The Perfect Beginner’s Guide on How to Buy Ethereum

The Perfect Beginner’s Guide on How to Buy Ethereum

buy ethereum

How to buy Ethereum is a question whose answer everybody has been keen to receive since the price of Ethereum rose from $8 at the beginning of 2017 to $4,153 by October 2021

Whether you have some knowledge about cryptocurrencies or have no idea about the topic, this guide is an excellent place to begin your journey in cryptocurrencies. It will enhance your understanding of the different platforms that sell Ether (Ethereum’s currency) and how to settle for the safest and best option.

Crypto hasn’t been around for long. It is ever-evolving and far from simple. The good bit about it is: This guide will make it simple! Before we begin discussing how you can buy Ethereum, we will look at how Ethereum works. It goes beyond just being digital money – Ethereum transforms the way many businesses operate

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What is Ethereum: How to Buy Ethereum

To clearly understand Ethereum, you need first to understand the technology that operates it. The technology it runs on is called ‘blockchain.’ To understand blockchain properly will require you to do some research. Our guide on “Blockchain Explained” is an excellent place to begin. However, if you don’t have time, here’s a short description for you.

To put it in simple terms, a blockchain is a worldwide database that is operated and shared by many computers called ‘nodes’. The nodes collaborate in transferring information in the database and verifying it using a secure code called cryptography.

Since different computers share the database, it won’t crash if one malfunctioned or was hacked. This phenomenon is called decentralization, implying it doesn’t work out of one center but many.

For instance, occasionally, when you attempt to load a website, and it crushes, this implies that their server is one central location. But with blockchain, it is different: there is never any downtime! With other computers operational at the same time globally, it cannot crush, thanks to decentralization.

How does Ethereum use this Technology?

Following the exemplary performance of Bitcoin (the first grand use of blockchain technology), Ethereum was launched in 2015. It is commonly referred to as “Blockchain 2.0”. Its use of smart contracts makes it an upgrade on how blockchain operates. 

A smart contract can be likened to a promise that can’t be broken: it cannot be altered once it is recorded. This offers a far more secure way of doing business.

How Does a Smart Contract Work?

Let’s imagine that you are an up-to-date employer with technology and want to pay your employees in Ether. You will create an intelligent contract informing the Ethereum network to pay your employees their salary in Ether on the 20th of each month. As you can observe, smart contracts allow you to automate/program transactions on the blockchain.

Now, let’s imagine purchasing a house using the smart contract. If you pay the amount of Ethereum coins required for the home by sending it to the smart contract, then the ownership of the house is sent automatically to you via the blockchain. This transaction is then confirmed by all the other computers around the globe and added to the blockchain. It is a much secure way to conduct business.

What’s so Great about a Smart Contract?

Smart contracts remove the need for a trusted third party in numerous transactions! In the examples I have just shared, you would typically depend on a trusted third party such as a licensed broker or bank.

In the example of the employer, you would depend on a bank to move the money/salary into your employees’ accounts on the day they are due to be paid. Instead, you eliminate the need for a bank process to fulfill the transaction by using smart contracts. A smart contract will inform the blockchain to send and verify the transaction on the set payday.

buy ethereum
Buy Ethereum

In the house example, typically, you would depend on a real estate agent. But with smart contracts, there is no real estate agent to whom to pay a fee!

Additional note: If you have employees from abroad, the bank will charge you fees to pay them. The payment would take more than three days to process. With smart contracts, it’s a matter of minutes, and you have no third-party/bank to which to pay the fee. This is another significant advantage and reason to utilize smart contracts.

The Fuel that Powers it All

So, you now know what a smart contract is. You also understand that Ethereum is the blockchain/platform on which smart contracts operate. But what is it that drives it all? These computers must be using electric power, right? Who foots the electricity bills?

Well, at this point is when I introduce you to the Ethereum coin, Ether (ETH). This is the fuel that powers everything in the Ethereum blockchain. When used for Ethereum transactions, it is called gas.

The computers that run Ethereum are compensated in Ether for their work. This settles their electricity costs and also gives them a profit. This process is known as mining.

Because of the high demand for Ether, it is highly liquid. This implies that it can easily be converted to fiat currencies (cash i.e., EUR, USD, JPY, etc.). Also, because of its demand, the price of Ethereum coin has increased, causing many people to invest in it.

Although you now have an idea about Ether and its demand, it may still be confusing, right? I’m sure you are questioning yourself how and why Ethereum. So, let’s delve into it.

Why Would I Buy Ethereum?

If you are wondering, “should I purchase Ethereum?” you should probably ask yourself, “why shouldn’t I purchase Ethereum?”. Ethereum is the second-most-popular cryptocurrency worldwide, and there are excellent reasons for it.

Currently, our world operates in a centralized model. Interest rates, tax, and foreign exchange rates are controlled by central points such as governments and banks. Ethereum and its smart contracts offer a new model– the decentralized model. Businesses and investors must be a part of this new model as it is regarded by many as the future.

The price of Ethereum has been on an upward trajectory since its inception. On 1st January 2017, 1 Ethereum coin was worth just $8.24. By 25th October 2021, 1 Ethereum coin was worth $4,153. That’s an increase of more than 50,300%.

Although Ether wasn’t the first cryptocurrency, it picked lessons from the mistakes of those that came before it. For instance, Bitcoin takes over ten minutes to process its transactions. On the other hand, Ethereum improved on this and took just seconds to process its transactions.

Since Ethereum and its smart contracts transform the way the world functions by eliminating third parties, it isn’t easy to put a price on its value. Its price keeps on changing every day hence considered very volatile in the short term. However, the general long-term is that its value will keep on increasing as it grows in popularity each year.

When the world utilizes Ethereum for its leading role of eliminating third parties, then it will be easier to determine its worth. Even so, selling and buying Ether and other cryptos is a popular way of making money.

So, now that you know why people invest in Ethereum, how do you purchase Ethereum?

How to Buy Ethereum in Three Easy Steps

Now that you have all this knowledge on Ethereum, let us look at how to purchase Ethereum. You can do this in a few easy steps!

Step 1: Get a Digital Wallet

The first step to take when you want to buy ethereum is to get a digital wallet. Since Ethereum coin is a digital currency, you will need a place to keep it – a digital wallet. 

Just like your everyday wallet, you can keep many currencies in it. When you go to other countries, you might carry Euros, U dollars and pounds.

The same goes for digital currency – you can keep different cryptocurrencies depending on the type of wallet you are using. For Ether, you can keep it in an Ethereum-compatible wallet. 

You can find hardware wallets, software wallets, or web-based wallets. 

a. Hardware wallets

These are the safest way of keeping Ether and other cryptos. 

Hardware wallets are small electronic gadgets that can be connected to your computer using a USB. Although your cryptocurrency will be in an online account and kept on the blockchain, you cannot access your account without your hardware wallet. The good bit about it is that you cannot be hacked if you keep your hardware wallet secure.

b. Software wallets

These wallets are downloadable onto your mobile phone, tablet, or computer. They are much safer than web wallets. 

c. Web-based wallets

This one ranks last on the safety list. It is recommended not to keep an amount that you can’t afford to lose in this wallet.

Step 2: Buy Ethereum

The marketplace of digital currencies is open. This implies that it offers you the opportunity to choose how to buy Ether. This offers you more control and enables you to develop your portfolio in a way you would prefer.

Note: Portfolio: A collection of investments

To understand how to purchase Ethereum, you have first to know where you can buy Ether. Ethereum coins can be bought on different online platforms (exchanges).

Other platforms offer the opportunity to convert other cryptocurrencies into Ether, such as ShapeShift. Other platforms such as LocalEthereum allow you to buy Ether from another person.

For you to purchase Ether using fiat currencies (GBP, JPY, USB, EUR, etc.), you need to have an account with any of these exchanges: 

a. Coinbase

Coinbase is the most commonly used exchange for digital currencies. This is because of its excellent user experience. It’s as simple as visiting the site or downloading the app.

Coinbase offers the opportunity the transact via bank transfer, which is one `of the simplest ways to purchase Ethereum. However, its services aren’t available in all countries.

Coinbase charges 1.49%-3.99% of the transacted amount as their commission. The fee varies from one payment method to another – bank transfer fees are lower than credit/debit card fees.

How to buy Ethereum using Coinbase:

1. First, sign up for a Coinbase account. Visit the Coinbase website, then fill in your details in the required boxes after clicking the ‘sign up’ button.

2. Then, check your email to confirm that Coinbase has sent you an email. Click the ‘log-in’ link in the email to confirm your email address.

3. Once you are logged in, you will be required to verify your phone number. Key in your phone number and click ‘send code’. You will then receive a code through an SMS sent by Coinbase. Key in that code into the box on the Coinbase website.

4. Now that you have a Coinbase account, configure your payment method. Select from bank transfer or credit/debit card.

5. Choose ‘Buy/Sell’ next to ‘Ether’ and enter/select the amount of Ether you would like to purchase. You can finish paying with GBP, USD, or EUR.

6. Click ‘Buy ETH’.

b. Coinmama

Coinmama was launched in 2013. It is another good exchange for beginners. However, it only allows you to purchase Bitcoin and Ether. The low fees of Coinmama, together with them accepting payments via bank transfer and credit/debit card, makes them a good option for many newbies. This exchange only accepts EUR and USD.

How to Buy Ethereum with Coinmama:

1. Register for a Coinmama account: Visit their home page and you will spot a form below the ‘Register’ on the right-hand side of the page. Enter/type your details into the field on the form. Click ‘Register’. Check your email inbox and click the link in the email sent by Coinmania to confirm your email address.

2. Now that you have an account, log in to your account. Once in your account, verify it by clicking the ‘Verify my account’ button on the left. Key in your information in the form and remember to also fill in your national identification details.

3. Then go on to the next page, where you will be asked to upload copies of the back and front of your national identity card or passport. Thereafter, you will need to take a photo of yourself while holding a piece of paper with the word ‘Coinmama’ and today’s date written on it.

4. Once you have the photos ready, attach them to the online form then click ‘upload’. The following message will be sent to you:

5. Please note: You will have to verify your account every time you wish to invest in larger amounts of Ether. This first verification will allow you to buy up to $10,000. The other amounts can be seen in the screenshot.

6. On the menu at the top of the website, find ‘ETHER’ and click it.

7. Enter/Select the amount of Ether you would like to buy then click ‘buy now’.

8. Click ‘credit/debit card via Simplex’.

9. Key in the address of your wallet (from the wallet created in step 1) into the field below ‘please insert your Ethereum wallet address’ and click ‘complete payment’.

10. Fill in details of your payment into the fields on your screen and click ‘Pay now’.

11. Your Ether will be sent to your wallet from Coinmama. Sometimes, this can take seconds but at other times it can take up to an hour, especially when the Ethereum network is busy

c. CEX.io

This is another straightforward exchange, though the website is easier to use than the app. One of its advantages is that it’s available in more countries than Coinbase is.

How to buy Ethereum with CEX.IO:

1. Create a CEX.IO account by first clicking ‘Register’ in the top right of the homepage of CEX.io. Key in your details into the required fields. Alternatively, you can click ‘Login with Facebook’.

2. Go to your email inbox and locate the email from CEX.IO. Follow the link in the email to confirm your email address.

3. Next, CEX.IO will request you to activate two-factor authentication. This offers an extra wall of security to keep your account secure.

4. The next page will read ‘Buy BTC’ when you first access it. When you click ‘BTC’ you will see a menu. Choose ‘ETH’ from the menu.

5. Next to ‘Buy ETH’ is ‘For USD’. If you would like to use a different fiat currency, click ‘USD’ and another menu will be shown. From the menu, select GBP or EUR. Currently, these are the only fiat currencies that you are allowed to use to purchase Ether on CEX.io.

6. Enter/select the amount of Ether you want to purchase then click ‘BUY’.

How to buy Ethereum with CEX.IO:

1. Sign up for a CEX.IO account: click ‘Register’ in the top right of CEX.io’s homepage. Type your details into the required boxes or click ‘Login with Facebook’ if you would like to use Facebook to sign up.

3. Next, CEX.IO will ask you to enable two-factor authentication. This provides an extra layer of security to keep your account safe.

4. The next page will say ‘Buy BTC’ when you first land on it. Click ‘BTC’ and you will see a menu. From the menu, select ‘ETH’.

5. Next to ‘Buy ETH’, you will see ‘For USD’. If you want to use a different fiat currency, click ‘USD’ and you will see another menu. In the menu, choose EUR or GBP. These are currently the only fiat currencies you can use to buy Ether on CEX.io — maybe they will update this!

6. Choose/enter the amount of Ethereum you want and then click ‘BUY’.

Step 3: Store Your Ether

Congratulations on purchasing your first Ether! Now, you will need to transfer your Ether to the cryptocurrency wallet you created in step 1. This is because it is much secure to keep your coin in your wallet than on an exchange.

Let’s now have a look at how you can transfer Ether to your wallet from CEX.io and Coinbase. If you purchased Ether on Coinmama, you don’t need to do anything – your Ether will be sent directly to your wallet when you purchase it.

Sending ETH from Coinbase

1. Choose ‘Send/request’ from the menu at the top of the website.

2. Enter/type the address for your wallet that you signed up for in step 1.

3. Enter/type the amount of Ethereum coins you would like to send and click ‘send funds’.

4. You will receive an SMS with a code from Coinbase. Key in the code into the box.

5. Click ‘confirm’.

Sending ETH From CEX.io

1. Get to the top menu of the CEX.io homepage and click ‘FINANCE’.

2. Scroll down the page until you spot ‘ETH’.

3. Select the ‘withdraw’ button which is next to ‘ETH’.

4. Enter/type the amount of Ethereum coin you want to transfer to the box on the right. It is below ‘Select currency and amount’.

5. Enter/type your wallet’s address that you created in step 1 into the field at the center of the page. It’s found below ‘Enter the recipient’s address below.

6. Click ‘Withdraw’.

Conclusion

At this point, you now know how and where to buy Ethereum. You’ve purchased it already, or you are thinking about it and still trying to figure out which is the best approach to go about purchasing Ethereum.

Well, if you are still trying to figure out how to go about it, the content in this guide will help you find your way around.

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CryptGainer

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