Are you thinking about buying Ethereum? Do you want to know how to buy Ethereum?
Many folks are debating getting into cryptocurrency investing but feel overwhelmed by the process. While cryptocurrency has become easier over time, there are still those who are confused about buying Ethereum since the technology hasn’t been fully adapted yet.
When you buy Ethereum, you’re technically purchasing “ether” or “ETH,” the native currency used on the Ethereum blockchain. You convert your fiat currency (regular money) into Ether on a cryptocurrency exchange where you can either hold your Ethereum there or move it into a crypto wallet.
That’s the simple answer for how to buy Ethereum. In this article, we’ll look at everything you could want to know about how to buy Ethereum.
Table of Contents
Why Should You Buy Ethereum? What’s the Potential of Investing in Ethereum?
Before we look at the exact steps for how to buy Ethereum, we need to look at what Ethereum is and address the logic behind investing in this cryptocurrency asset.
What Is Ethereum?
Ethereum is a form of cryptocurrency that’s currently number two behind Bitcoin based on market cap. Ethereum has a market cap that hovers around $135B. Ethereum was created by Vitalik Buterin in 2013 and went live in 2015. Ethereum is a decentralized global computing platform that’s powered by blockchain technology. You can run a variety of applications on the Ethereum network. You can also build and execute smart contracts on the blockchain. Many NFT projects are being minted on the Ethereum network.
Ether is the official currency used on the Ethereum network (used for transactions and gas fees), so when you invest in Ethereum, you’re buying Ether.
Why Should You Buy Ethereum?
There are a few different types of Ethereum investors and users:
- You can buy Ethereum (Ether) as an investment because you feel that it’s going to increase in value as the technology becomes more popular.
- You use the Ethereum blockchain for smart contracts. Ethereum provides real-world applications, and it’s where many NFTs are minted.
Here are the exact steps to buy Ethereum, so you can break into cryptocurrency investing.
Five Steps to Buy Ethereum
Are you ready to buy Ethereum? Here are the five steps you will go through as a new cryptocurrency investor:
Step 1: Decide How Much Money You Want to Invest in Ethereum
Some experts believe you shouldn’t allocate more than 5% of your portfolio to cryptocurrency assets. Others claim that cryptocurrency is the future.
Nobody can tell you how much money you can afford to risk since nobody else knows what your financial goals are or what your risk tolerance is like. It’s generally advised that you allocate only 1-5% of your portfolio towards cryptocurrency.
You must decide what kind of cryptocurrency investor you want to be before buying Ethereum.
Here are a few questions to think about when buying Ethereum:
- Will this be a one-time purchase of Ethereum?
- Will you buy a little bit of Ethereum weekly?
- Will you hold Ethereum for the long term?
There are many different types of cryptocurrency investors. Once you figure out your strategy for buying Ethereum, it’s time to move on to the next step.
Step 2: Choose a Cryptocurrency Exchange to Buy Ethereum
There are many options for purchasing cryptocurrency these days, and you don’t have to worry about visiting the dark web or using an ATM in a plaza. You can easily buy Ethereum from your phone while sitting on your couch.
How do you choose which crypto exchange to use? This will depend on what you’re looking for. Here are a few common options for buying Ethereum:
- Your Online Stock Broker: You can often purchase your cryptocurrency assets using the same tool you use to purchase stocks.
- Centralized Cryptocurrency Exchange: Many centralized exchanges allow you to buy various forms of cryptocurrency. Beware of fees and scammy exchanges, as both are prevalent in the crypto industry.
There are new crypto exchanges constantly popping up. While we can’t comment on the safety of every platform, it’s in your best interest to go with a trusted crypto exchange when you buy Ethereum for the first time.
We went through the process of buying Ethereum with the popular exchanges to show you what the process would be like.
Step 3: Open Your Crypto Account
You have to go through the process of opening an account on a crypto exchange. You have to verify your identity and complete the entire application process.
What kind of questions will you be asked?
You’ll be asked about all of your specific personal information. You’re also going to have to prove your identity. Some platforms will even ask you questions about your investing knowledge.
Everyone has to be verified on a cryptocurrency exchange. Some apps will ask for voice or video identification next to your passport/government document to confirm your identity.
What Are the Best Places to Buy Cryptocurrency?
The key here is to find a reputable cryptocurrency exchange that you’ve heard of from trusted sources. You’re going to want to use a centralized exchange.
Here are some of the best exchanges for purchasing cryptocurrency:
Your goal is to find a crypto exchange that’s easy to use and offers educational resources to help you out. Exchanges like Coinbase offer tutorials and easy-to-read educational pieces if you want to learn more about buying Ethereum.
Step 4: Fund Your Crypto Account So That You Can Buy Ethereum
Once your crypto account has been confirmed, it’s time to decide how you will fund your new account. You can usually transfer money from your bank account or payment card to buy Ethereum. The other option is transferring to any other cryptocurrency that you currently own.
Once you’ve funded your account or decided how you’re going to buy Ethereum, you can make your purchase.
Here’s what this looks like at the popular Coinbase exchange:
The simple Ethereum purchase form at Coinbase
Once your account has been created and funded, you can easily purchase Ethereum in seconds.
Step 5: Look Into Crypto Wallets for Storing Your Ethereum
Where do you plan on storing your Ethereum once you’ve purchased it? There are generally two types of crypto wallets. Those are hot (connected to the internet) and cold (stored offline) hardware wallets.
Many experts advise that you always store your crypto in a cold wallet so that your assets remain close to you and avoid any security concerns with the exchanges.
Should you take your Ethereum off the crypto exchange?
This is a decision that you have to make on your own. It will likely be determined by how much money you plan on allocating towards buying Ethereum. Moving your money off the crypto exchange into a cold wallet won’t make much sense if you’ve only put in a small sum.
Where can you store your Ethereum?
- Crypto Exchange: Buyers can store currency in the cryptocurrency exchange account used for purchasing ether. You can leave your Ethereum as is, though there are security risks if the exchange goes bust or your account is hacked.
- Digital Software Wallet: You can transfer your Ethereum to another digital wallet where you can start swapping Ethereum for other coins. MetaMask is a popular option.
- Cryptocurrency Hardware Wallet: This would completely take your Ethereum off the exchange and offline, making it extremely difficult to hack.
That’s how you can buy Ethereum. It may seem overwhelming at first, but once you get your account set up, you’ll notice it’s a fairly seamless process.
How Should Ethereum Fit Into Your Portfolio?
You may be wondering how to structure your investment portfolio now that you’re looking to buy Ethereum. This depends on your risk tolerance and your financial goals. If you have a balanced portfolio and are looking to add some cryptocurrency exposure into the mix, then Ethereum could be one of the safest places to start.
There are many speculative coins and “meme coins” in cryptocurrency. You have heard of “Dogecoin” or “Shiba Inu” over the last few years. You’re going to be tempted to purchase coins that promise astronomical returns. This is just a friendly reminder that for every crypto success story, there’s a depressing tale of how someone lost their life savings in crypto.
Is Investing in Ethereum Risky?
Investing in Ethereum can be risky, considering the volatility and the price movement in recent months. Ethereum reached an all-time high in November of 2021, only to fall below $1,000 at times in 2022.
Investing in speculative assets of any kind is risky when you’re using money that you need in the short term. For example, if you’re saving up for a wedding or a big purchase, it’s not recommended that you invest this fund in Ethereum since you don’t know where the price will be when it’s time to liquidate your investment.
How to Buy Ethereum: Bottom line
This article should give you all the information you need to buy Ethereum for the first time. Once you decide how much money you will allocate towards buying Ethereum and find a crypto exchange that suits you, the process becomes fairly straightforward.
Please keep in mind that investing in cryptocurrency assets can be risky, so it’s important that you only use money that you can afford to lose. Good luck with buying Ethereum.