What is Ethereum
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This guide gives the necessary and sufficient information about how to buy Ethereum. But before we answer this question, we should find out what Ethereum actually is. First of all, let’s make clear that Ethereum is a technological platform generally based on the technology called “blockchain”, and originally meant for the software developers. As any blockchain technology, it gives a possibility to codify, decentralize and secure almost any digitalized process: elections, smart contracts, trading of all kinds, or even online poker game. Well, cryptocurrency is the most common and obvious appliance of the blockchain technology. The cryptocurrency based on Ethereum is called Ether. So, when you’re asking yourself where can I buy Ethereum, it’s somewhat incorrect. Actually, the correct question would sound like “Where can I buy Ether” instead. However, as far as most of the people got accustomed to using the word “Ethereum” in place of “ether”, we’ll do the same. So, “Ethereum” is going to mean “ether” in most cases, but now you do know the difference.
What is Ethereum Classic
To answer this question, we’ll have to go back a short way in the time of the history of Ethereum. Thus, it was invented in 2013 by Vitalik Buterin, a Russian-Canadian programmer whose primary purpose was to create a distributed-computing platform with smart contract functionality. As an indispensable application of such technology, Ether, a fundamental cryptocurrency for the operation of Ethereum, came to life immediately. Everything went well with it until June 2016 when the system was hacked, and 50 million of US dollars in Ether were stolen (others say, 60 million). After that incident, the army of the Ethereum enthusiasts was split into two camps. One contended that the code of Ethereum must be totally changed, and the stolen tokens should be refunded. Other insisted that “the code is law”, and it was just a particular case, a mistake that should be corrected and passed on.
The camps at war did not manage to reconcile contradictory views, which led to the creation of another Ether, and now we all have both Ethereum Classic (ETC) which is the original version of Ethereum, and Ethereum (ETH), a branch made to create an independent Ethereum. Therefore, you should keep in mind: when, for instance, you’re searching for the best Ethereum exchange, you’ll be usually given the ETH exchange rates, as it is commonly held. If you want to know how to buy Ethereum classic you should investigate a totally different area as this is a totally different cryptocurrency. You should also remember and distinguish the conventional signs ETC and ETH as mentioned above.
Steps to buy Ethereum
Before we get to know how to buy Ethereum with usd or other currency, let’s describe the process in general. Because it doesn’t matter what exchange exactly you choose to buy Ethereum, you’ll have to pass through the same three steps anyway.
Step 1 – Create an Ethereum Wallet
Before starting to deal with Etherium you will need to get an Ethereum wallet for your Ether. There are many kinds of Ethereum wallets. Mainly, they are divided into two types: hardware wallets, and software wallets. The hardware wallets are the safest way to keep the cryptocurrencies. The disadvantage of using them is their cost. There are no free hardware wallets at all. The most famous instantiations supporting Ethereum are Ledger and TREZOR.
If you don’t want to spend the money on buying a hardware wallet you can use the software wallets. These wallets are usually free of charge but their imperfection is a lack of security. So long as they are actually programs, in theory, any program can be hacked. The fact that the software wallets are continually linked to the Internet makes this a real threat. Ethereum wallets like Exodus, Jaxx, and MyEtherWallet are believed to be the best for inexperienced users.
Step 2 – Purchase Ethereum
The fastest way to buy Ethereum is to use one of the common Ethereum exchanges. The top list of them can be found in the next chapter.
Step 3 – Transfer the Ethereum to your wallet
After you bought Ether don’t forget to transfer it to your wallet, otherwise your assets will be held on the exchange. If you leave your Ether there and the exchange gets hacked, crashed or out of business you may finish with both your Ethereum and your money lost.
So if you’ve ever asked yourself a question how can I buy Ethereum, now you have a full guide for this transaction. Now let’s move to the main point.
Where to buy Ethereum
Now it’s time to find out where to buy Ethereum in the best way.
- How to buy Ethereum with usd (or other acceptable fiat currency).
There are many various exchanges where it is possible to buy Ethereum online. There’s no best Ethereum exchange – each one has its “pros and contras”. Here’s top-three list of the most popular marketplaces:
Coinmama is a famous and reliable seller of Ethereum. The site allows you to buy Ethereum with your debit or even credit card and offers comparatively fair exchange rates. Coinmama is a very reliable site that has been known as a seller of cryptocurrencies since 2014.
CEX.io is known as a Bitcoin exchange but it sells Ethereum via debit and credit cards as well. It should be noted that fees for on CEX.io are already included into the exchange rate. That often makes themto seem higher as compared to other places.
Bitpanda is a crypto exchange that mostly focuses on buying and selling cryptocurrencies inside the Eurozone. The site has a very easy-to-use interface and works relatively quickly. The only drawback is that there are no listed transaction fees, so you’ll have to calculate the fee by yourself on the basis of the final price.
- How to buy Ethereum with PayPal
This is more difficult (and costly) issue because most exchanges don’t accept PayPal for some security reasons. But if it’s really necessary to buy Ethereum with paypal, here are two ways to do it.
- One way is to purchase Bitcoin with Paypal and then sell it for Ethereum on a cryptocurrency exchange. The whole process will take time, and you will pay a transaction fee for each operation. You should be ready to pay up to 15% or more of charges when using this method.
- Another way is to make use of LocalEthereum. This is a trading place that allows individuals to deal Ethereum with each other. The service may be very convenient, but you should consider the risk of using it. You have to be sure that the person you’re dealing with is fair because the marketplace doesn’t take any responsibility for your trading operations.
The investment strategy: why to buy Ethereum?
Well, now that you have the idea of how to buy Ethereum let’s say a few words about why you may be willing to do it. Generally, there are two common ways to deal with Ethereum. First one is for those people who have spare money and want to invest in order to save (and probably increase) the assets. This is a strategy called “buy and hold”. Besides, such asset as Ethereum is often used for portfolio diversification, as it can be converted to any cryptocurrency and any time. The second way is trading with Ethereum, which means to buy Ethereum when the price is law and to sell it when the price increases. Usually, such deals are very short: a trader can buy and sell Ethereum several times within a day. Considering the level of volatility for cryptocurrency is incredibly high, such operations may give really great gains, but the risk of loss is also extremely high. That’s why day trading with Ethereum can be suggested only to the investors with the highest risk tolerance.
A very important question: how to buy Ethereum safely? The earliest realizations of Ethereum raised some questions concerned with the security, but later all known security defects were eliminated. Nowadays it’s quite safe to buy Ethereum as far as you follow the simple safety rules. Here are the main ones:
- Copy and paste the address instead of typing it.
Quite obvious, but still must be said. You must not type the address by hand, either in your wallet or at the exchange. If you make a mistake in a single symbol, you will lose your funds forever.
- Check the address carefully before confirming the transaction.
Yes, even after you copied and pasted it. There is no need to verify every single letter and number: checking the first and last few symbols will make certain the address has been pasted correctly.
- Always check the transaction fee.
Sometimes frauds don’t steal all of your money, they actually make a transaction, but specify an overrated fee for it. Check it to make sure that the offered fee is rational.
- Test your transaction with a small amount.
The usual transactions fees are pretty low, so you’re always free to send a bare amount of Ether in order to ascertain that everything goes well.
- Prefer hardware wallet to a program.
As we already mentioned, for the highest security use a hardware wallet instead of a program.
- Use Two Factor Authentication.
Particularly if you chose using a software wallet. Two Factor Authentication requires the input of a one-time password (OTP) before login to a wallet or confirm a transaction. An OTP is usually sent to your mobile phone that was confirmed previously.
So that’s it. Now you’re aware how to buy Ethereum in a safe and straightforward way. If you have further questions, you can refer to the support service of the chosen wallet to consult.