Cryptocurrencies are becoming increasingly mainstream as potential investments. One of the most popular digital coins is Ethereum, which is not only a currency, but also focuses on providing a platform for applications and contracts.
For some, the underlying use case might make Ethereum an attractive addition to a cryptocurrency portfolio. Here’s what you need to know about how to buy and sell Ethereum.
|Total circulating supply||117.43 million (as of Sep. 7, 2021)|
|What it’s best for...||Those interested in app development and using the blockchain for practical purposes|
What is Ethereum?
Ethereum is a blockchain concept first outlined in a 2013 whitepaper by Vitalik Buterin. The idea was to build a decentralized platform that developers could use to create apps. One of the main draws of the Ethereum blockchain is that it can facilitate smart contracts, which have the potential to remove the middleman in a variety of transactions. On top of that, the Ethereum blockchain has use cases for supply chain management and other potential applications.
In 2016, a hack prompted a split of Ethereum. Ethereum Classic (ETC) is the original, unaltered version of the Ethereum blockchain, while the current Ethereum blockchain continues to have a timeline for changes and upgrades.
The crypto token native to the Ethereum network is called ether (ETH). Ether is used to power transactions on the blockchain. Additionally, ether can be used to power various “dapps.” Dapps are products and services that developers can create for a variety of purposes, ranging from games to financial transactions. Ethereum is also used to sell non-fungible tokens (NFTs). One of the most famous games and NFT sources, CryptoKitties, was the first dapp on Ethereum’s blockchain.
As a digital currency, ETH is compatible with a number of hot and cold crypto wallets, and it is readily available on many crypto exchanges. It’s the second-largest cryptocurrency after Bitcoin (BTC) and is considered the largest altcoin (alternative to Bitcoin).
Ethereum has been a proof-of-work blockchain, with transactions verified by computational power solving cryptographic puzzles. But Ethereum is moving toward a proof-of-stake model, which focuses on ownership of the token — a stake in ether. Those who have a stake in ETH will represent a potential node designed to verify transactions once the new model is live on the blockchain.
How much does Ethereum cost?
As of September 7, 2021, the price of ETH is a little over $3,300, according to industry website CoinMarketCap.
In September 2015, ETH cost right around 70 cents. It’s highest point, reached in May of 2021, was just over $4,100.
If you’re hoping to learn how to invest money in ETH and think that it will rise in the future, the current price might seem reasonable.
How to buy and sell Ethereum
Because it’s so popular, it’s relatively easy to learn how to buy and sell Ethereum. Most hot and cold wallets can function as Ethereum wallets, meaning that you can use just about any wallet to buy, sell and store your ether.
Ethereum is also available on all major exchanges, including Coinbase, Kraken, and Gemini. This gives you a lot of ability to choose a trading platform that will work with your preferred payment method. For example, you might buy crypto with a debit card, credit card, PayPal, or bank transfer, depending on the service you sign up for.
When learning how to buy cryptocurrency, starting with an exchange can be an easy way to move forward. But you can also purchase ETH directly from other owners. You can receive ETH as payment for services, and even create your own NFTs and sell them to receive ether in your wallet.
It’s important to note, however, that transactions using the Ethereum blockchain technology come with a cost, called gas. Your gas cost is based on how busy the network is at the time and other factors. This cost is paid in ether (or in fractions of ether, called gwei). Depending on where you purchase your ETH, you may have to pay an additional gas cost, or, with some exchanges, the cost will be baked in. You can generally see how much an Ethereum transaction will cost before you complete it.
FAQs about Ethereum
What is the best place to buy Ethereum?
The best place to buy Ethereum is wherever you’re comfortable making transactions. Because ETH is a popular cryptocurrency, it’s relatively easy to buy it on any of the best cryptocurrency exchanges. Coinmama, Binance, and eToro are all exchanges that support Ethereum and made our list, with eToro being a particularly good fit for beginners.
Also consider other features or currencies you might be interested in. For example, if you also want to buy and sell Bitcoin or Litecoin, you might pick an exchange that supports all three coins. Or if you want to be able to trade on the go, pick an exchange or brokerage that has a mobile app.
Are there fees to buy Ethereum?
Some exchanges charge transaction fees to buy ETH. Additionally, if you’re transacting business over the Ethereum blockchain, you generally have to pay a fee known as a gas cost.
How do I contact Ethereum?
While Ethereum doesn’t have what you might consider traditional customer support, they are an open-source platform and have a thriving Ethereum community as well as many educational resources on their website.
The Ethereum blockchain is known for its versatility and the ability for developers to use it to create decentralized applications and services of their own. The blockchain uses its native token, ether, to power transactions and applications.
Depending on your situation and what you’re interested in, it could be useful for you to learn how to invest in Ethereum as a cryptocurrency with an underlying use case. But carefully consider your portfolio and strategy goals before you move forward since all investments, including digital assets, come with the chance of loss and you could potentially lose money when investing in Ethereum.
Disclosure: The author owns ether and bitcoin, which are mentioned in this article.