For all rookies out there who have just shaved off the tip of the cryptocurrency iceberg, pondering how to buy Ethereum – we are here to set things straight.
Ethereum is now the hottest altcoin in the cryptocurrency community, with one Ether selling at a stock price of $175!
Moving back to the basics, Ethereum was invented by Vitalik Buterin in 2013 and was initially released in May 2015. It showed a potential through the integration of smart contracts in addition to its blockchain platform.
This means that Ethereum could be used to codify, secure and trade most things in everyday life: crowdfunding intellectual property, real estate contracts, and so much more that haven’t even been explored yet.
Ethereum (ETH) vs Ethereum Classic (ETC)
You may have noticed that there are in a way two cryptocurrencies related to Ethreum – an Ethereum and an Ethereum Classic. In this article, we’ll be looking at ETH, however, it will come in handy to know what Ethereum Classic is about.
Ethereum started off as one entity and stayed on the market for 2 years, until the 18th June 2017. At that time, the DAO (Decentralized Autonomous Organization) had launched a 28-day funding window and it succeeded with more than $150 million being raised.
In the meantime, a hacker exploited a recognised bug and found a way to steal $60m worth of Ethereum coins. Ethereum was forked in two: ETH and ETC. Supporters of ETH fought that the code should be altered and stolen coins refunded, whilst ETC stood by the ideology that the “code is law”.
These two now compete as any other two exchange rates compete. The altered ETH’s price is much higher and more renowned than its counterparts.
Difference Between a Cryptocurrency Wallet and an Exchange
When going into cryptocurrency investing, one of the first things you’ll learn is there is a big difference between a wallet and an exchange.
An Ethereum exchange facilitates the exchange of Ether to other fiat currencies or other cryptocurrencies such as Lisk.
An Ethereum wallet is like any other conventional physical wallet with the exception that they’re not well… tangible.
They don’t really store coins themselves but more your private keys which in turn access the coins. Also, there are three available options: the online, software and hardware wallets, each with their own reasons as to why use them.
Hence, your Ethereum wallet is a place where you can store cryptocurrencies but an Ethereum exchange provides you not only with the storage options but with trading and buying opportunities as well.
Another thing to note is that a cryptocurrency exchange acts as an intermediary, holding and exchanging currencies at will. A wallet only stores the currencies but, just like a savings account, is there to secure your funds. So it should serve as an extra line of protection.
In addition, exchanges are notorious for being hacked and you would do good with that extra level of security when handling your hard-earned funds.
Is It Possible to Use a Wallet and an Exchange Together
Yes, what’s more – it’s advised to use a separate wallet for an exchange to improve your funds’ security.
So getting back to the real world, the Ethereum StackExchange clearly details how to obtain both a wallet and exchange in 8 simple steps.
We will use Coinbase and BitPanda as an exchange medium and Ethereum wallet as a storage for our coins.
How to create and Ethereum wallet and exchange:
Step 1 – Create an account
Set up a virtual currency exchange account on any exchange available online.
Step 2 – Verify the account
First, verify the account via e-mail, then verify the actual account by passing through the site’s requirements. Different exchanges take various time in verifying the account.
BitPanda will take only a few minutes and you will have to go through a video call, while Coinbase can take up a day or two depending on the activity of the site.
Step 3 – Deposit money
Follow the instructions to deposit your money into the exchange. This will also take some time – depending on your bank and wire transfer – between 3-5 business days.
If you’re based in Europe and can use BitPanda, then some of the payment methods take only up to few minutes.
Step 4 – Invest in the cryptocurrency
Buy the ETH (Ether) through your chosen exchange.
Step 5 – Find and set up a cryptocurrency wallet
Moving back in between steps #2 and #3, while waiting for verification, download and install an Ethereum Wallet.
There’s plenty of choices, depending on the security level and preferred accessibility. Two of the best on the market are Exodus and CoinMama but you can also stick to the wallet that comes with an exchange.
Step 6 – Get your public key
Run to sync the blockchain and enter details of the new account. Here you will enter a password and will be given an address beginning with 0x…etc. This will be used to transfer your ETH into your account.
Step 7 – Check if you have all the required information
Now you should have 3 pieces of information:
- Address
- Password
- Private key
The address is the free-to-share component of the group, which will be used to transfer funds into your wallet. The password protects your private key which is stored in the key store file. The private key is that added layer of protection making your wallet more secure.
Step 8 – Back up your keys
Make a backup of your private key through the Wallet. Find the top bar and move along:
ACCOUNTS -> BACKUP -> ACCOUNTS
Within this directory is a file within a folder with the private key. Copy this onto a secure backup (CD / USB) and safely store.
Which Exchange To Use To Buy Ethereum
You will find plenty of wallets that are available online and it will be overwhelming. But you have to remember to look at the security features and how much privacy do they offer.
Coinbase is one of the most trusted digital currency exchange, offering secure storage, almost instant exchanges and full control over your private keys with a multi-signature vault.
In reality, there are other feasible options out there too.
Kraken – partner to the first cryptocurrency bank and the largest Bitcoin exchange in Euro – is the ideal replacement to Coinbase. Good reputation, secure, minimal transaction and deposit fees whilst being supported worldwide, Kraken is great for technical users.
Another exchange – Changelly – prioritises speed with a reasonable fee of only 0.5%. It works by simply locking in your rate and waiting for the exchange to go through other crypto trading platforms, searching for the best currency rates. Changelly strives to remove the technical barriers between customers and the cryptocurrency world and is a great choice for beginners.
PS This exchange only accepts US Dollars as a fiat currency so charges may apply from your bank for other currencies.
Which Wallet To Use To Buy Ethereum?
In one of the previous articles, we covered in detail different wallet types but here is a quick reminder:
- Software (online/desktop/mobile)
- Hardware
- Paper
A paper wallet is just a printout of your public and private keys, for which you will still need a software wallet to transfer funds. Not the most efficient option, not to mention the security.
The ideal hardware wallet is the Ledger Nano S. An inexpensive device in relation to some other products on the market. Ledger Nano S handles both Bitcoin and Ethereum, including many other altcoins. The USB also comes with a small OLED screen to control your transactions. With its superb, robust security, it has been said that you can use the Ledger Nano S even on a hacked computer.
The Ethereum Wallet, from the official Ethereum website, is integrated with ShapeShift. It’s great for people searching for an easy-to-use wallet. Similar to MyEtherWallet, this is a good place to start at, however, it’s not recommended for big amounts.
What Are The Different Ways To Buy Ethereum
Assuming you have secured a place to store your Ether, you may be wondering which payment system to use. If you’ve already invested in Bitcoin than you’re probably familiar with different ways of buying cryptocurrency. Below you will find the best investment options for Ethereum.
How to Buy Etherum With a Credit/Debit Card
Buying Ethreum with a bank card usually secures a fee of around 3.5%. Coinbase, CoinMama and CEX.io all offer credit card transfers.
Coinbase limits how much Ethereum you can buy, but it operates only in 33 countries. It also charges a 3.75% convenience fee but it is faster than buying via a bank account transfer.
CoinMama has an interesting feature – when spending less than $125 worth of Ethereum there is no need to verify your identity. Ideal for keeping anonymity, this crypto-wallet also operates in 226 countries and is fast to register and begin with. Unfortunately, CoinMama’s fees are a pretty high at around 7%.
CEX.io is a worldwide alternative to the above two. Their fees are already calculated into the exchange rate, which is why exchange rates seem higher than others. On the other hand, it’s one of the oldest exchanges out there and offers a stellar security.
How To Buy Ethereum With Paypal
As of today, no website offers a direct way to buy Ethereum through Paypal. Paypal transactions can normally be reversed through their dispute process, and you have to remember that cryptocurrency transactions are irreversible. This creates quite a serious conflict.
However, if you still insist on using Paypal, there is an alternative.
You can buy Bitcoin with Paypal through… VirWox. Yes, the platform through which you can buy a currency for Second Life.
You can then use that currency to buy bitcoins, transfer them to a wallet and buy Ethereum with them. However, it’s not the easiest way of investing in Ethereum, considering its complexity and the fees you would have to pay in the exchange rate.
How To Buy Etherum With Bitcoin
If you already have bitcoins or simply want a way to buy Etherum without too much hassle – Bitcoin is one of the easiest ways to do so.
The majority of wallets and exchanges offer a multi-currency storage, through which you can easily buy cryptocurrency with other cryptocoins.
How To Earn Ethereum Through Mining
If none of the options above appeal to you or your bank account is closer to a zero than a hundred, you could mine Ether.
Especially, if you own some serious mining tech, a cloud mining contract with Genesis Mining or Hashflare is the way to go.
A mining contract means you will surrender a small piece of the cake, so someone else takes care of management, maintenance and setup costs. Mining contracts can be found here.
Despite being a bit more challenging, setting yourself up for mining can be a very satisfying endeavour. If not necessarily for profit, it’s also a great way of understanding how cryptocurrency works from scratch.
Should You Buy Etherum
Ethereum is a great, versatile technology and holds much promise in the cryptocurrency world. Its stock will continue to rise as its value is discovered and innovators create Ethereum-based software.
When it comes to cryptocurrency exchanges and wallets, make sure your choice is a reputable one. Within the circle of cryptocurrencies, there is a concentration of hackers with convincing ways to steal your credit card or digital currency.
Coinbase – capable of serving as both an exchange and wallet – and Kraken are the two most reliable exchange sites. For the recommended added security, use a crypto wallet in conjugation to an exchange of your choice.
Hopefully, the ‘How to buy Etherum’ question has been answered. Now is time for you to invest in Ethereum.
It definitely has a lot of potential and will continue rising. Don’t miss the opportunity!
