5 Things to Consider If You Want to Buy Ethereum
If you are buying Ethereum for the first time ever, it is certainly advisable to take several key factors into consideration. We recommend examining the following five issues before advancing with any Ethereum purchase.
Carefully choose your preferred secure payment method
Security and safety are always of paramount importance with any financial transaction, and this certainly applies to Ethereum and cryptocurrencies in general. So purchasing methods are obviously particularly important, and it should be noted that there are many methods available with Ethereum.
It is impossible to account for all of the potential options in this article. What you should always bear in mind is that factors such as the speed of transactions and the costs associated with each payment system are particularly important.
Will you need to set up your own wallet?
It is certainly important to set up your own wallet to store Ethereum funds; this is the only way to keep them safe from theft and hacking. There are a variety of options available, and one of the most convenient is the wallets that are built into cryptocurrency exchanges. Conversely, it should also be noted that these tend to be more vulnerable to security breaches.
Finally, it is important to understand that any investors entering into CFD agreements won't need to set up wallets at all. CFDs secure transactions and funds, meaning that you can use Ethereum with peace of mind.
Fees and costs associated with transactions via the Ethereum network are obviously significant, and comparing them to other cryptocurrencies and blockchains available is certainly advisable. Having said that, it is important to know that using cryptos as a means of payment or transfer attracts smaller fees than traditional currencies. Indeed, this has been one of the most attractive qualities of cryptocurrencies thus far, and an oft-promoted aspect of the niche.
Safety and security
While Ethereum has some advantages over Bitcoin, its blockchain is effectively rather similar. Ethereum miners solve complex computational problems in order to add new blocks to the Ethereum Public Ledger of transactions. But the Ethereum blockchain executes smart contracts, which require developers to program in a complicated language.
In order to protect the Ethereum blockchain, a Proof of Work algorithm has been developed, which the Ethereum founders referred to as ethash. This was intended to be a democratising influence in the industry, as it makes it harder for institutional investors to mine Ethereum tokens using expensive ASIC units.
However, there are plans afoot for a switch to the Proof of Stake algorithm for Ethereum, which will radically change the way that the blockchain operates. It has been decided that this will achieve distributed consensus that utilises fewer resources, thereby making Ethereum a more efficient and secure solution.
Can you understand and navigate the platform?
Ethereum is unquestionably one of the most successful and popular cryptocurrency platforms on the planet, and it has only achieved this status by being particularly user-friendly. It is not at all difficult for proficient users to navigate the Ethereum platform and system, while its blockchain has some efficiency advantages over Bitcoin that prove attractive. Ethereum is also widely available on exchanges, and can generally be considered a very accessible crypto token.
Ultimate Beginner’s Guide to Trading Ethereum
What is an Ethereum Broker?
Brokers have become increasingly important in the financial ecosystem over the last decade or so, particularly as trading on the Internet has become more commonplace. This has thrust brokers into the consciousness of the average investor, meaning that they are far more available to the general public than would have been the case in the relatively recent past.
Essentially, brokers execute trades for investors, working as intermediaries between the investor and the market. Brokers can be either individuals or companies, and most now work in the cryptocurrency niche, at least to some extent. Because Ethereum is the second most popular and valuable cryptocurrency after Bitcoin, there is no doubt that virtually all brokers working in cryptocurrency will be willing to trade Ethereum on your behalf.
What is an Ethereum CFD?
CFD is an acronym for Contract for Difference, and refers to one of the most popular trading mechanisms available within the financial system. CFDs are particularly valuable with cryptocurrency, as they enable those interested in investing to speculate on the price discovery of a coin or token.
By using its CFD contracts, cryptocurrency investors can enter either buying or selling positions, which is possible by simply investing in a particular token. What this means is that investors can profit from all market conditions, rather than simply an increase in value of a particular token or coin. Another advantage of CFD contracts is that they enable investors to use margin; enabling investors to effectively borrow money in order to potentially make more profit.
What is the Benefit of Regulation?
The obvious benefit of Ethereum regulation is that it helps provide a safe platform for investors. The aim of international regulation and legislation on cryptocurrency has been to create a more uniform and safer environment for everyone involved. All this has obviously had benefits for investors, while it also generally lends credibility to Ethereum as a platform, and the cryptocurrency market as a whole. This can only be a good thing for those interested in cryptocurrencies from any perspective.
What is the Best Payment Method for Buying Ethereum?
There are several payment methods that can be used to purchase Ethereum, particularly as it is one of the most popular cryptocurrencies. However, these can vary quite significantly depending on location, so do a little research on the matter before committing to an investment.
Buying with PayPal
PayPal is becoming an increasingly popular method of payment, although cryptocurrency exchanges will still refuse to accept this digital payment system.
PayPal also attracts fees that are higher than some other payment methods, but it can be useful for bulk purchases.
There are cheaper options and PayPal is not always available, but the convenience of this payment method does attract many consumers.
Purchasing with Cash
Buying Ethereum with cash costs absolutely nothing. But there is a catch - it is almost impossible to do so! If you are able to arrange a private transaction with someone already holding Ethereum then this would be a possibility, but for most investors, it is practically a non-starter.
Via Bank Transfer
Ethereum can be purchased via bank transfers, and this attracts absolutely no fees. It also makes transferring funds via an exchange easier. But bank transfers can be time-consuming, and this will cause some investors to look elsewhere, and even some exchanges to refuse them.
With Credit Cards or Debit Cards
Credit cards and debit cards are always the most convenient way to purchase any digital currency, as they are universally accepted. The only problem is that purchasing Ethereum with a credit card will attract higher fees than any other payment method.
The Verification Process for Trading Ethereum
While cryptocurrencies began as the renegades of the financial world, they are increasingly credible and regulated. This means that it is usually necessary to verify your identity when trading any cryptocurrency, including Ethereum.
This process mostly takes place with online exchanges, which will require address confirmation and some form of government-approved ID. It may still be possible to purchase Ethereum anonymously, but it is certainly becoming increasingly difficult to avoid regulations and legislation intended to oversee the market.
Long vs Short Term Investment
Both the short-term and long-term investment strategies for Ethereum have merits, but they are rather different in nature. Those implementing a short-term investment strategy in Ethereum will attempt to read the market over a short timeframe, essentially attempting to buy ETH low and sell high in most cases. This can reap rapid reward, but is also quite risky and requires either astute understanding of the financial markets, or a good deal of luck!
Conversely, long-term investment requires an investor to be in the market for the long haul, but can be considered less risky than a short-term approach. Long-term investment in Ethereum is really based on market fundamentals, although it still poses challenges in terms of the timing and exit from the investment. Another major advantage of this strategy is holding the digital currency as a commodity, which will find favour with those who have similarly held physical gold coins and other commodity-based investment mechanisms.
Why Buy, Rather Than Trade?
It is certainly common to trade Ethereum, in the manner of other commodities, but there are advantages to purchasing the token as well.
Firstly, by purchasing Ethereum, any investor will gain access to a physical commodity, which can then be used as a method of payment. Ethereum has actually gained some traction in this area, and is one of the most accepted cryptocurrencies worldwide.
Another obvious advantage of holding Ethereum is that the price of ETH can appreciate in value over a longer time frame. By purchasing the token, you are less vulnerable to fluctuations in the market, and have made a sound investment in the medium.
Purchasing Ethereum also means that you retain complete control over your own coins. Exchanges, for example, can crash, and this can be very problematical for investors. There are also considerably less fees associated with directly purchasing and holding Ethereum, as opposed to holding it within an exchange platform.
These are all valid advantages, but you also do require significant knowledge in order to purchase any cryptocurrency. Setting up wallets and understanding online security requires research, while you also need to confirm the compatibility of systems and software involved.
What Fees Are Involved?
There are fees associated with purchasing Ethereum, so the following is a useful guide to some of these.
Transaction fees for Ethereum are much lower than if you buy Bitcoin, with the cryptocurrency currently attracting transaction fees of approximately 35 cents. Some exchanges will also charge dynamic fees for holding Ethereum in wallets, so they should definitely be researched before committing to a particular exchange.
Any form of deposit fee is dependent on an individual broker, so it's certainly worthwhile to research this diligently before committing to a particular platform.
Withdraw fees are also dependent on exchanges, but many do not charge for withdrawals at all, so it’s again definitely worth seeking out these particular exchanges.
Safely Storing Your Ethereum
If you want to safely store Ethereum then you need to use a wallet system; complex computer software that helps encrypt your tokens, keeping them safe from hackers and theft. And there are several options available to you.
Web wallets can be considered the most accessible form of cryptocurrency storage, as they are often built into broker and exchange platforms. But they are not necessarily as secure as other wallet systems available, which should certainly be taken into consideration.
MyEtherWallet and Lumi Wallet are two of the more popular Web wallets available.
Mobile wallets are, as the name would suggest, used on mobile devices. These are increasing in popularity as mobile devices are increasingly used for trading and investing. They offer improved security over exchanges, but can be vulnerable if another person manages to hack into your device.
Coinomi and Atomic are popular mobile wallet choices for Ethereum.
Those wishing to purchase cryptocurrency through desktop computers should use desktop wallets, which include security enhancements and advanced protocols, such as 2FA. This is definitely in their favour, but an obvious black mark against desktop wallets is they are less accessible, and significantly less convenient, than other options available.
Exodus, MetaMask, and Mist are all examples of popular desktop wallets for Ethereum.
And the last option for Ethereum purchasers would be a hardware wallet. They are certainly an excellent selection, as they have no reliance on software, which can be vulnerable at times. Hardware wallets also take advantage of private keys, which make it practically impossible for any information to be transferred out of them without the express permission of the investor.
Other advantages of hardware wallets include the fact that they are immune to computer viruses, and also enable users to validate the entire operation of the system. However, they can be complex and difficult to use, meaning that hardware wallets require an investment of time in order to be utilised appropriately.
Ledger Nano S, TREZOR, and Keep Key are three of the most popular cryptocurrency hardware wallets compatible with Ethereum.
What Other Coins Can I Trade or Use to Buy Ethereum?
As one of the major cryptos, pretty much every token founder is willing to swap their units for Ethereum. And as Ether continues to trade well, and retain its status in the niche, there is no prospect of this changing in the foreseeable future. Of course, fiat currency can also be used to trade or purchase Ethereum.
What’s the Smallest and Largest Amount of Ethereum I Can Buy?
The smallest amount of Ethereum that can be purchased is 0.0001 units, which at the time of writing, amounted to approximately 2 cents. There is no upper limit for the purchasing of Ethereum, although there are theoretical limits as many of its tokens are already in circulation, and are being held by investors.
Can I Buy Ethereum Anonymously with no ID? Is it Safe and Legal?
Historically, Ethereum has not been known for anonymity. But the recent rollout of the Aztec protocol means that it can be acquired anonymously for the first time. It should be noted that purchasing Ethereum via an exchange almost always requires some form of identification, with both address confirmation and government-approved ID usually required.
Will Buying Ethereum Make Me Money?
Now is seen as an excellent time to be buying ether, with the cryptocurrency halving just been through a bear market. But it is also important to understand the platform and its underlying fundamentals in order to profit from this cryptocurrency. Many people believe that the cryptocurrency market is still in its infancy, and that there will be massive institutional investment into the niche in the future, resulting in big price increases. This would obviously be bullish for Ethereum.
How to Spend Your Ethereum
Ethereum is now widely accepted as a token, and is particularly broadly accepted online. You can also exchange Ethereum for fiat currency with ease.
How to Sell Your Ethereum
There are several options available for selling Ethereum, but the most straightforward is to go through an exchange or broker. Exchanges are set up to facilitate this process, although some fees may be charged. Selling via CFD contracts is also more convenient, as these instruments are widely traded within the mainstream financial architecture.