Introduction
Ethereum is the second most popular cryptocurrency after Bitcoin and it is the second-largest token by market cap. Ethereum was created in July 2015 by Russian Canadian programmer Vitalik Buterin. Ethereum was designed to be a decentralized global supercomputer on which people can build different kinds of Blockchain applications called dApps. Ethereum also popularized the idea of Smart Contracts, which are self-executing contracts enshrined in code and stored on the Blockchain.
Ether (ETH) is the cryptocurrency token used on the Ethereum network/Blockchain. Ether is used to pay for transactions, services, and to generally keep the network running. When the original ETH sale happened in 2014, each token sold for around $0.3, the token has gained about 57,000% since launch and its price rose to almost $1,400 during the 2017 bull run. This piece is a simple guide to help you get started buying and selling Ethereum.
Why do you need Ethereum?
Ethereum (ETH) is used mainly for two purposes – as a digital currency to trade just about anything and as a token to run transactions and operations on the Ethereum network. Ethereum could be likened to a Blockchain operating system platform on which you can build new kinds of application in the same way the Android OS is a platform for building applications to run on mobile devices.
Many people have argued that Ethereum has better chances of bringing Blockchain to the mass market because of its versatility in allowing different kinds of blockchain applications.
The fact that decentralized applications (dApps) hold the key to the mass-market adoption of Blockchain suggests that it would be smart to buy and hold Ethereum for the medium to long-term. Also, Ethereum is the second oldest token, it has resilient development community and an almost fanatical user base. From a trading and investment standpoint, Ethereum could deliver a 700% uptrend from its current price levels if it only manages to return to its 2017 highs.
3 Easiest ways to buy Ethereum
Buy Ethereum on reputable exchanges
The easiest, simplest, and probably the fastest way is to buy Ethereum on an exchange. Finding a cryptocurrency exchange with global operations or one in your jurisdiction is an easy undertaking.
Skrill is unarguably the most user-friendly platform for buying Ethereum. Operating as part of Paysafe Group since 2001, Skrill has built a reputation as a simple, secure, and quick platform for digital payments. Last year, it doubled up its efforts to provide an opportunity for its users to start engaging with cryptocurrencies. Now, Skrill users can easily buy Ethereum, Bitcoin, Ripple, Bitcoin Cash, Litecoin, Ethereum Classic, Stellar and 0x online.
Open a Skrill account
Skrill’s account opening process is simple – you’ll only need to fill in your name, country, currency, email, and select a password. Skrill doesn’t require an additional layer of verification and you can start buying, selling, and converting cryptocurrencies immediately after creating your free account.
Upload some funds
The next step for buying Ethereum would be to deposit some money into your Skrill account. Skrill accepts over 100 different deposit methods including, card, bank transfers, and other alternative payments.
Navigate to the Crypto tab
On your home screen after funding your account, there’s a tab labeled “Crypto”. Clicking on that tab will take you to a dashboard where you can see the price movements of Ethereum and other cryptocurrencies in real-time.
Buy Ethereum
The next step will be to click on “ETH” to buy Ethereum and then click on the purple button with the words “EXCHANGE NOW”. You’ll then see a live exchange rate of Ethereum relative to your chosen currency. When you enter how much of your chosen currency you want to spend, Skrill will automatically calculate how much Ethereum you’ll get in return.
Confirm the trade
The next step is to double-check the amount you want to spend on the trade and how much Ethereum you’ll get in return. You can then hit the “Confirm” button to complete the transaction.
Skrill is by far the easiest way to purchase Ethereum because you can complete the whole process of creating an account and buying Ethereum in less than 2 minutes. Skrill also has iOS and Android mobile apps that make it easier to move your Ethereum balance to fiat or from fiat back to Ethereum on the go.
Buy Ethereum with cash from Local Ethereum
The second easy way to acquire Ethereum is to buy Ethereum with cash using a peer-to-peer solution such as LocalEthereum. At the risk of running afoul of KYC and AML regulation (depending on your jurisdiction) LocalEthereum allows you to purchase Ethereum anonymously in an over-the-counter trade that works very much like eBay.
You can search on the marketplace to see offers from people that want to sell Ethereum all over the world. For smoother trades, you might want to filter offers by currency, location, and payment method among others. Popular payment methods include gift cards and bank transfers.
Once you find an offer that works for you, you’ll initiate a trade with the user and then enter the amount of Ethereum you want to buy to lock in the rate. The seller is then expected to put the Ethereum in an escrow account and you go ahead to make payment through the agreed payment medium. You can hold conversations with the seller to work out kinks in payment. The Ethereum will be released from the escrow and released to you once the seller confirms the receipt of funds.
However, you’ll need to have a prior understanding of how Ethereum Wallets work and be willing to trust the dispute resolution process to use LocalEthereum. It is also important to note that the service is not free as buyers are typically charged 0.75% per trade while sellers are charged 0.25%. The transactions on LocalEthereum are also not instantaneous because the seller will need to first receive payment, you’ll be relying on third-party alternative payment systems, and the transfer of Ethereum will still require network confirmation.
Become an Ethereum Miner
The third way to acquire Ethereum is to become an Ethereum miner. Mining is an important network activity that keeps the Ethereum network running and miners are rewarded with Gas. Mining essentially requires you to unleash computing resources to solve cryptographic puzzles that help to confirm transactions on the Blockchain.
To start mining Ethereum, you’ll need to invest in a mining rig, which is a special computer designed for the heavy computing that full-time mining requires. Mining hardware typically consists of CPUs and GPUs but you’ll only be able to use GPUs to mine Ether.
You’ll also need to have a fair amount of programming knowledge; know how to install a client, use the command line to install geth, and be able to navigate your way around the scripting language “Go”. You’ll also need to install Etheminer to integrate your mining rig into the Ethereum Network.
Lastly, the mining of Ethereum is designed to become increasingly complex as more people use Ethereum and as more miners join the network. Hence, it is unlikely that you’ll have much success mining Ethereum on your own. You’ll be better off joining a mining pool where you can pool your computational resources to improve your chances of solving the cryptographic puzzles that will earn you Ether.
Conclusion
Deciding to buy Ethereum should be a carefully thought out decision in which you’ve factored your risk appetite, investment horizon, and your convictions about the future of cryptocurrency. Ethereum has gained a mere 18% this year and it is down 75% from its 2017 highs; hence, one can safely predict that its price is still depressed and that it has upside potential ahead.
Cryptocurrencies are by nature highly volatile and Ethereum is not immune from the crazy highs and lows of cryptocurrencies. You should do your research, invest only money that you can afford to lose, and remember that the entire cryptocurrency industry is barely 10 years old and it still has a long way to run to reach its full potential.
Disclaimer: This content does not necessarily represent the views of IWB.