How to Buy Ethereum in 3 Simple Steps
Last updated: 9.10.18
Ethereum is a blockchain platform with smart contract functionality. It’s basically 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.
- Step 1 – Get an Ethereum wallet
- Step 2 – Go to Coinmama and choose the amount of Ether to buy
- Step 3 – Enter your Ethereum address and payment information
That’s it! The Ethereum coins will be sent to your wallet within a matter of minutes.
Here are the top 5 exchanges for buying Ethereum worldwide
A complete list of Ethereum exchanges can be found here. If you want a deeper explanation of the buying process and also a better understanding of Ethereum and its currency, Ether, keep on reading this post. Here’s what we’ll go over:
- What is Ethereum?
- What is Ether
- Buying Ether in 3 steps
- Additional buying options for Ethereum
- Buying Ethereum with Paypal
- Ethereum vs. Ethereum Classic
- Optional – Mining Ethereum
Ethereum can be used to codify, decentralized, secure and trade just about anything: voting, domain names, financial exchanges, crowdfunding, company governance, contracts and agreements of most kind, intellectual property.
Ether is the currency of the Etherium 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. In a second I’ll show you exactly where you can buy it. Most people use the term Ethereum to refer to the currency instead of Ether and that’s why it can get so confusing.
The total supply of ether and its rate of issuance was decided by the donations gathered on the 2014 presale of the currency. The results were roughly:
- 60 million ether created to contributors of the presale.
- 12 Million (20% of the above) were created 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 will be reduced to 2 Ether soon).
- 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. This means that you probably won’t be able to buy stuff with Ether online. However you can still trade it and invest in it in hopes its price goes up.
Because Ether is less “mature” than Bitcoin at the moment, it’s less suitable for non technical people.
No matter what exchange you use for purchasing your Ether you’ll usually need to go through the following steps.
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
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, Jaxx and MyEtherWallet.
The easiest way to buy Ethereum (i.e. Ether) would be through one of the popular Ethereum exchanges which are listed below. It’s important to make a distinction between an actual Ethereum exchange that will sell you Ether and platforms like eToro that only let you speculate on the price.
Platforms like eToro don’t give you actual access to your coins and you can’t send coins from eToro to other people. The only thing that can be done with the platform is to buy and sell Ethereum for fiat currency (i.e. Dollars, Euros, etc.).
This method is only valid if you live outside of the US. Also, 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.
IMPORTANT! If you use eToro you don’t actually need an Ethereum wallet as they don’t supply you the actual coins. Also, 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.
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 (think of it as the email address for Ethereum). An Ethereum 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.
There are several Ethereum exchanges available online. Below I’ve listed the top exchanges suitable for beginners. For each exchange there is a summarized review and some also include a step by step guide for buying Ether.
Pros: Good support, respectable company, fast service
Cons: Limited states in the United States, limited payment options
Overall rating: 4.5 Stars
Coinmama is a worldwide seller of Ethereum. The site allows you to buy Ethereum with your credit card and exchange rates are relatively fair considering the alternatives. Coinmama is a very reputable exchange that has been working in the cryptospace since 2014.Buy Ethereum on Coinmama Read our Coinmama review
Pros: Veteran company, high buying limits
Cons: Support can be slow, Higher exchange rates than competition
Overall rating: 4.5 Stars
CEX.io is a Bitcoin exchange that also sells ETH via a credit card. The fees for on CEX.io are already calculated into the exchange rate, that’s why it will seem higher than other exchanges. For example, the exchange rate for 1 ETH on CEX.io can be around 7% higher than on Coinbase. However, CEX.io works with countries worldwide (unlike Coinbase).
- 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”
February 2018 update: Coinbase has cut off new credit card purchases for US customers. Debit cards are still an option on Coinbase.
Pros: User-friendly interface, relatively low fees, established reputation
Cons: Not available worldwide, support takes time to respond
Overall rating: 4 Stars
Coinbase is a convenient and cheap way to buy Ethereum would be Coinbase (if it’s available in your country):
- 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”
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).Visit Coinbase Read our Coinabse review
Pros: Wide variety of payment options, relatively low fees, beginner friendly
Cons: Not available worldwide, fees are “hidden” within the exchange rate
Overall rating: 4 Stars
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.Visit Bitpanda Read our review
A lot of people have been interested in the option of buying Ether via 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 still ways you can buy Ethereum with PayPal:
Buy Ethereum with PayPal through conversion
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.
Here’s a short overview of the process:
- Sign up to VirWox
- Buy SLL with PayPal
- Convery SLL to BTC
- Withdraw the BTC to Binance
- Convert BTC to ETH
Pros: Anonymous, wide variety of sellers
Cons: Prices are usually higher than other exchanges, relatively new platform
Overall rating: 3.5 stars
LocalEthereum is 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.
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 Ehtereum code and ETH forked their code to create a new Ethereum.
Therefor 2 identical competing currencies were created that have 2 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). This will probably not get you too far, However, if you have a GPU on your machine then you can get some actual rewards rewards. Mining Ethereum uses proof-of-work. It’s similar to Bitcoin mining in many aspects aside from the fact that you don’t have to buy dedicated hardware to participate in it.
For a detailed guide about how to start with Ethereum mining read this post.
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 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 want to learn more about Ethereum you can use the variety of social channels dedicated to the platform: Facebook, Twitter, YouTube, Reddit, StackExchange and the Etheruem blog. If you have additional questions feel free to leave them in the comment section below.