Ethereum is by far the biggest altcoin available on the market today. Its market cap is larger than the next ten altcoins combined. The cryptocurrency has been around for quite a while, being launched in 2015, and has since grown to become the go-to blockchain for decentralized finance applications.
The long-awaited Ethereum 2.0 upgrade is slated for later this year (although Ethereum is notorious for never being on time), where the protocol will shift from its older Proof-of-Work mechanism to a Proof-of-Stake process.
Just how this update will impact the price and functionality of Ethereum remains to be seen, but regardless, ETH is one of the most popular investment options for both novices and crypto experts. Those that are thinking about getting involved in the DeFi world of Ethereum, or just want to add it to their portfolio, can find out exactly how to purchase, use and sell ETH in this guide.
The easiest and safest way to purchase Ethereum is using an exchange and by following these steps:
- Compare and select a crypto exchange. Find and compare cryptocurrency exchanges that are available within the specific country and support the fiat currency that is to be converted into ETH. Each exchange will have different deposit options to fund an account with money. Other important considerations to finding the right exchange are the deposit, trading and withdrawal fees, account and wallet security and customer support.
- Register an account with the exchange. Create an account with a crypto exchange using a valid email address or mobile number. Before making a deposit in fiat currency, exchanges have a mandatory Know Your Customer (KYC) process that will need to be completed. This is to meet the international Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) requirements. It is also recommended to activate 2 Factor Authentication (2FA) for additional account security.
- Deposit funds to a wallet. Choose a payment option that offers the best fees and reasonable speed for the funds to arrive in the exchange wallet. The most common payment methods include a bank transfer, wire transfer, debit card, credit card and PayPal. Existing crypto investors can also deposit Bitcoin or stablecoins (e.g. USD, USDT or BUSD) which can be converted into Ethereum using the exchange.
- Buy Ethereum. Browse the supported assets and choose Ethereum. Use the funded account to choose an amount to spend. Finalize the transaction by clicking on 'Buy'. The amount of Bitcoin will be determined at the selected price and transferred to the user's BTC wallet.
Ethereum is one of the most popular cryptocurrencies and is accessible via nearly every exchange and brokerage on the market. Even low-volume platforms with a limited number of supported coins are likely to offer ETH for purchase. A large number of exchanges available means investors can choose a trusted, reputable platform to add ETH to their portfolios.
Such a large number of platforms to sift through can be overwhelming, so it is worthwhile for potential investors to prioritize a specific feature best-suited to their cryptocurrency needs. Performing research on the best-rated cryptocurrency exchanges and comparing aspects like fee structures, wallet and staking support, trust history and security measures can help simplify the process.
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eToro USA LLC; Investments are subject to market risk, including the possible loss of principal. Archived, "Virtual currencies are highly volatile. Your capital is at risk."
Ethereum was conceptualized in 2013 by programmer Vitalik Buterin, who has since become a figurehead of the cryptocurrency industry. Ethereum is an open-source blockchain that uses “smart contracts” – small lines of code that automatically execute when certain conditions are met. This new technology added a whole new scope and potential to blockchain operations, primarily through decentralized applications (dApps). dApps now form a vital piece of cryptocurrency’s framework – without them, there’d be no NFTs, no play-to-earn games, no yield farming, or liquidity pools.
ETH (also known as Ether) is the native token of the Ethereum blockchain. ETH is one of the most-traded, highest-market cap cryptocurrencies out there and has a huge range of use-cases. It is a necessity to interact with a substantial number of decentralized applications and can be used to purchase NFTs or to mint new ERC-20 tokens.
There’s no doubting Ethereum has changed the landscape of blockchain technology, and its widespread influence will likely continue for years to come. When starting out in cryptocurrency, Ethereum (along with Bitcoin) is near-unanimously recommended as the first investment to make. Ethereum’s high value and volume make it a less volatile choice than other cryptocurrencies. That is not to say the price of ETH isn’t susceptible to wild swings, and on any given day it could move more than 10% in either direction.
For the most part, Ethereum has entrenched itself as the second-largest cryptocurrency in terms of market capitalization, popularity and development. It has held this mantle for multiple years now and seems unlikely to drop any time soon.
Ethereum’s upgrade to 2.0 will play a major role in the blockchain’s long-term success. While Ethereum is close to as safe as altcoin investments go, it has long been plagued with limited scalability and high gas fees, dissuading its casual use. Investors will be hoping that a smooth transition to 2.0 will resolve many of these issues so Ethereum can deliver on its sky-high potential.
ETH is currently priced around the $2,000 mark and hasn’t dropped below $1,500 in over 12 months. While it may seem unlikely to fall below $2,000, the last few years have seen a strong bear market. This may suggest Ethereum will follow a similar trend for the remainder of 2022. Some industry experts have suggested a late-2022 price rally although is dependent on:
- End of the current bear market. Bear markets can be particularly harmful to cryptocurrency prices, as public interest tends to nosedive during these periods. Some experts have suggested it could take until 2023–2024 before cryptocurrency begins trending upward again.
- Full implementation of the Ethereum 2.0 upgrade. The network upgrade is ear-marked for the end of 2022 and could see a sustainable price hike with its improved throughputs, better energy efficiency and increased number of nodes that should lead to more decentralization.
Although centralized exchanges are the simplest way of purchasing Ether, there are a few alternatives that more experienced crypto investors may want to use.
- Brokerages. Crypto brokers are quite similar to centralized exchanges, except for one key difference. Exchanges operate using an order book, which matches sellers (asks) with buyers (bids). Instead, trading on a brokerage cuts out the middle man, allowing investors to purchase ETH directly from the broker. This method of buying cryptocurrency often has a high barrier to entry and is intended for large-volume investors.
- Decentralized exchanges (DEX). More advanced crypto traders can leverage DEXs to purchase ETH. It is important to note that most DEXs do not support fiat deposits – customers will need to buy Ether using another cryptocurrency, particularly stablecoins. This process requires a third-party wallet compatible with the Ethereum network (like Metamask) and some base-level knowledge of how cryptocurrency works. DEXs often have much lower fees than traditional exchanges, however, are much riskier to use. It's therefore wise to use the bigger decentralized platforms which are more reputable and employ rigorous safety precautions.
- Peer-to-Peer (P2P). Another option for purchasing Ethereum is P2P. Investors can purchase ETH from other people – family, friends or even strangers – through word-of-mouth agreements, or licensed P2P marketplaces. Using a trusted platform and trading with a trusted seller is extremely important when trading P2P, as this method of buying Ethereum can leave buyers vulnerable to scams.
Yes, Ethereum is one of the most popular and highest-volume cryptocurrencies out there. It can be bought from a number of trustworthy exchanges and stored in a secure wallet. However, all cryptocurrencies are extremely volatile and investors should expect drastic market swings and the potential for serious losses.
When most people purchase Ethereum, they will just leave it in their exchange wallet to appreciate (or depreciate) in value until they’re ready to sell. However, this means they may be missing out on a number of opportunities. Ethereum’s blockchain is a bustling ecosystem filled to the brim with decentralized applications, earning features and more. The network’s synonymity with decentralized finance means that ETH has perhaps the widest use case of any cryptocurrency token.
With that said, it is worth noting Ethereum’s blockchain is so congested that “gas fees” – which are essentially transaction fees – can quickly add up. To transfer Ethereum between wallets and platforms will incur such fees, and they may seriously impact potential profits from DeFi earning protocols or other applications.
1. Ethereum Staking
Ethereum is still awaiting its full-scale upgrade to 2.0 which will support native staking. However, the platform released a part of its upgrade, the Beacon Protocol, in late 2021. While this upgrade was not initially added to the Ethereum Mainnet, it did introduce staking to ETH holders. Users can either run their own node as a validator (requiring a minimum of 32 ETH), or delegate their ETH to someone else to receive additional ETH as a reward.
More than $25bn worth of Ethereum is being staked as of mid-2022. Generally, the more ETH being staked, the worse rewards for the staker. Only about 10% of Ethereum that can be staked is being staked, meaning it should have a competitive annual percentage yield (APY). Certain platforms, particularly those operating in the decentralized finance sector, can offer returns of up to 10% annually. The average yield for staking ETH is closer to 4% though.
Staking is relatively low-risk, but there are a number of pitfalls to look out for. For more information, read our guide on the best places to stake Ethereum, which also outlines the pros and cons of staking ETH 2.0.
2. Decentralized applications
Ethereum hosts over 3,000 unique dApps on its network, by far the most of any blockchain. ETH is commonly required to interact with these applications, the function of which spans a range of industries. Examples include Metamask (a wallet browser extension), UniSwap (Decentralized exchange/AMM), OpenSea (NFT marketplace), Axie Infinity (online game) and The Sandbox (metaverse platform). You can actually explore the majority of dApps on the Ethereum blockchain via this page.
3. Buy & Sell NFTs
Ethereum’s ERC-721 is still the most popular token standard for non-fungible tokens. Not only is Ether the main currency for purchasing and selling NFTs, but it is also used for minting new NFTs on the network. OpenSea, by far the world’s largest NFT marketplace, runs on Ethereum and requires most of its purchases to be made using Ether. To start collecting NFTs, buying Ethereum is one of the first steps.
4. Medium of exchange
Ethereum can be used as a medium of exchange across certain outlets and merchants globally. This is not the most efficient use of ETH due to the network’s high gas fees.
5. Earn interest on Ethereum
Ethereum’s major role in DeFi has made it a leading coin for liquidity pools. Advanced crypto users can utilize their Ether by providing it to liquidity pools or yield farming to earn passive revenue. Certain protocols exist that perform these tasks automatically, analyzing and selecting the most profitable pools to earn on ETH with. It’s worth noting these processes are much riskier than staking and are only recommended for seasoned crypto veterans. For more information, read our article on where to earn interest on Ethereum.
1. Compare and select a crypto exchange
The first step when adding Ethereum to a crypto portfolio is deciding which crypto exchange to use. Fiat-to-crypto (centralized) exchanges are the easiest way to buy ETH for most people, but more advanced users can utilize decentralized exchanges (DEXs), P2P platforms or brokers.
The best crypto exchanges typically come with a multi-coin wallet, which makes it easy to store ETH, along with any other digital currencies purchased. Platforms such as Coinbase also offer additional services like earning hubs which can be leveraged into passive income. Given Ethereum’s immense popularity, there is a huge range of options available, which may be a little overwhelming to new investors. To simplify the process, there are a few specific criteria worth considering:
- Fees. One of the first things any investor will look for is efficient and transparent fee structures. The vast majority of exchanges will charge transaction fees, but it’s also important to look out for withdrawal/deposit fees as well as spreads (the difference between a crypto’s buy price and its actual price).
- Regulations. Not every exchange is regulated by a local authority. This may dissuade some investors from getting involved due to the higher risks. Additionally, certain countries and states have very tight crypto regulations – notably New York and China. It is integral to double-check the exchange supports trading in your local area.
- Supported cryptocurrencies. Nearly every centralized exchange out there will list Ethereum for purchase. The exception will likely be “Bitcoin-only” platforms.
- Security. Exchange security is a huge factor when selecting a platform to purchase Ethereum. Researching whether the exchange has been hacked/exploited, whether they keep assets in cold storage and whether they support 2FA will help in making a decision.
- Customer service. Some investors, particularly the inexperienced, may want to ensure their exchange of choice has comprehensive customer support. Certain exchanges will have 24/7 live chat, whereas others may have no chat option whatsoever. It’s worthwhile researching support reviews on websites like HedgeWithCrypto or Trustpilot to determine if the exchange’s customer support will be sufficient.
For the purpose of this article, we will demonstrate buying Ether using the Coinbase platform. This is not intended as a recommendation of Coinbase, and individual investors may choose a completely separate platform depending on their specific cryptocurrency needs. That said, Coinbase is a high-volume, long-running and well-trusted exchange that will likely be a solid choice for most individuals that are looking to buy ETH.
2. Register an account with the exchange
Get started by navigating to the exchange’s homepage and registering an account. To begin trading on the platform, there are a few things the user will likely need: a valid email address, mobile number and relevant government documentation. Once an email and mobile have been inputted, they will need to be verified with a unique code or by clicking a link.
To finalize the account creation process, new users will need to undergo verification. Without passing this measure, most exchanges will not allow customers to deposit fiat currencies (such as AUD, USD, GBP, EUR and more) into their accounts.
The verification process will vary between exchanges, though most are now automated and can be completed within a few minutes. Users will need to provide basic information such as address and date of birth, on top of images showing government documentation like a driver’s license, bank statement, proof of residency or passport. This information is collected by the exchange to comply with the international Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
Once the account is verified, it is highly recommended to activate 2-Factor-Authentication. This will make it much harder for hackers to access any funds held on the exchange account.
3. Deposit funds
Once the account has been verified and is ready to start trading, it’s time to deposit funds. For first-time investors, most exchanges will come with simple-to-use deposit methods like instant bank transfer or even credit/debit card purchases. Alternatively, those with existing crypto capital can transfer their assets to the exchange’s wallet address. Also, there are minimum deposit limits to be aware of as certain exchanges can be much higher than others.
When using Coinbase, users can choose between a number of deposit options, or alternatively, instantly purchase Ethereum by selecting ‘Buy’ and linking a credit/debit card. Depending on the region, Coinbase may not offer deposits via bank transfer (for example, in Australia).
The easiest way to deposit money on Coinbase is to link a payment method to your account. To do so, navigate to the ‘Profile/Settings’ tab, then simply select ‘Add Payment method’ and follow the relevant prompts.
From there, users can click ‘Add Cash’ from their Coinbase dashboard to instantly deposit funds (depending on the payment method chosen). Some banks may take up to a few days to process the transaction.
This process will vary between cryptocurrency exchanges but should be relatively intuitive for most.
4. Buy Ethereum
Now the Coinbase account has funds, it’s time to purchase ETH. Most exchanges will have a list of purchasable assets under a ‘Market’, ‘Buy Now’ or similar tab. Navigate to this page, select ETH and input the amount you wish to buy.
When buying Ethereum on any platform, make sure to read the final transaction price to assess the fees. Additionally, certain exchanges will have a minimum investment amount, so take note of that too. Experienced traders may be able to utilize advanced order options like Stop, Limit, Market and others.
Once the order for ETH has been put through, the amount to be received should be shown. After reviewing and confirming the transaction, ETH should be added to the exchange wallet within a few minutes. If it takes longer than an hour, it may be worth reaching out to customer support.
Selling Ethereum largely follows the same process as purchasing cryptocurrency. The easiest way to sell ETH is to use the same exchange it was bought on, whether it be Coinbase or otherwise.
- Navigate to a centralized exchange such as Binance, Coinbase or Kraken. If the Ethereum has been moved to an external wallet, send it back to the exchange’s wallet address. Ensure that the ETH is being sent via the Ethereum network, otherwise, the funds may be lost. The exchange’s wallet address can usually be found by navigating to the Ethereum asset page and selecting “Receive” or “Deposit”.
- Now the account has ETH, it’s time to sell. Most exchanges will support selling Ether directly from the wallet. This can be done by clicking “Sell” and inputting the amount of ETH to be sold.
- Alternatively, users can navigate to the exchange’s “Markets” section and select a trading pair. Trading pairs may include fiat/ETH, as well as for cryptocurrencies like BTC/ETH.
- Input the amount of ETH to sell and confirm the transaction. Once again, take note of any incurred fees to ensure the trade is at a desirable rate. When confirmed, the funds should appear in the exchange account within minutes.
- Once completed, the funds can be transferred to a bank account or re-invested into another cryptocurrency if desired.
If buying ETH via a centralized exchange, it’s most likely that any purchased assets will automatically be stored within a native exchange wallet. While convenient, this is not the safest way to store Ethereum and it is generally recommended long-term holders transfer their tokens into an independent wallet. There are two main wallets to choose from:
- Hot wallets. A hot wallet is any cryptocurrency wallet that is connected to the internet. This includes pretty much any wallet hosted on an exchange. However, third-party non-custodial wallets are very popular in the blockchain world and give control over crypto assets back to the investor. There are a lot of hot wallets for ETH traders to choose from, whether it be a browser extension or desktop/mobile application. Although non-custodial wallets give investors control over their assets, they still aren’t the safest option for storing ETH. As they are constantly connected to the blockchain, this leaves them vulnerable to hacks and other exploits. Metamask and AtomicWallet are two of the more popular third-party wallets.
- Cold wallets. A cold wallet is a cryptocurrency wallet that does not rely on a connection to the internet. They often take the form of a USB dongle or other similar hardware. Admittedly, storing ETH in a cold wallet can be inconvenient, as it takes much longer to send, receive and sell tokens when compared to a hot wallet. However, the extra security is worth it, especially for high-volume investors. The Ledger Nano series is one of the best cold storage wallets on the market.
Ethereum can be easily purchased from a range of reputable exchanges and brokers including Coinbase, Binance, eToro, and more. The “best” place to buy Ethereum will depend entirely on the investor’s specific cryptocurrency needs which can include supported payment methods, deposit fees, purchasing limits, trading and withdrawal fees.
No, you do not have to be over 18 to purchase Ethereum. Certain decentralized and traditional exchanges allow customers to sign up and trade ETH without verifying their age. However, the majority of crypto exchanges do have an 18+ age restriction on their platform, including Coinbase.
Ethereum and Bitcoin are by far the two largest and most well-known cryptocurrencies, each with a unique set of advantages and disadvantages. The coin that’s right for a crypto portfolio will come down to the individual's own investment goals. Generally, diversification is a great tool to mitigate risk and many experts recommend investing in Bitcoin and Ethereum.
Buying Ethereum is becoming more accessible through cryptocurrency exchanges that provide easy-to-use platforms and mobile apps. While there are learning curves for many investors to overcome and understand how to buy Ethereum and transfer ETH to a personal wallet, the overall experience will become more streamlined and simplified with mainstream adoption. In summary, the best approach to obtaining Ethereum can be completed in 4 steps: selecting a reputable Ethereum exchange, registering an account, depositing funds and purchasing Ether.
Kevin started in the cryptocurrency space in 2016 and began investing in Bitcoin before exclusively trading digital currencies on various brokers, exchanges and trading platforms. In 2019, he started HedgewithCrypto to publish informative guides about Bitcoin and share his experiences with using a variety of crypto exchanges around the world.