What Is Ethereum?
Firstly, before you buy Ethereum, it’s important to understand what this cryptocurrency is. As mentioned, it’s the third most valuable cryptocurrency in terms of market value. In 2019, it was valued at $16.4 billion, leading behind Ripple’s $29.35 billion and Bitcoin’s $92.56 billion. It’s an open-source cryptocurrency that works through a network of computers worldwide. Like other cryptocurrencies, it relies on a decentralized network instead of storing information on one centralized system. However, unlike other cryptocurrencies like Bitcoin, Ethereum works slightly differently. That’s because Ethereum’s network can create decentralized applications or “dapps,” which help you carry out agreements. Of course, the network also allows you to transfer coins from wallet to wallet. However, because of the more unique Ethereum network, it offers more practical uses than Bitcoin. Unfortunately, while cryptocurrencies are still highly valued, they have lost a bit of steam since 2017. This begs the question: should you buy Ethereum? Luckily, there are still several reasons why it’s still a good idea to buy Ethereum. Firstly, the crypto market has been continuously innovating and growing. Moreover, Ethereum particularly shows a lot of promise as a cryptocurrency — potentially even more than Bitcoin. That’s because it has more potential uses and can integrate with the Ethereum Network. This, along with the support of several Fortune 500 companies, makes Ethereum a good investment. However, Ethereum isn’t perfect and has its drawbacks. For example, there have been concerns with Ethereum’s scaling that can potentially compromise security. This means that there is more potential for bad actors to hack the system. There’s also more potential for bugs to arise in Ethereum compared to other alternative cryptocurrencies. There are hundreds of cryptocurrency exchanges available online. As a result, it can be very confusing for new investors to decide on which one to use. Some of the most popular platforms include Coinbase, Binance, Bitstamp, Kraken, Bitfinex, and Gemini. If you’ve decided to buy Ethereum, any one of these platforms would do. However, to help you determine the best cryptocurrency exchange, you have to first identify your needs. Are you going to buy Ethereum only? Perhaps you want to trade with multiple cryptocurrencies instead of just Ethereum. These questions are important to ask because some cryptocurrency exchanges operate differently. Apart from identifying your trading needs, it’s also important to consider a cryptocurrency exchange’s credibility. That’s because the market is unregulated and it’s fairly volatile with lots of continuous innovation. This means that the market might be prone to fraud if you’re not careful. To help you make an informed decision, check out our guide on the best cryptocurrency exchanges. Now that you’ve done your research, the next step is to create an account with your chosen cryptocurrency exchange. Creating an account is usually fairly simple and straightforward like most brokerage platforms. The information you usually need to provide is your name, address, identification details, social security number, etc. Once you’ve filled out a cryptocurrency exchange’s requirements, the last thing you need is verification. Verification is usually the final step to an exchange’s process, which you can do in multiple ways. You might need to upload documents or ID scans to verify your identity, depending on the platform. Once uploaded, verification can take up to two days to finish. However, some cryptocurrency exchanges do verify quickly, taking as little as one hour. Nonetheless, when your account is verified, you can move onto the next step to buy Ethereum. The next step to buying Ethereum is to deposit money into your account. You can easily do this through cryptocurrency exchanges that accept fiat money. Some platforms allow you to buy Ethereum with a credit card or debit card. Still, others may also allow you to buy Ethereum with PayPal, which adds even more convenience. Of course, cryptocurrency exchanges have to verify your payment information first before accepting the deposit. However, it’ll be smooth sailing after that. Once you’ve made a deposit, you can easily invest the amount you want to buy Ethereum. Thankfully, most platforms accept investments as low as $5. However, if you want to trade high, you can even buy Ethereum worth $1,000 or more. Take note that cryptocurrency exchanges do charge fees per trade you conduct. Hence, it’s better to trade higher if you want to maximize the fees. On the other hand, if you’re using a C2C platform, depositing money might be more difficult. That’s because C2C trading requires users to send crypto codes between locations. Unfortunately, this process takes a longer time than depositing fiat currency. You might have to wait up to an hour for the deposit to push through. After depositing money into your account, the next step is to begin trading. You can finally buy Ethereum with the money deposited into your account. You can also purchase different cryptocurrencies available on the platform if you want to broaden your horizons. Of course, all of this is also subject to a cryptocurrency exchange’s processing time. That’s because even trading to buy Ethereum and other cryptocurrencies may take time. Each platform is different, and if you’re using a more popular exchange, you can expect a lot of traffic. Hence, some transactions might take time to process, especially during peak hours.
© Photo by Investopedia.com Lastly, after you buy Ethereum, you can withdraw and transfer it to a digital wallet. Of course, that means you need to get a digital wallet before you do this step. You can purchase a hardware wallet or software wallet depending on your needs. Once you do, you can use the wallet to safely store the Ethereum you’ve bought. Conversely, you can also skip digital wallets altogether and withdraw Ethereum to your bank account. However, this doesn’t mean your bank account will suddenly accept a new cryptocurrency. Instead, you can do this by selling the Ethereum you’ve bought and depositing the money to your bank. Of course, the price you sell Ethereum might be different from the price you bought it. Hence, it’s important to learn how to trade Ethereum properly if you want to earn a profit. If you’re using a C2C exchange, the time it takes to withdraw Ethereum might also be longer. That’s because it also needs a code before you can transfer Ethereum to a fiat exchange to convert to cash. However, you can cut the processing time a bit if you withdraw to a digital wallet.
What Is a Digital Cryptocurrency Wallet?
Some investors might want to buy Ethereum and deposit the profit straight into their bank accounts. However, not every buyer thinks this way because they may want to keep their cryptocurrencies digitally. That’s because digital wallets and cryptocurrencies aren’t subject to the same disadvantages that fiat money has. Cryptocurrencies aren’t affected by government regulations or third parties. On the flip side, cryptocurrency buyers might want to use their cryptocurrency to transact with other establishments. If you’re not sure what a digital wallet is, let’s break it down. A digital cryptocurrency wallet is a virtual “wallet” allowing you to access your cryptocurrency. It keeps and records all the cryptocurrency transactions that pass through the blockchain. The wallet takes note of all these records and takes note of the amount of cryptocurrency you have left. It does this by recording your private and public keys. Your public key is the “account” that other cryptocurrency users can use to send you crypto. On the other hand, your private key is the “password” to your account that grants you access to your balance. This is the main gist of how all cryptocurrency wallets work. However, different types of digital wallets offer different benefits. Some come in the form of a hardware wallet, while others remain purely digital through software. There are also digital wallets that only store one type of cryptocurrency, while others allow storage for multiple variants. However, all of them have the same basic function. Regardless of why you’d want to keep your crypto digital, there’s an easy way to do it using a digital wallet. However, you first need to decide between a software wallet and a hardware wallet. To put it simply, a software wallet remains in purely digital form. It can live on your desktop, laptop, phone, or tablet. On the other hand, a hardware wallet exists in hardware form, kind of like a USB stick. This hardware wallet keeps your private key safe without needing an additional computing device.
Software Wallets
There are many advantages and disadvantages to both and it all depends on your needs and security. On the one hand, software wallets are extremely convenient because you can easily access them through devices. All you need is a smartphone or laptop to get started. Moreover, they’re pretty versatile because many software wallets exist across platforms. Hence, you can find one whether you’re using a Mac, Windows, Linux, or Android device. However, software wallets do have one main flaw: malware. Since software wallets rely on computing devices, they can be easily hacked or compromised by bad actors. All it takes is downloading one corrupted file from the internet to compromise your data and money.
Hardware Wallets
Hardware wallets avoid all the disadvantages software wallets have. They’re relatively “dumber” devices with mostly just a screen and a few buttons. They’re portable devices that you can store in a safe. However, they don’t have the benefits software wallets tout. For example, they’re not as easily accessible if you leave them behind and only have your phone. Furthermore, they’re prone to damage and theft. Bad actors can easily “kidnap” them, threatening owners to give them the passcode to open the wallet. Also, they require an initial investment before you can get one. That’s because hardware wallets are still physical products. Hence, they can cost money, sometimes even over $100. Nonetheless, they’re a great way to keep your Ethereum safe and secure.
Final Word
It’s pretty easy to buy Ethereum if you want to kickstart your crypto journey. Just find a proper exchange, create an account, deposit money, and start trading. However, while the process to buy Ethereum is pretty straightforward, that doesn’t mean it’s for everyone. That’s because, despite cryptocurrency’s rising popularity, the market is still very volatile compared to stocks. Hence, it’s not something risk-averse people might be comfortable with trading. However, if you can get past the learning curve and the volatility, it’s a good way to earn profit.
