from thirty minutes to a few hours. The exchange can also facilitate meetings if you’d prefer to pay in person, but if you take this route then you should be careful and make sure you meet in a public place.
Ethereum ATMs are perfect for buying small amounts of Ether in the real world. They generally do not require identification, due to the low fees involved. In order to use an Ethereum ATM, you will first need a Ethereum wallet. To find one, use websites like coinatmradar.com, which provides a list of Ether ATMs locations.
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 confirm the quantity of Ether with the machine. Your Ether will then be sent to your wallet, though the purchase could take a few hours.
Points of Safety
Double check any addresses used in transactions.
Only use trusted exchanges.
Use hardware wallets for large amounts of Ether.
Transfer your Ether from exchanges to hardware wallets if you aren’t going to trade it.
Don’t share your private key.
Use multi-factor authentication and favor exchanges that use extensive identity checks.
There are a number of different ways to buy Ethereum, and depending on what you intend to use it for, some methods are more appropriate than others. There are a range of trading exchanges if you intend to trade cryptocurrencies, while peer-to-peer exchanges, such as LocalEtherium, are useful for buying Ether in your local currency. Finally, if you live near an urban area, you can use an ATM to buy Ether directly, and have it transferred into your wallet.
Ethereum is a very volatile investment, and you should be comfortable with the significant risk associated with cryptocurrencies. Practice safe investment and don’t overexpose yourself—allowing your portfolio to be dominated by any one investment is a recipe for trouble.Grow your money with low fees and no account minimums. Invest as little as a dollar and we’ll build you a personalized investment portfolio to meet your financial goals.