Comprehensive Guide on How to Buy Ethereum?

In the world of cryptocurrency there are 2 coins that outshine the rest. Namely Bitcoin (BTC) and Ethereum (ETH.) Most tend to think that Bitcoin is the undisputed champion, far ahead in terms of value and technology. But the only reason anyone would think that is because they haven’t been paying attention to Ethereum. With a host of highly innovative tech, much of which outshines even Bitcoin, Ethereum may soon be taking the throne.

In this guide we’ll cover how to buy Ethereum, how to trade Ethereum, and cover some of the unique features offered by the Ethereum blockchain. Ethereum is the currency to watch without question, and should absolutely be in the portfolio of any serious trader.

How Did Ethereum Come to Be?

The story of Ethereum is a fascinating one, involving a father and son team that achieved the impossible. Canadians Dmitry and Vitalik Buterin were well aware of the fuss that Bitcoin was making in 2011, though hardly thought they had any part in the cryptocurrency revolution. Vitalik was a student and tech blogger at the time, having published a few papers on cryptocurrency.

The papers caught the attention of 23 year old Polish tech enthusiast Mihai Elisie. Mihai had been looking for someone to start Bitcoin Magazine with and felt that young Vitalik might be just the person. Vitalik accepted, of course, and this started his new job as a dedicated tech writer.

More confident in his technical abilities than ever, and spurred on by his father, in 2013 Vitalik took a big risk. He dropped out of college, got in touch with Doctor Gavin Wood, and started to develop Ethereum. The 2 dedicated much of their lives over the next year to writing the Ethereum blockchain, releasing it in January 2014. Though, what most impressed the world is that Ethereum wasn’t just an aping of Bitcoin, it was something altogether better.

Those aware of what had been achieved started to buy Ethereum immediately, realising the that the first true contender had hit the crypto scene. Bitcoin finally had something to be worried about.

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What is Ethereum?

At its core Ethereum is a blockchain, similar in some ways to Bitcoin. What makes Ethereum different is that the tech was the first to be open source, meaning that any number of other applications may be based on the same core technology. The apps created allow a trader to buy Ethereum in a number of convenient ways, such as via mobile devices. Though, still based on the Ethereum code itself, the apps are able to make use of the same impenetrable blockchain tech.

How to Buy Ethereum

The security of blockchain is widely touted, leading some newcomers to believe that if they want to buy Ethereum it is a complicated process. Nothing could be further from the truth. Buying Ethereum requires only 3 simple steps, taking no more than a few minutes. Let’s take a look at how to buy Ethereum.

Step 1 - Set Up a Wallet

Cryptocurrency is a digital asset, but it is still best to think of it has a physical commodity. A crypto like Ethereum, therefore, needs to be stored, as with traditional currency. Storage comes by way of wallets, both digital and physical. Digital wallets are best for beginners, with a number of great options available. Signing up for a wallet takes just a few moments, requiring a few basic details. Once a wallet has been verified it will be ready to go immediately.

Step 2 - Sign Up at an Exchange or Broker

A trader can buy Ethereum with fiat currency, or trade for it with other cryptocurrency. We’ll take a look at both methods, using Coinbase and Binance Coin (BNB) as examples. Though, of course, there are many other exchanges besides Coinbase, and many other cryptos besides BNB.

Step 3 - Make a Deposit

If a trader wants to buy Ethereum with fiat currency an account will be required at the chosen exchange, in this case Coinbase. The Know Your Customer (KYC) process will have to be completed in order to sign up at Coinbase. KYC won’t take long, provided that proof of identification is close at hand. Once this is done and the account active, fiat currency will have to be deposited. This can be done via credit card, debit card, Google Pay or Apple Buy. With the funds deposited the Buy/Sell option can now be clicked. The amount of fiat currency wanting to be spent can then be inputted, or alternatively the desired amount of Ethereum to be purchased indicated.

Step 4 - Buy Ethereum

Binance coin is an exchange, allowing for crypto-to-crypto trading. A trader can trade Ethereum here, or any other digital currency. Completing the KYC process is also required at Binance, so once again proof of identification will be required. Once the account is active note that Google Authenticator will be utilised, meaning that the app will have to be installed and setup on a mobile device. Google Authenticator constantly generates security codes, providing additional security. The ‘Funds’ tab may now be clicked, followed by the ‘Deposits and Withdrawals’ button. On this page supported cryptos will be displayed. The desired crypto to be deposited can be selected, after which an address will be given. The external crypto can now be sent to this digital address. In Binance ‘Exchange’ must now be selected, followed by ‘Basic.’ The option is now given to trade 1 crypto for another.

Step 5 - Withdraw Ethereum

With Ethereum purchased, it must now be moved for safe storage. The digital wallet previously set up will allow for the digital assets to be stashed in a safe environment. Withdrawing is as easy as selecting for withdrawal at any exchange, entering the wallet’s address, and confirming.

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5/5

Excellent

TESTED & VERIFIED

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4.9/5

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TESTED & VERIFIED

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4.8/5

Excellent

TESTED & VERIFIED

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4.7/5

Excellent

TESTED & VERIFIED

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4.6/5

Excellent

TESTED & VERIFIED

Trade Ethereum With CFDs

It is also possible to trade Ethereum with Contracts For Difference (CFDs.) CFDs are a highly risky proposition, with the potential to either make or lose a great deal of money. A CFD essentially allows a trader to make a prediction on whether a crypto’s value will increase or decrease.

Profits are made on how accurate the prediction turns out to be, with the higher the gain or loss, the more earned. The draw of the system is that only a small amount must be deposited upfront, with many brokers accepting a minimum deposit of $100. With the $100 deposit big risks can be taken, but CFDs are strictly for those that understand what they are getting into, and those prepared to deal with potential losses. There are safer ways to trade Ethereum.

Ethereum Specific Technology – Smart Contracts

Now that it is clear how to buy Ethereum, let’s look at some of the other technology involved in the blockchain. The Ethereum blockchain supports an impressive innovation referred to as Smart Contracts. It is the Smart Contract system that has played a big part in the success of Ethereum, with many appreciating how streamlined and convenient trade is.

At its core Smart Contracts is a computer protocol. The system handles almost all trade on the Ethereum network, including the execution and enforcement of agreements, as well as the monitoring of general activity. Most ground-breaking is that Smart Contracts essentially eliminates the need for lawyers, witnesses, banks, and governments. This means that not only is the Ethereum blockchain extremely efficient and convenient, it is also dramatically more reliable and cheaper.

In practice traders only have to indicate the contract they are looking for, put in a request, and let Smart Contracts do the work. Smart Contracts is aware of all contracts being requested at all times, thereby working endlessly to find matches. If a match is found, and all parameters met, the deal will go ahead. Hence, anyone looking to buy Ethereum or trade Ethereum can do so on a near instantaneous level, safe in the knowledge that an infallible system is handling the details on their behalf.

Interestingly, the idea of a Smart Contract goes back as far as 1994. An engineer named Nick Szabo sought a way to allow for safe and secure contracts to be executed, without the need for any human intervention. His system was based around the following core principals;

  • A contract system that will automatically track both parties involved in an unbiased fashion, ensuring that the details of the contract are met on both sides.
  • A system that is automatically able to confirm that all details of a contract are followed through, including any specific conditions.
  • A system that can selectively distribute the details of a contract, ensuring that only necessary information is made available for the process to be completed. Importantly, personal details will not be needed.
  • Human intervention should be kept to a bare minimum in all cases. A perfect system will require no human intervention, ensuring that both parties were guaranteed a totally unbiased middleman that does not interfere in any way.

With the concept for a Smart Contract system made available in 1994, in 2009 the perfect environment for the tech arrived by way of blockchain. Satoshi proved that a decentralised Byzantine Fault Tolerant (dBFT) algorithm could work, declaring that not only can contracts be anonymous, but that they can also be completely fair and be entirely irreversible.

Though, it wasn’t until Vitalik Buterin founded Ethereum that Smart Contracts became a reality for the first time. Hence, anyone using Ethereum can now experience a breakthrough tech proposed in 1994, made into a reality in the 2010s.

Other Ethereum Applications

Smart Contracts are not the only advanced technology at work on the Ethereum blockchain. Other applications, referred to as Decentralised Applications, or dApps, work in a vast, ever changing network. They handle all other tasks on the network, designed to function in harmony with the more specific Smart Contracts. Most important is that the dApps runs on the distributed ledger technology, ensuring that all functions are operating within a strict set of predetermined parameters. Interestingly, dApps also operate on a self-incentivised basis.

Otherwise known as native tokens, the system is directly linked to the nature of Ethereum itself, meaning that it cannot operate unless a process needs to be completed. This allows for automated tasks to be carried out while completely guaranteeing the safety of user assets.

What is the Difference Between Bitcoin and Ethereum?

In comparing Bitcoin and Ethereum the cryptos seem similar on the surface, but have a few key differences behind the scenes. Perhaps the most notable difference is that, across the board, the Ethereum blockchain is faster and more efficient. While Blockchain can handle just 7 transactions per second, Ethereum can handle 15. Bitcoin uses a Proof of Work model, which requires mining to fuel the economy, while Ethereum uses Proof Of Stake, which is dramatically faster.

Technically speaking none of this directly impacts the value of a crypto, with Bitcoin still being more valuable. But it is clear that Ethereum is ahead of the game as far as tech is concerned.

Final Thoughts

Taking all cryptocurrencies into account, Ethereum may not be the oldest, or the most valuable, but is leading the charge in terms of tech innovation. One of the primary reasons that Ethereum took off so quickly is that developers and software engineers understood what was being achieved, and so jumped on board immediately. They felt firmly that the Ethereum technological leap pegged it as a sure bet. So far those early investors have been correct.

Again, the technology doesn’t necessarily impact the current value of the currency. But if looking to the future it seems clear that Ethereum has an advantage in that regard. There has already been rumours that Ethereum will overtake Bitcoin, but that really is just nothing more than speculation. Either way, any serious trader should be watching Ethereum carefully. There is no question that the future is bright, and the chances are good that anyone getting into Ethereum now will be seeing the benefits in the near future. Of course, all crypto investments come with risks, and any purchases or trades made should be thought out carefully. Remember; blockchain transactions are irreversible.

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