In March, everyone who has recently stumbled upon the amazing world of cryptocurrencies is asking how to buy Ethereum. With new upgrades coming to the industry’s largest smart contract ecosystem this year, many expect that the project will massively improve. As such, investors expect a similar move price-wise.
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Ethereum recently bounced from its old ATH at $1430 as if it was nothing, proving to investors that the second largest cryptocurrency has much more progress to make than expected. After all, Bitcoin managed to jump almost 200% from its previous price record - Ether’s meager 30% increase shows that it lags heavily in contrast to the rest of the market.
Where did all the sudden interest in Ethereum come from? As reported in last week’s newsletter, Vitalik Buterin and the crew have decided to schedule the EIP-1559 upgrade together with the London hard fork in July.
Once launched, the upgrade will scale the biggest smart contract ecosystem and deliver significantly lower fees. This not only means that Ethereum fanboys will no longer pay crazy fees but that the DeFi community will have an easier time trading the latest governance tokens and NFTs.
Is it a good time to buy Ethereum? The EIP-1559 is a bullish narrative that certainly goes a long way with bringing positive price action. Nevertheless, the success of ETH will heavily depend on Bitcoin’s own performance and the stability of the stock market as well. If all goes well, Ether will undoubtedly succeed in establishing a far better ROI than anyone expected.
For anyone who is confident in the skills of Ethereum’s developers, it would be wise to get at least a small stack of ETH. But before we show you how to do that, we will briefly explain how Ethereum works and why it is so important for the crypto market.
Ethereum is the blockchain industry’s largest and most influential network (after Bitcoin) that hosts smart contracts and decentralized applications. The best way to understand it is to see the project as a hub for all sorts of activities and use cases towards which developers and users contribute.
Mainly led by Vitalik Buterin, the Ethereum team did a great job at improving the crypto space by basically bringing an upgraded version of Bitcoin. Although Ether does not have any features that would make it a viable Store-of-Value asset, due to its “unlimited supply,” the platform changed the way of doing transactions with digital assets by introducing a truly trustless system.
Ethereum 2.0, a Proof-of-Stake version of the original blockchain, is set to replace its Proof-of-Work predecessor and bring in a new age of scalable transactions. If ETH2 works as planned, investors will no longer face silly problems such as network congestion and +$100 fees.
Ethereum is famously referred to as “programmable money” since blockchain developers can create numerous financial applications by writing and executing smart contracts.
What is a smart contract, you might ask? Essentially, it is a form of digital contract based on blockchain technology that autonomously executes code once the necessary prerequisites are met.
Imagine it as an evolutionary jump from handmade production to automated assembly line production. Developers no longer have to manually call functions, like a periodical exchange withdrawal. Instead, they can code a single, smart contract to handle the withdrawals automatically, without the need for any personal interaction.
Similar to what we have described in our How to buy Bitcoin blog post, there are two ways to acquire Ethereum as well. Users can invest in the bullish smart contract ecosystem by either directly buying ETH or by mining it. As of lately, Ethereans can also receive more ETH by staking tokens - but that would fall under the investing method since owning the asset is a prerequisite.
The original and currently active Ethereum blockchain network works under the PoW consensus mechanism. As we already know, the model is powered through the act of mining. Therefore, users can join the network and confirm its transaction for the sake of earning block rewards - in this case, ETH tokens.
Mining Ethereum is done in a similar manner as mining Bitcoin, so let’s focus on the novelty at hand: staking.
The Ethereum 2.0 network already allows its users to stake and earn ETH tokens. Despite the fact that there are no transactions to be confirmed, early supporters are rewarded for stabilizing the network by locking in assets.
Those who wish to stake can head over to the official Ethereum launchpad website to learn more about the rewards and how setting up a node works. Alternatively, we recommend reading our blog post on the best Ethereum 2.0 staking pools in 2021. By using third-party platforms, users with not that great technical knowledge can stake on ETH2 without having to go through the process of setting up a node.
For most new users, both mining and staking are two complicated methods that require a lot of technical skill and capital. Truth be told, neither of them is for everyone, and if you wish to just make a one-time investment and relax, it might be better to simply buy ETH.
Since the market is highly liquid, buying Ethereum is as easy as buying Bitcoin. All crypto exchanges support ETH, and you can purchase it even on stock trading platforms like Robinhood.
Now that we have quickly reviewed the top two methods for acquiring the second-best cryptocurrency, it is finally time to show you how to buy Ethereum.
You will first have to find a suitable cryptocurrency exchange on which you can either buy or trade Ethereum. Don’t worry, there are a lot of options to choose from, and even if you don’t like one platform, you can always switch to another one.
In our opinion, Coinbase, Binance, and Kraken are currently the best companies to work with. All of them offer great trading services, and they are pretty reliable custodians as well.
After selecting your preferred exchange, you’ll have to create and verify your account. Do not fret, opening an account is pretty simple and the process is far easier compared to creating a stock trading account.
Users create an account just like when creating accounts on social media platforms, forums, and other kinds of websites. The difference? For higher withdrawal limits, deposit limits, and other neat rewards, exchanges require that you go through a Know-Your-Customer (KYC) identification process.
Again, there is no need to be alarmed. This is pretty normal to do nowadays, especially if we are talking about a reputable company that operates the exchange. It might take several days for the platform to confirm your KYC submission, but it is worth waiting for.
What kind of documents do you need to submit? In most cases, you’ll have to provide a picture of yourself, a valid ID, and possibly a recent document that can confirm that you’re currently located at the address that you have provided.
After creating an account, you will of course have to fund it with money. If you already own cryptocurrencies like Bitcoin or USDT, you can alternatively send them and use those assets to exchange them for ETH.
If fiat is all that you have got, you will have to use traditional methods like wiring money to the account or buying crypto directly from the company via credit or debit cards.
Keep in mind that all exchanges charge fees for direct crypto purchases. Methods like wire transfers average at 2% while credit cards often charge 4% in fees.
You are close to completing the entire ordeal. All you have to do next is to create an order on the exchange you have chosen and buy Ethereum. Since you have most likely deposited fiat, you should exchange it for USDT (tether) and head over to the ETH/USDT trading pair.
There, you can create either a limit order or a market order. What is the difference? Limit orders will execute your trade once the asset reaches your chosen price level. Market orders will execute the order instantly at the current market price.
After buying Ethereum, the exchange will act as the custodian and manage your assets. If you prefer to be your own custodian, you can withdraw your assets to a desktop or mobile hot wallet. Alternatively, you can buy a hardware wallet like Trezor or Ledger and store ETH with much better protection.
Next to Bitcoin, Ethereum is the largest blockchain network. Given how popular DeFi is at the moment, we might even see Ethereum outpace Bitcoin adoption-wise.
As previously mentioned, the upcoming EIP-1559 improvement proposal is the driving force of this month’s bullish price action. With the chance to deliver a scalable blockchain network that will no longer have an enormous amount of network congestion, investors wager that the price of ETH will massively increase.
After all, Ether did not move much compared to the price record established in the last bull run. On account of how volatile altcoins are and how much more value they gain in comparison to Bitcoin, it would be the only natural to see better performance. But will we? Only time will tell if ETH will stop lagging behind or not.
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Learn about Ethereum sharding, a proposed solution to increase transaction throughput and scalability on the Ethereum blockchain.
EIP-4844, a proposed Ethereum upgrade, introduces proto-danksharding and blob-carrying transactions to reduce gas fees and increase transaction throughput.
Liquid Staking Derivatives (LSD) represent a new trend in Ethereum that offers investors a way to stake while still being able to access their capital.