How To Buy Ethereum | Ultimate Guide To Buy ETH
Ethereum (ETH) is the second-largest coin by market cap in the entire cryptocurrency industry, and probably the second most important coin to ever be created, right after Bitcoin. You see, where Bitcoin holds tremendous potential to become the future currency of the internet, or even to replace gold as a store of value, Ethereum brought something much more critical — it shone a light on the possibilities of blockchain technology.
Ethereum is really more of a development platform than a crypto project, but its ETH coin is just as much crypto as any other. With all of that in mind, ETH is clearly one of the best investment choices that a crypto investor can make. All that remains for you to do is learn how to approach it.
5 Steps to Buy Ethereum with eToro Now
Buying any cryptocurrency with eToro is easy, simply follow the steps below:
1Sign up for free with eToro, entering your details in the required fields.
2Fill out the questionnaire, this is both educational for you and eToro.
3Click 'Deposit', you'll then be asked how you want to fund your account.
4Choose your required payment method, follow the simple steps to link your payment.
5Enter the amount you want to deposit and you're good to go!
Our Recommended Platform to Buy Ethereum
If you are a complete novice when it comes to buying Ether, then you should keep reading, and we will explain all the details of the process, as well as different options that you can choose from along the way.
If, on the other hand, you already have experience with buying cryptocurrencies, ETH included, then you can skip the next few chapters. Instead, allow us to present you with our top choices among available crypto trading platforms, to which you can go and buy ETH right away.
Where to Buy Ethereum in 2021
In order to know where to go to buy Ethereum, you must first make up your mind regarding the strategy that you wish to employ.
You see, there are many different investment and trading strategies, with some of them requiring you to purchase and own coins, while others allow you to trade derivatives contracts of ETH coins. That way, you don't have to actually own Ethereum, but you can still make a profit off of it.
Both approaches have their advantages and flaws. For example, owning the coins makes them yours, as you withdraw them from exchanges and place them in your private wallet. The downside is that you need to take care of the management and security of your coins all by yourself. Not to mention that, if you buy coins and their price drops, you will see losses.
Alternatively, if you want to make a profit without owning coins, you can trade derivatives, which allow you to profit whether the price goes up or down. However, the risk is still involved, and you need to make very accurate price predictions in order to actually see a profit.
So, depending on which strategy you wish to employ, you will choose different types of trading platforms. But, whichever you choose, you will need to know what to do next, and that's what we are here to help you with.
How to Buy Ethereum With a Broker
If you choose to go for crypto brokers and don't actually own ETH coins, you can absolutely do that. However, with the great popularity of the crypto industry, there is also great competition.
A lot of people launched brokerages, and now, choosing an adequate one became quite a task. Of course, they all differ in all kinds of aspects, and you can't just run across a name and decide that that will be your broker.
Instead, make sure to compare their fees, see what coins they allow you to invest in, how secure their platforms are, whether or not they are regulated, and especially whether or not they support your preferred payment method. It won't do you well to find a broker and register only to discover that you don't use any of the payment methods that it supports.
But, once you do your research and find a broker that fits, here is what to do next.
1. Register With the Broker
The first step is, of course, registration. You need to create an account with your broker, which you will later fund and use for trading contracts and giving instructions to your broker on what to do in specific situations.
Registration is pretty straightforward on most platforms. For example, you can just go to the eToro platform, enter your username, email, and choose a password, and that's it. Some other platforms do not even need you to do that, but instead, they let you log in with Facebook, Google, or perhaps some other social network.
It is quicker, and it is definitely an option worth considering. However, whichever way you go, the next step is still mandatory, and that is to:
2. Verify Your Identity (KYC Process)
Identity verification has become a mandatory step on most, if not all brokers out there. At least when it comes to regulated ones. It is required by law, so that the brokers could help prevent (or report) unlawful activities, including money laundering, terrorism financing, and alike.
You can complete the procedure by uploading photos of official documents, which display your photo, name, address, and other information that can help identify you.
The number of documents, as well as the specific type of documents that you need to deliver will differ from platform to platform, so we can't tell you exactly what you need unless you tell us which platform you plan on using. However, your broker will be very precise regarding what you need to deliver, so there should be no confusion there.
3. Deposit Funds With Your Preferred Payment Method
At this point, you should be ready to get some money to your platform of choice, and then start trading.
All you need to do is find a button that says 'Deposit Funds' or some variation of that, and click it. You will then be transferred to a new screen where you will be able to choose a payment method and an amount you wish to deposit.
Choosing a payment method is important, as well, as this will decide on how much you will have to pay in transfer fees, as well as how much you will have to wait for the funds to arrive.
Just make sure to adequately secure your device by implementing a good antivirus software, or some other security software that will protect your data from leaking.
4. Open a Position to Long/Short Ethereum
The first thing to consider next is whether you wish to go long or short. This will depend on what do you expect will happen with ETH price in the near future.
Basically, if you expect the price to rise, you will go long, which means that you will buy derivatives contracts like CFDs (Contracts For Difference) or futures contracts that bet that the price will increase.
Another thing worth noting is that you can even buy physical coins on some broker platforms, which is also a thing to consider if you expect the price to rise. Buying coins when they are cheap, and then selling them after their price goes up is a good way to make a profit. This is usually done on exchanges, rather than brokerages, but there are some brokers who allow it regardless, such as eToro.
If, on the other hand, you expect the price will go down, then buying coins wouldn't make much sense. Instead, you would go short and basically bet that the price will drop in the future. If you are right, you will profit from the price difference.
Just keep in mind that a wrong prediction could result in a loss of your investment. To prevent this, you can introduce measures such as stop-loss and similar orders. These allow you to choose a level at which your order would be closed automatically if the price starts moving in an unfavourable way.
So, if the price of ETH is $200, and you bet that it will go up, you should introduce a stop-loss level somewhere below $200 so that your losses wouldn't be too great if the price starts dropping.
5. Close Your Position
As explained above, you can set up a level at which your position will close automatically if the price starts moving towards it. However, you can also close your position manually, if you believe that the price has gone as far up as it can go before it starts dropping again, or if you are simply satisfied with the profits that you have made, and you don't want to risk losing anything.
How to Buy Ethereum With an Exchange
If you would rather own coins than deal with derivatives, you can always go to crypto exchange to quickly buy or sell your ETH. Exchanges are the main place to do this, as many of them pair Ethereum coins directly against the USD and other fiat currencies, which make it quick and easy to buy them.
However, just make sure that you carefully investigate an exchange you might be interested in, and find out all the necessary details. Things like the cost, supported payment methods, security, and everything else that might impact your experience should be considered and compared between exchanges before you decide on the platform.
Once you do, here is what comes next.
1. Set up an Ethereum Wallet
As mentioned, when buying crypto directly, you are responsible for its security. That means that you need to set up a secure Ethereum wallet to which you can transfer your coins, and be their sole owner.
You can, of course, leave your coins in the exchange's wallet, although we don't recommend it. If you use an exchange's wallet, then the exchange holds the private key, and your coins are only yours in theory. In practice, the exchange can freeze your account, get hacked, suffer a site crash, and alike, and in any of these events — you might never get access to your cryptos again.
Instead, it is better to set up your personal wallet and be the private key holder, yourself. There are two main types of wallets to consider — software wallets and hardware wallets.
Software wallets are wallets that come in the form of software, and those include online wallets, mobile wallets, and desktop wallets.
Hardware wallets can be paper wallets or devices such as the USB stick which you can plug in or out of your computer, and completely sever them from the internet.
Online wallets are the most convenient of the bunch, as they are always online, in the form of a website or a browser extension. But, this also makes them the riskiest, as they can be hacked. Hardware wallets are also called cold storages, and they are the safest since they don't have a connection to the web when they are not plugged into a connected PC. But, this also makes them the least convenient of all.
Mobile wallets and desktop wallets are somewhere in between, as you can treat them as cold storages if you disconnect from the internet, or hot wallets if you connect your phone or computer back on.
2. Choose and Join an Exchange That Sells Ethereum
The next step is to choose an exchange that sells ETH, and while we have an entire list ready for you — including the likes of Binance, Coinbase, Coinmama, and others — pretty much every exchange holds Ethereum these days, and pairs it against countless cryptos.
So, you won't have an issue finding an exchange that lists ETH. But, make sure to check out all the other aspects that we talked about above, as finding a good platform is half the job. Feel free to go for one of the mentioned platforms, as they are both reputable and competent.
Just make sure that you understand how to use them, as some may be equipped with rather advanced trading tools which might be too confusing for beginners.
3. Choose Your Payment Methods to Buy Ethereum
Next up, you need to figure out which payment method to use for buying ETH. As we talked about before, it is important to check that out when choosing an exchange, in order to make sure that it supports the payment method that you prefer.
And, once again, you need to consider different things when choosing a payment method, such as the speed of transactions, fees, and alike. Debit and credit cards, for example, complete the transactions very quickly. However, they also come with higher fees. Bank transfers are cheaper, but they last a long time. So, it will depend if you are in a hurry and if you are investing with a very limited budget.
4. Place an Order to Buy ETH
Once you decide on your payment method, you will be ready to buy Ether. The process is pretty simple and straightforward, and typically, you will start by clicking on the 'Buy Crypto' button.
After doing so, the exchange will transfer you to the buy screen, where you will have to select a payment method, a coin you wish to buy, and the amount. That's pretty much all there is to it, and before long, your coins will be safe inside your wallet.
5. Safely Storing Your Ethereum in a Wallet
While we are on the topic of safely storing your coins, this is where your pre-set Ether wallet comes into play. Note that this is a completely optional step, but for your own security, we recommend that you complete it. But, as mentioned, you don't have to. Just know that you are risking losing your coins if something happens with the exchange.
The way to do this is to go to your wallet, find an Ethereum address, and copy it. Then, go back to the exchange, and find a withdraw option. Click it, and you will be transferred to the withdraw screen, where you need to paste your copied Ethereum address and enter the amount you wish to withdraw.
That's pretty much it, and by giving a withdrawal command, you will complete the process. All that remains is to check if the coins have safely landed in your wallet.
Should You Buy or Trade Ethereum?
One of the biggest questions that new crypto users have is whether they should buy or trade Ethereum. Buying is, as we explained, done on exchanges, while trading can be done there too if you wish to own coins. If not, then you should go to a broker for trades, and make a profit by trading derivatives.
But what is the difference between the two? That's what we are going to talk about next.
What's the Difference Between an Ethereum Exchange and a Broker?
As mentioned, you go to an exchange if you wish to buy Ethereum coins. This is what you should do if you wish to make a long-term investment. Alternatively, brokerages are a better way to make a smaller profit, but to do it quicker.
It all depends on your strategy, which you also need to choose based on what you want to do. Exchanges also require you to set up your own wallet and take care of your digital funds, while you don't have to bother with that if you simply trade CFDs and futures. That is something that the broker will do for you, and you simply walk away with the money you made by trading.
Long vs Short Term Investment
When it comes to investments, they can be long-term or short-term. Long-term investments include buying coins and holding them for months, or even years, as you wait for their price to skyrocket. For example, those who bought coins in mid-2018, when their price hit bottom, are waiting for the next major bull run when ETH might go back up to $1,000 per coin instead of only $200.
If it does, they will make a massive profit by selling it at that time, but they needed to wait for at least two or three years before they did it. Provided that ETH price does go that high up again, of course.
Short-term investments are a much safer way to make profits by exploiting the volatility of the crypto industry. For example, if you buy ETH at $198 and sell them at $230, you can still make a decent amount of money, if you bought enough coins.
It all revolves around whether you have enough patience and if you are willing to wait for years, or if you want to make some money faster.
What are the Pros and Cons of Buying Ethereum?
When it comes to investing in any context, it’s crucial you have a clear understanding of both the benefits and potential for return, along with the associated risks to an investment. Such transparency will help you make wiser decisions when investing in ETH and cryptocurrency, negating potential losses when you buy and sell. Ethereum is a slightly different proposition to Bitcoin, as the blockchain houses many different business ventures and ideas. This means that the de facto cryptocurrency of the Ethereum network (Ether) is used for far more than just payments between individuals and companies. With this in mind, we’ve looked at both the pros and cons of buying Ethereum;
- Conventional currencies like the Pound, Euro and Dollar are all governed by a central institution. When a national institution makes the decision to lower or raise interest rates, the associated currency experiences significant changes in value almost immediately. Unlike conventional fiat currencies, Ethereum is not governed by a central authority and is therefore immune to such volatile value changes. This is known as ‘decentralisation’.
- Sole-ownership of holdings and the potential for anonymous trading makes Ethereum an enticing investment prospect.
- Ethereum is a blockchain that runs not just a cryptocurrency, but many different things. Want to invest in collectable digital pets? Ethereum has this. Want to buy an ICO token? Ethereum has this. Overall, if Ethereum is becoming the blockchain of choice for all of these projects, the value of the currency is more likely to go up and up over a longer period of time.
- Smart contracts. These things completely opened up a new way of people to invest in new projects and businesses. ICOs are all ran on the Ethereum network, meaning the currency is going to be vital to the eventual growth of the cryptocurrency market.
- Newcomers to cryptocurrency might not be prepared for the slightly advanced nature of the Ethereum network. Bitcoin is a far easier prospect to understand; one blockchain, one currency, one idea. Buying Ethereum isn’t just an investment in the actual asset, but also a vote of confidence for the wider Ethereum network. It’s a complicated world and needs to be understood well in order to profit properly.
- A lack of regulation of the crypto sector has implications for buying Ethereum. With no governing bodies overseeing things, there’s always the chance of prices suddenly soaring or crashing considerably. However, you can trade on Ethereum’s price with fully regulated brokers – this then mitigates your risk when dealing with cryptocurrencies like Ethereum.
- Although Ethereum has a lot more technical advancement over Bitcoin, its value isn’t as well understood. This can cause the price to fluctuate solely based on news rather than changes in the technology.
What Fees Are Involved When Buying Ethereum?
When it comes to buying Ethereum, encountering fees is unavoidable. Generally, transaction fees are fair and won’t impede your investment returns too considerably. The reason they exist is solely down to the nature of blockchain payment processing. Essentially, the blockchain uses many users to contribute computational power to the network for payment processing. To incentivise this, Ethereum pays these people with an amount of Ethereum. This process is otherwise known as ‘mining’ and many blockchains use it to get their users to contribute computing power. There are a few types of fees that are usually associated with any Ethereum purchase.
Most cryptocurrencies out there carry a small fee for every single transaction that is made. This is due to the mining incentives that are required to keep the blockchain network running. Ethereum is no different, and the transaction fees are baked into the way that the Ethereum blockchain works. If you’re looking to buy Ethereum, you will always see some sort of transaction fee, but it is usually a very small amount and goes directly to the miners that contributed computational power to ‘mine’ the transaction.
It’s no surprise deposit fees exist in the cryptocurrency world. After all, trading platforms and exchanges need an income in order to stay operational. Charging users a small fee when they make a deposit can generate a substantial income for platforms and exchanges, although fee amounts vary from one provider to the next, so do your homework to get the best deal. Also, don’t automatically assume those platforms without deposit fees are the best option. Having to fork out nothing to deposit might seem enticing, but the compromise might be an increase in extra/bloated transaction or withdrawal fees.
When it comes to buying or selling Ethereum, a lot of trading platforms or exchanges will charge you a small amount to withdraw your money from your platform. They usually roll this together with some sort of exchange rate fee, but overall they aren’t that high. There is sometimes a cost associated with moving money around and most platforms use this fee to cover their backs on any transactions.
Commissions and Spreads
Spread is the difference between the asking price of a currency vs the actual amount that you bid on. This is a tiny margin that is added to every trade, and all brokers use this to make a profit for using their service. It can be likened to the small odd differences in casinos which means the house will make a commission on every single bet placed. In the trading world, the spread can be seen in the difference between the current buying price versus the current selling price. There is always a small discrepancy, and this is the small margin that brokers will put in place to earn commission on every single trade made. Some brokers or platforms also just put a percentage-based amount on top of all trades. This is normally stated upfront and can be seen as a commission that goes directly to the brokers.
3 Tips to Buy Ethereum
We have three more tips to share with you regarding the purchase of Ethereum, although you can easily apply them to any crypto out there and even other assets. Those are as follows:
Choose the Right Time and Do Your Own Research
Our first tip is to think for yourself. Never invest due to someone else's advice to do this or don't do that. It is easy to follow someone else's lead and make a mistake. Do your own research, and pick the best time to buy, which is typically when the price is as low as it will go — once again, according to your own research and assessment.
Comparing Costs to Buy Ethereum
We mentioned this briefly before, but let's make it official — don't just use the first broker or exchange that you come across. They all offer different rates, fees, and other aspects that matter to you, as a trader. Compare their deals and offerings, and choose the one that will help you make (and keep) the most money.
Safety and Security
Lastly, never underestimate safety and security. That means securing your wallet, using proper security software to protect your information, don't write down the wallet's private key on your phone or PC, don't avoid two-factor authentication because it is bothersome to type in a code sent to your phone every time you log in, and alike. Avoiding these will save you literal seconds, and can end up costing you thousands of dollars if your account or wallet get compromised.
What Is the Best Payment Method for Buying Ethereum?
There are multiple payment methods that you can use to buy ETH, including:
Buy Ethereum with cash: You can buy Ethereum with cash but it is actually a very difficult thing to do. Unlike Bitcoin, Ethereum is far less prevalent in the offline world, and there aren’t many services out there that can facilitate the meetup and payment of Ethereum using cash. Essentially, you’ll need to buy directly from a seller, in person, all offline in order to actually purchase Ethereum with cash. Ethereum ATMs and other various Bitcoin technologies don’t exist anywhere near the level that the Bitcoin alternatives do. This makes buying Ethereum with cash an almost impossible task.
Buy Ethereum with credit card: Just like any other online purchase, buying Ethereum with a credit card or debit card would be most people’s preferred payment option. Although buying any cryptocurrency with a card is obviously a convenient and desirable method of payment, there are a lot of restrictions and regulations that have been put in place which means providers aren’t as prevalent as you might think. Fees involved in card transactions vary. Some providers charge a lot for cryptocurrency transactions because of the added risk involved. In fact, some credit card companies flat out refuse to make any sort of cryptocurrency purchase – which of course, leaves your options limited.
Buy Ethereum with bank transfer
Buy ETH with Bitcoin
Buy Ethereum with PayPal: There aren’t many exchanges that actually offer the ability to buy Ethereum with PayPal. Brokerages are a different story, as they are usually regulated by a governing body, meaning PayPal are more likely to deal with them. As PayPal is a regulated business itself, it has to put strict checks onto the exchanges and brokerages – to make sure it keeps compliant. Obviously, PayPal is an extremely convenient and popular choice for online payments. However, it’s not the easiest to actually purchase cryptocurrency using the service, meaning most of the purchasing of Ethereum is simply for trading purposes. Most regulated brokers will offer the ability to trade on the coin by buying with PayPal, but there are a few that don’t.
There are, of course, other ways to get your hands on ETH, as well, so you might be interested in considering the following:
Other Ways to Buy Ethereum
If you don't want to use brokers or exchanges, or you don't have access to any exchanges that you like, or they simply don't offer good deals, you can get ETH by:
Buying Ethereum on P2P exchanges
Using decentralized exchanges
Buying ETH via crypto ATMs
Getting more ETH by lending it and collecting interest
So, you see, buying, trading, or earning Etheruem in some other way is not that difficult. Not anymore, at least. The crypto industry has become very approachable, and all that remains is for you to do some extra research, and make your move.
Frequently Asked Questions
Yes, you can legally buy, sell, trade, or own Ethereum pretty much everywhere in the world.
In most places, you can use Ethereum as a payment method as long as you can find someone willing to accept it as such. However, there are regions that don't allow this, including Russia, China, and potentially some countries in the Middle East.
Generally, no. Ethereum's purpose is not to serve for buying goods and paying for services, but to act within its own ecosystem, for creating new coins, using dApps, and making smart contracts.
No, Ethereum can be broken down into very tiny fractions which you can buy with literal cents. However, keep in mind that regular fees will still apply.
In the past, Ethereum has shown the capability for great price growth, and in the future, a major overhaul of its blockchain is expected to take place which will make it better, and hopefully, more valuable. With that said, it is up to you to make that decision based on research and facts.