You may have heard of Ethereum due to its role in the creation of NFTs. Or maybe you’ve noticed it’s the second-most popular cryptocurrency and want in on the action. Or maybe you’ve noticed the multiple new all-time highs it has set recently.
Ethereum is one of two cryptocurrencies that investing experts recommend beginners stick to (the other being Bitcoin) because it is more established than other lesser-known cryptos. So, if you’ve decided that cryptocurrency has a place in your portfolio, are comfortable with the risks, and are ready to invest, here’s where to begin.
Developers can use the Ethereum blockchain to create applications known as decentralised applications (aka DApps). To gain access to that network, developers must purchase Ethereum’s associated token, ether (ETH). Similarly, users must pay in ether to interact with a decentralised application.
Investors can buy and hold ether as a long-term investment, similar to Bitcoin, in the hope that its value will rise in the long run. However, as with any cryptocurrency investment, the price of ether is likely to fluctuate significantly, particularly in the short term. Because of this volatility, investing experts advise keeping cryptocurrency investments to less than 5% of your total portfolio and investing only what you’re willing to lose.
Ethereum was launched in 2018, and it set several new all-time highs in 2021, the most recent being $4,800 in November. Over the last year, its value has ranged between $1,000 and $4,800 per coin. While Ethereum’s price has fallen slightly since its all-time high last year, it is still significantly higher than the $1,000 range it was in this time last year.
Ethereum’s price, like that of most cryptocurrencies, fluctuates a lot. Any cryptocurrency investment should be prepared for price fluctuations. If short-term price fluctuations bother you, you might want to reconsider investing in cryptocurrency altogether.
How to buy Ethereum
Pick a Cryptocurrency Exchange
As you cannot buy cryptocurrency through a bank or an online brokerage such as Fidelity or Vanguard, you must use a cryptocurrency trading platform. There are numerous cryptocurrency exchanges available, ranging from simple systems for novice traders to complex dashboards for advanced traders.
As Ethereum is so popular, most cryptocurrency exchanges will allow you to purchase it, but we recommend sticking to a few of the more popular exchanges, such as Coinbase, Gemini, or eToro. Ethereum is also one of the few types of cryptocurrency that can be purchased through platforms such as Venmo or PayPal. Different platforms charge different fees, have different security measures, and may include additional features, so it’s a good idea to do some research before signing up.
Fund Your Account
To open an account with a cryptocurrency exchange, you’ll most likely need to provide some personal information and verify your identity. Then you’ll be able to fund your account by connecting your bank account or debit card. Fees will most likely vary depending on the method you choose.
Funding your account does not imply that you have purchased Ethereum, and as with any investment account, you do not want to leave your uninvested funds in your account. At this point, you must purchase Ethereum in order to invest.
Place an Ethereum Order
After you’ve funded your account, you’ll be able to exchange your US dollars for Ethereum. Simply enter the amount of USD you want to exchange for Ethereum. Depending on the price of Ethereum and how much you want to buy, you will most likely be purchasing shares of a single Ethereum coin. Whatever amount you pay will be displayed as a percentage of the total ether coin.
Store your Ethereum
If you only have a small amount of cryptocurrency, it’s best to keep it in your exchange account. However, if you want to move your holdings to more secure storage, a digital wallet can provide more security. There are numerous types of digital wallets, each with varying levels of security.