How to buy Ethereum
Ethereum, which was launched in 2015, is the best-known cryptocurrency after Bitcoin. Buying Ether (ETH) – which is the name for the currency generated by the Ethereum platform, can appear daunting at first but is actually straightforward.
Ethereum’s value rose by around 3,600 per cent in 2017 and is expected to keep growing. However, like all cryptocurrencies it has been highly volatile and there are occasional sharp drops in value. It makes sense to keep an eye on the value for a while before buying your first Ether.
The value of a single Ether was several hundred dollars in early 2018 but you do not have to buy a whole ETH. It is possible to buy fractions of a cryptocurrency token. To buy Ether you will need an account with an exchange or cryptocurrency broker, such as Coinbase or Kraken. These vary in the service they offer but most will require you to submit your personal details and then connect your traditional bank account. Some will require you to verify your identity with appropriate documentation, just as a stockbroker or bank would.
Once you have an account you will be able to buy ETH, which you store in a digital wallet. Digital currency, being virtual, must be stored somewhere and your wallet is the place to do this. Some exchanges will offer a wallet as part of their service. Others will require you to use a third party.
Your wallet holds the private key that allows you to access your ETH and which you will use to ‘sign’ your transactions. It will also make it possible for you to move between marketplaces or other wallets.
Cryptocurrency transactions are not reversible. If you accidentally transfer coins to the wrong place or if your coins are stolen, then you will not be able to get them back. Security is vital.
There are software and hardware wallets for storing cryptocurrencies. The former are apps that store your information or that connect you to virtual services where your ETH are stored. These are easy to use but less secure. Some online services have been targeted by hackers and people have lost their coins.
Hardware wallets are usually memory stick-like devices that store your private key information. They are more secure than software wallets because they can be disconnected from the internet.
Wallets can also be encrypted with password protection and backed-up, protecting you from a computer failure or human error. Both steps are important measures to take to protect your ETH.
ETH can be spent on a range of online goods and services but it is worth keeping in mind that if you want to change it back into local currency at any point, this can be difficult in some parts of the world. If this is likely to be an issue for you then you should check local regulations before you buy.