As the world’s second most popular cryptocurrency, Ethereum is undoubtedly one of the coins most budding crypto investors would like to invest in. Not only can it be successfully used as an actual currency due to its widespread popularity, but it also has many other uses, making it a good long-term investment.
Ethereum was invented back in 2013 by programmer Vitalik Buterin, but the network only went live on July 30, 2015. It is a decentralized, open-source blockchain that features smart contract functionality. The platform’s native cryptocurrency is called Ether (ETH), but many people just call it “Ethereum”.
Ethereum’s Investment Potential
Ethereum has a lot of potential as both a short- and long-term investment. This cryptocurrency may not be rising as explosively as Bitcoin or smaller coins and tokens, but it can still provide investors with big returns, especially in the long run.
When it comes to short-term profit, Ethereum may not be as flashy as some other cryptocurrencies, but it still has a lot to offer. For example, when its price goes down, it doesn’t usually crush like the values of many other cryptocurrencies. Overall, its price dynamic can be described as a slow and steady creep upwards.
When it comes to determining the long-term potential of an investment, one of the first things you should check out is the asset’s roadmap. Ethereum has recently released its long-awaited London upgrade, and there’s a lot more to come.
There are a lot, and we mean a lot, of tokens built on the Ethereum blockchain. That alone promises longevity for this cryptocurrency. In addition to that, Ethereum also provides developers with an environment to build and deploy DApps, decentralized applications. Whenever you use an application that was built on the Ethereum network, you pay a small fee in ETH. Here are some examples of the kinds of DApps that get built on the Ethereum network:
- Financial services (Uniswap, PoolTogether)
- Video games
- Galleries and marketplaces
Ethereum played a big role in the latest NFT craze – and although some people may say “well, it’s not much of a trend anymore”, we think that the resounding success of non-fungible tokens should be seen as an example of Ethereum keeping up with the times and having functionality that can potentially attract thousands of new users. Ethereum developers add more and more features to the platform as time goes by.
Overall, Ethereum is a cryptocurrency with a solid foundation, and just as solid plans for the future. It has a brilliant team of developers behind it, and is always evolving.
How Ethereum Fits into Your Portfolio
In order to maximize your profit in both the short and long term and mitigate risk in the most optimal way, you need to have a balanced and diversified investment portfolio. Before investing in any asset, you should analyze how it will fit into your portfolio – you don’t want to have too many risky assets, for example.
As crypto doesn’t always follow the stock market and vice versa, mixing shares and cryptocurrencies can be a good idea to ensure long-term profit – just don’t forget to also add less risky assets to mitigate the risk.
All crypto assets are incredibly volatile, even popular ones like Bitcoin or Ethereum. That said, if you want to have a purely crypto portfolio (which we wouldn’t recommend), then Ethereum can be one of the (relatively) low-risk crypto assets you invest in. In most cases, however, Ethereum would be classified as a typical high risk, high reward asset.
How Much ETH You Can Afford
Although the amount of Ether you can buy is only limited by how much money you have, we recommend against spending all your funds on it. As we have mentioned above, having a balanced and diversified portfolio is essential to ensuring stable long-term income.
How much Ethereum (or cryptocurrency in general) one should have in their portfolio is highly subjective as it depends on what other assets they invest in and in what quantities.
One way to determine how much Ethereum you can afford to have in your portfolio is to use Modern Portfolio Theory – calculate your portfolio variance and find a point at which you can get your target profit at the lowest risk possible.
Where to Buy Ethereum (ETH)
As the world’s second most popular cryptocurrency, Ethereum is relatively easy to get. It is available on most crypto exchanges, online brokerages, and fiat-to-crypto marketplaces – no matter what country you reside in and what payment option you prefer, you are sure to find a quick and easy way to buy ETH.
The easiest way to find a platform to buy some Ethereum is to use ethereum.org. Just scroll down and find your country of residence on the drop-down list, and you will be presented with a list of platforms that you can easily get Ether on.
Online Stock Brokers
Although crypto mass adoption is not reality yet (sadly), there are quite a few traditional financial institutions that have already embraced crypto. Nowadays, you can buy crypto like Bitcoin or Ethereum quite easily on online stock brokerages.
Well… we said “quite easily”, and while it is true for some platforms, it’s not really the case for others. First of all, some online stock brokers only offer crypto futures contracts, and exclusively Bitcoin ones at that. So finding a stock broker that will allow you to get Ethereum can be quite a struggle. Additionally, you will find that both the registration and the trading processes on these platforms are not that user-friendly and can be quite complicated – not to mention many online stock brokers require you to share quite a lot of personal information.
The big advantage of using online stock brokers, however, is that they offer more than just cryptocurrency. If you’re a newbie investor and want to build a diversified portfolio, then online exchange platforms can be a good choice for you.
Many online brokers also have very attractive bonuses for new users, which can be a good boost if you’re just starting your investment journey. Here are some good platforms:
This app is quite famous for making trading easy and accessible.
IB is another famous online broker, but for a different reason – it is known as one of the most serious platforms out there, and is used by many big-shot investors.
A cryptocurrency broker is either a company or an individual that facilitates transactions between the crypto market and the individual. Crypto brokers are generally very beginner-friendly, and offer a vast range of services besides just buying and/or exchanging crypto.
Look for a broker that has good reviews and state-of-the-art security in place.
Centralized exchanges are probably the most straightforward way to buy cryptocurrency. If it’s your first time buying ETH, we recommend using a CEX – centralized crypto exchange.
Contrary to popular belief, centralized exchanges can also offer you a way to purchase Ethereum, Bitcoin, and other cryptocurrencies anonymously. However, if you want to purchase or exchange higher amounts of crypto, you will most likely have to go through some kind of account verification.
Unlike DEXs, centralized cryptocurrency exchanges charge a fixed exchange fee – but it is very small.
If you’re looking for a good centralized cryptocurrency exchange to quickly and easily buy cryptocurrency, we recommend using established platforms like Binance, Coinbase, or our very own beginner-friendly trading platform.
Decentralized exchanges are a very viable option for buying Ether. Although they are usually less user-friendly than centralized platforms, they offer more privacy and anonymity – something that many crypto investors are looking for.
Decentralized crypto exchanges have worse rates than centralized exchanges, but offer higher transaction speed. Read this article to learn more about the differences between the two.
Buying ETH on DEXs and P2P exchanges is easy, secure, and quick.
Although making all your transactions online is very convenient and easy, there’s something incredibly satisfying about using ATMs.
There are not as many Ethereum ATMs as there are Bitcoin ATMs, but there are still quite a lot. You can use a map like CoinATMradar to find an ATM near you that lets you purchase Ether.
Ethereum Payment Methods
No matter what payment option you prefer to use, you will still be able to easily buy Ethereum.
How to Buy Ethereum with PayPal
PayPal supports crypto transactions and can be a good option for buying ETH. Keep in mind, however, that it requires you to pay fees for international transactions.
How to Buy Ethereum with a Credit Card
Buying Ethereum with your credit card is easy – this option is offered by most platforms, so you won’t have to worry about it not being available. However, you will need to check whether your platform of choice supports your credit card network (Visa, Mastercard, Amex, and so on).
How to Buy Ethereum with a Debit Card
Debit cards are as easy to use for buying Ether as credit cards. They’re supported by most platforms.
If you’re buying Ether with your bank card, make sure to enable all the extra security features your credit card issuer has to offer – it’s better to be safe than sorry. Additionally, be careful with where you enter your credit and debit card info, as there are a lot of phishing websites out there that can camouflage themselves as your favorite crypto exchange or fiat-to-crypto marketplace. Always check the website address of the platform you’re using to make sure it doesn’t contain any out-of-place digits, symbols, or letters.
How to Buy Ethereum with Apple Pay
If you have an Apple device, Apple Pay can be one of the cheapest and easiest ways for you to buy Ethereum. Just pick it as the payment method on your exchange of choice and then confirm the transaction – no need to enter any info like your credit card number or CVC.
How to Buy Ethereum with Bank Transfer
Alternatively, you can also buy Ethereum directly with your bank account – just use a bank transfer. This is one of the most straightforward ways to purchase Ethereum. Bank transfers are a good option for those who don’t want to pay extra fees or enter their credit card info.
How to Buy Ethereum with Cash
You can buy ETH with digital cash using the methods we talked about above, but buying it with actual physical cash might be a bit trickier. However, it is still possible.
The first and the easiest way to buy some Ethereum with cash is to buy it directly from someone you know. Make sure you have some sort of contract or an incredibly high level of trust in that person before making such a purchase.
Alternatively, you can use an ATM to buy Ether with cash. Although many of them only accept crypto, you can definitely find some that also accept cash.
What is the Best Way to Buy Ethereum
Now that we’ve overviewed all the ways in which you can get Ethereum, let’s talk about what is the best one.
Well, truthfully, there’s no one best way to buy some Ethereum – after all, it all depends on your own preferences and resources. Some ways to buy ETH may not be available for the residents of the country you live in, or for holders of your type of bank card. If you’re struggling to purchase ETH in exactly the way you want to, check out our fiat-to-crypto marketplace, where we aggregate a bunch of different fiat providers and allow users to filter offers by their preferred payment method, country of residence, and more.
How to Store Ethereum
Unlike fiat currencies, cryptocurrencies cannot be stored on credit/debit cards or bank accounts. Instead, you will need a crypto wallet to store your newly purchased Ethereum.
The type of crypto wallet you should store Ethereum in largely depends on what you want to do with your ETH. If you want to store it for a long period of time, go for a hardware wallet, and if you want to make a lot of transactions, go for a hot one. Finding the perfect wallet is all about balancing security with usability.
Custodial vs Non-Custodial Wallets
All crypto wallets can be divided into two big categories based on who holds the owner’s private key – custodial and non-custodial.
Private keys are probably the most important part of any cryptocurrency wallet. In essence, they are a sophisticated form of cryptography that allows you to access your crypto and keeps your funds safe. Your public address can be seen by hundreds of thousands of people, as it is only used to send funds to your wallet. A private key, on the other hand, should be kept secret, as it lets you withdraw funds from your cryptocurrency wallet.
Wait, you may think, then why would I ever let anyone but myself hold my private key? Isn’t that completely unsafe and can lead to me losing all my money?
Well… yes and no. In reality, whenever you store crypto on a cryptocurrency exchange, they basically have access to your private key. That is because crypto exchange wallets are the best example of custodial wallets.
Here are the benefits of storing Ethereum in a custodial crypto wallet:
- You’ll still be able to get access to your funds even if you lose your private key
- You’ll be able to execute free and instant transactions (with other users of the same custodial wallet)
- Custodial wallets can back you up in case of some minor mistakes (e.g. accidentally picking the wrong crypto during an exchange)
Thanks to 2FA, transaction limits, and other security measures custodial wallets can be perfectly safe and secure. However, if you want to be the only one in control of your funds, if you store big amounts of money, and/or don’t care about the user-friendly features custodial wallets can provide, we recommend using a non-custodial wallet instead.
Cold wallets, or hardware wallets, are cryptocurrency wallets that are not connected to the Internet. They keep your keys safe on a physical device instead of on the cloud or in software. Most hardware wallets work similarly to a USB stick.
As hardware wallets are not connected to the Internet, they are safe from hacker attacks and are thus automatically more secure than any hot wallet. However, cold wallets present another type of danger: if you lose your private key, your funds are as good as gone.
Most hardware wallets now have accompanying software that makes them a lot more user-friendly than they used to be, and even allows users to make crypto transactions without having to resort to third-party platforms.
Read more: Top 19 Ethereum Wallets
Although there are hardware cryptocurrency wallets for every price range, most of them cost over $100 – quite a hefty investment if you’re just buying your first Ether. We would only recommend buying a hardware wallet if you know that you want to hold big amounts of crypto and are looking for extra security.
Before buying a hardware crypto wallet, check whether it supports Ethereum (although almost all of them do) and see if it has good reviews. You can always go for well-known brands like Ledger or Trezor.
Hot wallets are cryptocurrency wallets that are connected to the Internet. Although they’re naturally less secure than hardware crypto wallets, they will still keep your funds safe – and offer quite a few extra benefits. Most software wallets fall into this category.
Unlike cold wallets, hot wallets are often very cheap or, in most cases, free. In addition to their low price, they also offer a lot of utility, making them perfect for executing day-to-day transactions in crypto.
A lot of investors use a combination of hot and cold cryptocurrency wallets. They store their long-term investments and crypto they don’t plan on selling any time soon on hardware wallets and have a smaller amount of crypto on a hot wallet for some quick transactions to earn profit in the short term.
The main three types of hot crypto wallets are mobile, web, and desktop.
Mobile crypto wallets are an application on your phone. They are often free or cheap, are extremely easy to use, have beginner-friendly interfaces, and let you do everything in one app. Most of them let users purchase and exchange cryptocurrency within the wallet interface.
Mobile wallets give you a lot more flexibility when it comes to interacting with cryptocurrency and crypto services. They also often come with QR codes that make it easy to buy and sell crypto and remove the risk of entering a wrong wallet address.
BTW, if you’re tired of having to enter long wallet addresses but don’t want to use a QR code, we’ve got just the solution for you: personalized wallet addresses!
Web crypto wallets are accessed via a web browser. They allow you to use a cryptocurrency wallet without having to download any extra software. Having a web wallet means you can easily access your crypto at any time as long as you have your login credentials and a device that is connected to the Internet.
One downside of web wallets is that they are pretty much always custodial, meaning the website that hosts your wallet holds your private keys. Some platforms offer multisig wallets – they have more than one key (in most cases, two), with one of them being held by you and the other by the website. This allows you to keep your funds secure while also benefiting from the advantages web wallets can provide, such as quick and easy transactions.
Desktop wallets are really similar to mobile wallets, with the main difference being that you install an app on your computer, not on your phone.
Most desktop wallets are non-custodial, meaning you are the only one who holds your keys. However, they are quite vulnerable: they require you to have good antivirus software and to always be on the lookout for malware.
If you’re using a desktop wallet, we recommend keeping a backup of your wallet data – since it is encrypted, it’s not that much of a security risk. Backup data will allow you to access your funds even if you’re away from your PC or if something happens to it.
Paper wallets are somewhat similar to hardware wallets: after all, they are not connected to the Internet. A paper crypto wallet is a piece of, well, paper that contains all the data you need to use your crypto.
Although they may seem safe at first glance, they are actually quite risky to have. If you lose your paper crypto wallet, that’s it – your funds are gone. Additionally, as they are not protected by encryption, the info written on your paper wallet can be easily seen by anyone and stolen.
Moreover, paper wallets make it quite bothersome to execute crypto transactions, particularly if you don’t want to move the entirety of the funds you have stored in your wallet. However, if you’re sure you can keep your paper wallet safe and just want to store a big amount of crypto for a year or two, they can be a good option.
How to buy Ethereum anonymously
Buying Ethereum anonymously is very easy. There are some P2P exchanges like HodlHodl that offer fully anonymous transactions, and you can anonymously exchange, buy, and sell small amounts of crypto even on centralized cryptocurrency exchanges.
However, please note that no Ethereum exchange or purchase is truly anonymous, as all transactions get recorded on the blockchain. If you want full anonymity, we recommend investing in privacy coins instead.
How to buy Ethereum instantly
Although the Ethereum blockchain has a relatively quick transaction processing time, it is nowhere near instant. Ethereum transactions usually take around 5 minutes to be processed, but that time can increase if the network is congested at the moment.
The post How to Buy Ethereum – A Step-by-Step Guide appeared first on Cryptocurrency News & Trading Tips – Crypto Blog by Changelly.