How to Buy Ethereum – Beginner’s Guide
By: Ofir Beigel | Last updated: 4/27/20
Ethereum is a DIY blockchain platform with smart contract functionality. It’s a platform for developers that was invented by Vitalik Buterin in 2013 to build decentralized apps. The platform has gained immense popularity and so did its currency, Ether. This post will cover the best ways to buy Ether online.
How to Buy Ethereum Summary
- Get an Ethereum wallet
- Find your Ethereum address
- Go to Coinmama and choose the amount of Ether to buy
- Enter your Ethereum address and payment information
That’s it! The Ethereum coins (i.e. Ether) will be sent to your wallet within a matter of minutes. If Coinmama doesn’t work out for you, here are the top exchanges for buying Ether online:
If you want a more detailed explanation of the buying process and also a better understanding of Ethereum and its currency, Ether, keep on reading this post. Here’s what I’ll cover:
- What is Ethereum?
- What is Ether
- How Do You Buy Ethereum?
- Frequently Asked Questions
- Ethereum vs. Ethereum Classic
- Optional – Mining Ethereum
Ethereum can be used to decentralize just about anything: voting, domain names, financial exchanges, crowdfunding, company governance, contracts and agreements of most kinds, intellectual property.
It’s a Do It Yourself platform for creating blockchains. The Ethereum platform is the base layer, and on top of that you can create different tokens (e.g. ERC-20 tokens) to run decentralized apps (aka Dapps). If you want to understand Ethereum completely, watch this video:
Ether is the currency of the Ethereum platform. Ether will be required by anyone wishing to build upon or use the Ethereum platform. Just like Bitcoin, Ether can be traded around the web and mined. Most people use the term Ethereum to refer to the currency instead of Ether and that’s why it can get a bit confusing.
The total supply of Ether and its rate of issuance were decided by the donation gathered on the 2014 presale of the currency. The results were roughly:
- 60 million Ether created were granted to contributors of the presale.
- 12 Million (20% of the above) were granted to the development fund, most of it going to early contributors and developers and the remaining to the Ethereum Foundation.
- 3 Ethers are created every block (roughly 15-17 seconds) to the miner of the block (this was reduced to 2 Ether in 2019).
- 2-3 Ethers are sometimes sent to another miner if they were also able to find a solution but his block wasn’t included (called uncle/aunt reward).
The founders of Ethereum state that Ether is not a currency as much as it is “crypto-fuel”, meaning it’s a token that has one main use – to pay for the Ethereum platform.
Step 1 – Get an Ethereum Wallet
Before starting the buying process you will need to get an Ethereum wallet to hold your Ether. There are many types of Ethereum wallets. Here is a short breakdown of the most popular Ethereum wallets.
Ethereum Hardware wallets
Hardware wallets are the most secure way for storing Ether. It’s a piece of hardware that you connect to your computer (just like a flash drive) that stores your Ethereum private keys offline. A hardware wallet is probably the optimal mix between security and convenience you can find. The main hardware wallets that support Ethereum are Ledger and TREZOR.
Electrum Software wallets
If you’re just starting out with Ethereum, don’t have a lot of Ether to store or don’t have the money to buy a hardware wallet you can use free software wallets. These wallets are free of charge but are less secure since they are constantly connected to the Internet (and therefore can be hacked). The top Ethereum wallets for beginners are Exodus (for desktop), Edge (for mobile) and MyEtherWallet (for desktop / mobile).
Step 2 – Buy Ethereum with a Credit Card or Wire Transfer
The easiest way to buy Ethereum (i.e. Ether) would be through one of the popular Ethereum exchanges which are listed below.
Buy Ethereum through Coinmama
Coinmama – A worldwide seller of Ethereum that has been working in the cryptospace since 2013. The site allows you to buy Ethereum with your credit card or bank wire transfer (SEPA and SWIFT). Exchange rates are relatively fair especially if you use SEPA transfers.
Buy Ethereum through eToro
eToro – If you’re only into Ethereum for price speculation and don’t need to hold the actual coins or send them to anyone else, eToro is probably the easiest and cheapest option. The company allows you to buy and sell Ethereum for fiat currency (USD, EUR, etc.) without access to the actual coins.
If you’re using eToro you can skip step 1 of getting an Ethereum wallet since you won’t be able to send any coins outside of the platform.
Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. So keep in mind that your capital is at risk.
Buy Ethereum through CEX.io
Cex.io is a cryptocurrency exchange that allows you to buy Ether with a credit card. If you use the company’s brokerage service (buying directly from the exchange) the fees will already be calculated into the exchange rate, that’s why it will seem higher than other exchanges. If you want to get better rates try using the site’s trading platform (suited for more advanced users).
- Open a CEX.io account
- Add your payment method (Credit card or bank account)
- Go to “Buy/Sell” and select Ethereum
- Choose the amount of Ethereum you want to buy
- Click on “buy Ethereum”
Buy Ethereum through Coinbase
Coinbase is a convenient and cheap way to buy Ethereum and the platform is open to 100+ countries). Coinbase will sell you ETH for a fee of 1.49%-3.99% depending on your payment method (credit cards have a higher fee than wire transfers). Here’s how you buy Ethereum on Coinbase:
- Open a Coinbase account
- Add your payment method (Credit card or bank account)
- Go to “Buy/Sell” and select the amount of Ethereum you desire
- Click “Buy Ethereum”
Buy Ethereum through Bitpanda
Bitpanda is a cryptocurrency exchange specializing in buying and selling cryptos inside the Eurozone. The company has a pretty intuitive interface for purchasing Ethereum and other cryptos and the service is relatively quick. The only issue is that there are no listed transaction fees and you’ll need to calculate the fee charged from the final price.
Step 3 – Withdraw the Ether to your Wallet
Once you bought Ether remember to make sure the coins are sitting in your own personal wallet. If you leave your coins on the exchange and the exchange gets hacked or becomes insolvent you may end up losing your coins.
For this step you’ll need to send your coins to your Ethereum address. Just like you need an email address to receive emails, you have an Ethereum address to receive Ethereum. The address is a long string of characters and numbers that start with 0x and looks something like this: 0x123f681646d4a755815f9cb19e1acc8565a0c2ac. You can retrieve your ETH address from your Ethereum wallet.
How do I Buy Ethereum with Paypal?
Most exchanges won’t accept PayPal since its buyer protection allows the buyer to reverse the transaction and that opens up the option for fraud (you can read more about this here). However, if you’re willing to pay a price there are several ways you can buy Ethereum with PayPal.
One workaround would be to buy Bitcoin with Paypal and then trade it for Ethereum on a cryptocurrency only exchange like Binance. The process will take time, as buying Bitcoin with Paypal isn’t straightforward, and you will pay a transaction fee for each step of the process. Only use this if you’re willing to pay up to 15% or more in fees.
Alternatively you can use LocalCryptos – a marketplace that allows individuals to connect with each other in order to buy and sell Ethereum. The concept is similar to LocalBitcoins. While the variety and flexibility of this marketplace are usually high, the risk is also high. You have to make sure the person you’re dealing with is legit before conducting a trade.
How do I Start Investing in Etheruem?
There are many forms of investing in Ethereum. You can mine, trade, buy and hold or even invest in different sites. However, many of these methods contain great risks. I suggest reading in depth about the different types of investments here.
How do you Sell Ethereum?
If you’d like to sell Ethereum you’ve bought you can do so on all of the exchanges listed about except for eToro. eToro will only allow you to sell Ethereum that was bought thought their platform. So here are your options:
For a complete list of Ethereum exchanges where you can buy and also sell Ethereum visit this page.
Ethereum Classic is a cryptocurrency that was created due to a disagreement with the way original Ethereum conducted business. The catalyst for the split was due to a hacker finding a way to steal $60m worth of Ethereum coins.
The supporters of ETH said that the code should be altered and the stolen coins should be refunded, while the supporters of ETC said that “code is law” and whatever happened happened. ETC is actually the original Ethereum code and ETH forked their code to create a new Ethereum.
Therefore two identical competing currencies were created that have two different exchange rates. Today ETH’s price is much higher and is usually what is referred to as the “true” Ethereum in the crypto community.
If you’re looking for an alternative for buying Ethereum you can try mining Ethereum. Using your own computer (CPU mining) will probably not get you too far. However, if you have a GPU on your machine then you can get some actual rewards. Mining Ethereum is similar to Bitcoin mining in many aspects aside from the fact that you don’t have to buy dedicated hardware to participate in it.
Ethereum is a disruptive technology that is set to change how the Internet works. Whether it succeeds or not remains to be seen, but for now you can easily get your share of “the Internet’s future” by following the steps mentioned above.
As Ethereum becomes more popular its currency, Ether, seems to be gaining momentum and appreciating in price. But as always cryptocurrencies are a very risky investment and things can change in a heartbeat (as demonstrated by Ethereum’s colossal price drop during 2018).
If you have additional questions or comments I’d love to hear about them in the comment section below.