The crypto called Ethereum is second in line to the cryptocurrency throne. Ethereum is an open source software platform that is based on blockchain technology. It allows developers to build and deploy decentralized applications, or DApps as they are commonly referred as. Both Bitcoin and Ethereum are distributed public blockchain networks, but there are some obvious technical disparities between the two which include their purposes and capabilities. Where Bitcoin offers only one area for utilization on the blockchain network, which is the peer-to-peer currency system that allows the transfer of Bitcoins to and from people and businesses and uses blockchain to track those payments. The Ethereum blockchain on the other hand is used for running decentralized applications, that have found their way into many different areas of business.
One thing that you might have heard about Ethereum is its “Smart Contracts” and they are simply lines of computer code that are used to facilitate the exchange of things that have value. Smart contracts run on Ethereum’s blockchain network, and they will run exactly how they have been programmed to run regardless if there are any faults in the code.
Ethereum has made headways by giving people the chance to create things called Decentralized Autonomous Organizations or DAOs, and these are completely autonomous, decentralized organizations that aren’t controlled anyone or anything. DAOs are controlled by computer code on a collection of smart contracts that have been written on Ethereum’s blockchain.
Ether is the currency of the Ethereum platform. Ether is required by anyone wanting to build upon or use the Ethereum platform. Similar to BItcoin, Ether can be traded as well mined. Most people use the term Ethereum to refer to the currency instead of Ether which can get confusing.
Choose Your Ethereum Wallet
Before embarking on the whole how to buy Ethereum process, you will need a digital wallet that accepts Ethereum. There are three main types of wallet to store your Ethereum. There are web-based wallets that are available on a browser, software wallets that you can download or hardware wallets which are physical wallets that connects to your computer via USB. The hardware wallets are the most secure as they can be disconnected and as long as they are kept safe, they are the least hackable.
Once you have signed up to a digital wallet that accepts Ethereum, you will have an ETH address which is exclusive to youand is where the ETH will be traded from.
Recommended Ethereum Wallets
There are many digital wallets to choose from. We recommend the following wallets when discussing how to buy Ethereum:
For further information and more in-depth digital wallet reviews, please visit our Crypto Wallets page.
Choose an Ethereum Exchange
After the wallet has been set up and funded, it is time to choose an Ethereum exchange. You can purchase ETH from many different exchanges. You can also use ShapeShift to convert other cryptocurrencies into Ether or make direct purchases from people using LocalEthereum.
To purchase Ethereum using fiat currencies – US Dollar, British Pound, Japanese Yen and the Euro being the most common, you’ll need to open an account at a crypto exchange. As with our guide on how to buy Bitcoin, there are certain factors to take into consideration in choosing an Ethereum exchange.
- Make sure that the exchange accepts customers from your country.
- What payment methods are available from the exchange. Payment methods such as credit cards or Paypal where the buyer can request their money back, generally have higher fees than those where the payment method is irreversible like a wire transfer.
- Check the fees involved, there are the deposit, transaction and withdrawals fees to compare.
- Check the exchange rates. Fees can be ‘hidden’ in the exchange rates so it is important to compare the exchange rates as well as the fees.
- Check what is involved in the Know Your Customer (KYC) process. What ID is needed and whether proof of income is required.
Recommended Ethereum Exchanges
Always make sure you do your research on the reputation of the crypto exchange you want to sign up to. Of course, there will be some negative reviews, but doing your homework, you can gage the true status of an exchange.
For full in-depth reviews, check out our best crypto exchanges.
An example of how to Buy Ethereum easily through an exchange can be found in buying Ether through Cex.io.
CEX.io is primarily a Bitcoin exchange which also sells ETH via credit card.
1.Open a CEX.io account
- Choose your payment method (bank or credit card)
- Go to Buy/Sell and choose Ethereum
- Choose the amount of Ethereum you wish to purchase
- Click Buy Ethereum
Make an Ethereum Trade
Once you have completed the Exchange registration and purchased Ethereum, it is highly recommended to move your Ethereum to your own digital wallet. This is recommended for safety reasons and for ease of withdrawal.