So you‘ve decided to dip your toes into the world of cryptocurrency and purchase some coveted Ether coins. Exciting times! But Ethereum and other altcoins still confuse more than they enlighten many newcomers to crypto investing.
Not to worry! I‘ve put together this detailed guide to walk you through the entire Ethereum buying process from start to finish in simple English. I‘ll provide everything you need to know as a beginner – from explaining what Ethereum is to setting up your first ETH wallet.
Here‘s a quick overview of what I‘ll cover:
Ethereum 101: What gives ETH value and how is it different than Bitcoin?
Choosing Where to Buy: Most trustworthy crypto exchanges for first-timers
Payment Methods: Connecting bank accounts/credit cards to fund your trading
Making Your First Trade: Step-by-step directions to buying ETH
Securing Your Coins: Essential crypto wallet options explained
Let‘s get started! This is going be fun and empowering.
What Makes Ethereum Unique?
So what gives Ethereum its growing value? In short – its functionality.
Ethereum operates as a decentralized computer network rather than just a digital currency. This opens up all kinds of possibilities! Specifically, the Ethereum network enables:
Smart Contracts: Self-executing contracts without middlemen. For example, an artist could program royalties sent automatically whenever their art is sold using an Ethereum smart contract.
Decentralized Applications: Developers worldwide can build and deploy apps that utilize the power of the Ethereum blockchain. No single entity controls these apps.
This means Ethereum has a flexibility that Bitcoin does not. While Bitcoin operates purely as a secure store of value currency, Ethereum proponents believe its functionality as a decentralized computer network gives ETH more long-term utility and value.
Below we see a comparison of Bitcoin vs. Ethereum by network activity and market capitalization:
| Cryptocurrency | Market Cap | 24 hr Exchange Volume | Circulating Supply |
|---|---|---|---|
| Bitcoin | $895 billion | $32 billion | 19 million BTC |
| Ethereum | $283 billion | $12 billion | 120 million ETH |
Source: CoinMarketCap
Now that you understand the Ethereum difference, let‘s get to the good stuff!
Step 1: Choosing a Crypto Exchange
First things first – you‘ll need to create an account on a cryptocurrency exchange platform to make your purchase.
Crypto exchanges act as middlemen that hold various cryptocurrencies as well as facilitate their buying/selling. Different exchanges have different pros and cons in terms of currencies supported, fees, payment methods, platforms, security practices and more.
Here are 5 of the most popular beginner-friendly exchanges I recommend checking out:
| Exchange | Key Features | Supported Currencies |
|---|---|---|
| Coinbase | Easy to use, insured protection | 200+ including BTC, ETH, USDC, DOGE |
| Binance.US | Low trading fees, extensive altcoin selection | Over 100 including ETH |
| Crypto.com | Best for mobile & credit card purchasing | Over 150 including ETH |
| Kraken | High liquidity, strong security practices | Over 50 including ETH |
| Gemini | Regulation-compliant exchange great for institutional traders | Over 30 including ETH |
Ultimately you‘ll want to choose the exchange that best fits your payment needs and offers solid security measures like two-factor authentication to protect your account.
Exchanges also typically require some ID verification like submitting a driver‘s license before trading. This helps them comply with anti-money laundering regulations.
Step 2: Fund Your Trading Account
Once your exchange account is setup, the next step is funding it with traditional "fiat" currency that you‘ll later trade for Ethereum.
Most platforms accept connection via bank transfer, debit card or credit card. I prefer linking a bank account when possible to avoid higher credit card fees.
Here‘s an example of deposit options and associated fees on Coinbase:
| Fiat Deposit Method | Estimated Deposit Time | Coinbase Fee |
|---|---|---|
| Bank transfer (ACH) | 3-5 business days | 1.49% |
| Debit card | Instant | 4.49% |
| Wire transfer | 1 business day | $10 ($25 outgoing) |
Trading cryptocurrency strictly with crypto (e.g. buying ETH with BTC) sidesteps deposit fees but has higher tax implications. As a beginner, I recommend sticking with fiat/crypto pairs that involve USD, EUR or other traditional currencies while learning.
Once your funds settle, we‘re ready for the fun part…
Step 3: Buying Your First ETH
Nearly all platforms operate via a centralized exchange where buy/sell orders are quickly matched between traders behind the scenes.
Navigate to the ETH trading portal and input your desired buy amount and price. Exchanges support market orders (purchasing ETH at current best market price) or limit orders (buying only below your set threshold price).
For example let‘s say you want to trade $500 USD for ETH. You‘d input:
- Order type: Buy
- Cryptocurrency: ETH
- Purchase amount: $500 (worth of Ethereum)
- Order type: Market order at best available rate
The amount of ETH you receive on a market buy will fluctuate based on the current ETH/USD exchange rate. At the time of writing 1 ETH = $1534 USD. So your hypothetical $500 buy order would net you roughly 0.326 ETH minus trading fees.
Double and triple check all your order details BEFORE submitting to avoid costly mix-ups!
Once executed, congratulations – the Ethereum network will officially register your ownership over that amount of ETH. But our journey doesn‘t end here…
Step 4: Securing Your Ethereum
Now that you‘ve bought crypto, it‘s absolutely vital you withdraw it from the exchange site and control the private keys yourself. The golden rule of crypto investing is: “Not your keys, not your coins."
Keeping coins long-term on an exchange poses huge risks like hacks that can drain customer holdings in an instant. always best practice.
Instead, transfer your shiny new ETH into a secure digital wallet where only YOU control access via private keys.
Here are the best Ethereum wallet options to safeguard your coins while still allowing convenient access:
- Hardware wallets (Most secure): Store keys offline on external device like the Ledger Nano X. Prone to physical damage/theft.
- Software wallets: Simple hot wallet apps like Exodus give quick access but are vulnerable to hacks.
- Paper wallets: Cheapest cold storage if you don’t mind penned private keys. Can incur human error.
I don‘t recommend keeping significant crypto holdings on phone/computer-based hot wallets long-term due to hacking risks. But they can be handy for frequent trading/transactions due to convenience.
Always triple check the receiving address when moving coins between wallets to avoid mistaken transfers!
Ready for Blastoff! 🚀
Congratulations – you now possess the knowledge needed to begin investing in highly promising blockchain projects like Ethereum and properly securing the spoils.
Remember – buying crypto opens up risks of high volatility and losses if you‘re not careful. But the technology itself has extraordinary potential in the coming years. I encourage you to keep learning about decentralized networks before investing significant funds.
Here are helpful resources if you still have questions:
Ethereum Project Whitepaper
Beginner‘s Cryptocurrency Educational Portal
Wishing you the very best on your crypto investing journey! Let me know via email if you have any other questions arise.
