Beginners Guide: 8 Tips When Buying Ether
Ether is a cryptocurrency that runs on the Ethereum blockchain. Ether can be traded for other cryptocurrencies or used to pay for services and goods and is the default currency used in the smart contract Ethereum programming language. If you’re looking to purchase Ether but are not sure where to start, this guide will help you through your first steps with buying Ether:
1. Determine Your Level of Risk
A couple of factors come into play when evaluating the level of risk, a person is willing to take on. The first thing to consider is how much you have to invest initially and how much you can afford to lose.
While investing in cryptocurrencies carries risks, it is important to understand that the potential rewards are greater than other investment vehicles. However, investing in altcoins that have little value compared to Ethereum can be risky as they tend to be highly volatile and subject to wild price swings due to the low liquidity of many altcoins.
2. Determine Where to Buy
The best way to buy Ether is to use an exchange that provides a good balance between buying and selling cryptocurrencies and security.
The most popular exchange for buying Ether is Coinbase, which is based in the US and operates in over 30 countries. However, alternative options are available if you’re based in a country that doesn’t support Coinbase. While there are many great exchanges to choose from, starting with one is best because the process can be a bit overwhelming if you are new. Many LocalBitcoins sellers will sell you Ether directly for cash.
3. Choose A Crypto Exchange
Before buying Ether, it is important to understand how to choose the right crypto exchange platform for you. The first thing to consider is whether the crypto exchange is based in your country. You can find the location of each exchange by searching for its name with Google.
Once you select a country, check whether that country supports Coinbase by looking at the ‘Supported countries’ page on each platform’s terms and conditions. It will help you determine whether the crypto exchange you’re interested in has a partnership with Coinbase.
While Coinbase is the most popular option for buying and selling Ether, there are a couple of drawbacks. First, Coinbase is only available in 30 countries. If you live in a country that doesn’t support Coinbase, there are alternative options available.
Second, the spread can be very high depending on market conditions if you’re looking to trade on margin and use leverage. Some crypto exchanges offer extremely low spreads and leverage of up to 5:1, which significantly increases profit potential and risk.
4. Open an Account
It’s time to open an account once you decide on a crypto exchange. While many exchanges provide step-by-step tutorials on creating an account, it’s best to find one that has a clean and easy-to-use interface and detailed instructions on getting started. The process is generally very similar across exchanges but may vary slightly by the exchange. It usually involves providing basic personal information such as name and address, verifying your email address and setting up 2FA for extra security.
5. Verify Your Account
If your account is new, chances are your details will need to be verified before you can buy Ether. Verifying your identity could be a simple process or a weeks-long ordeal depending on the exchange. Some platforms require you to upload an image of a government-issued ID and proof of address, while others only require a primary email address and password. You should check each platform’s terms and conditions to determine how long verification will take.
6. Buy Ether
Once you’ve verified your account and purchased the amount of Ethereum you wish to purchase, it’s time to make the transaction. You can use an exchange to send money from a bank account directly to the exchange and then buy Ethereum on the platform or simply trade Bitcoin or other cryptocurrencies with another person on an exchange that allows direct trading between fiat currencies as well as crypto.
7. Send and Receive Funds
Once you’ve purchased Ethereum, you’ll receive a unique wallet address that allows you to send and receive Ether. Depending on your platform, you will also be asked to verify your email address, mobile number, or both.
It is an important step because if one of these has been compromised or if someone else gets hold of your username/password, your account could be hacked and the Ether stolen. To ensure their email account has not been compromised, users should regularly check the spam folder of their email account, as this is where verification emails will be sent.
8. Store Your Ether
Once your payment has been confirmed, it’s time to store your Ether. After you’ve purchased Ethereum, it will be included in one of the wallets available on the platform of your choice. You can see which wallet address holds an amount of Ether by going to the home page of the exchange you’re using and clicking on ‘View Account.’
It’s important to understand that every Ethereum address is unique, so you won’t be able to send or receive funds from multiple addresses. When you decide to make a transaction, fund your wallet by sending funds from your Ether wallet.
Make sure you’ve done your homework and that your finances are in order before investing in a volatile cryptocurrency like Ether. Ideally, you should have a significant emergency fund, max up your retirement accounts and have low debt. Even if you can tick all the boxes, it’s crucial to diversify your portfolio. Thus, just a fraction of your assets should be in Ethereum and other cryptocurrencies.