Learn how to buy, sell, and trade Ethereum by following these helpful tips.
As one of two of the most popular cryptocurrencies by market capitalization, Ethereum routinely grabs headlines. But what’s the best way to buy, sell, and trade Ethereum?
This article will help you understand what Ethereum is and how the Ethereum platform differs from Ether (ETH), its native token — in addition to helpful tips on buying and selling Ethereum as part of a larger strategy.
What Is Ethereum?
Ethereum is actually an ecosystem comprising a distributed network of computers. It uses blockchain technology to record unchangeable and verifiable digital transactions. It features a native token called Ether (ETH), often referred to simply as “Ethereum.”
Cryptocurrencies are digital currencies powered by cryptographic techniques that make hacking or manipulating them extremely difficult. They bypass traditional financial intermediaries and allow the direct, person-to-person exchange of currency.
The key to the integrity of cryptocurrencies is a set of digital keys. A public key allows interaction between parties anywhere in the world. A private key, known only to the conductor of the transactions, authorizes transactions and keeps the assets safe.
Part of what attracts people to Ethereum is its underlying blockchain and associated community. With that in mind, here are a few key features to understand.
The Ethereum Blockchain
As we mentioned above, a blockchain is a digital distributed ledger that records transactions in an immutable way, which means it cannot be altered or overwritten by any participants in the blockchain.
The Ethereum blockchain supports smart contract functionality. For example, smart contracts enable parties to agree to a transaction wherein certain actions are triggered automatically based on commitments being fulfilled, a price target being reached, etc.
Another important digital innovation supported by Ethereum is the creation of non-fungible tokens (NFTs). These digital collectibles are created, sold, and traded on the Ethereum blockchain, attracting a huge community.
Unlike other cryptocurrencies, ETH may have an underlying utility that can support its value beyond just pure speculation. Of course, ETH has also been subject to tremendous volatility.
But, once you’re ready, how do you go about buying Ethereum? Let’s take a look.
How to Buy Ethereum
You can’t buy cryptocurrency just anywhere, though the available options are growing.
Generally speaking, you can find a marketplace that specializes in cryptocurrency — most often called an “exchange” or “platform” — or an app designed to let you buy and store crypto. Exchanges come in two flavors: centralized and decentralized.
Centralized exchanges allow you to use local currencies like USD to buy your Ethereum. They may offer other services, like staking or crypto-to-crypto conversions to further incentivize you to use their platform.
Decentralized exchanges are peer-to-peer networks that allow you to trade crypto. They use automation (a form of smart contracts) to complete and govern transactions. Participants are responsible for storing their own crypto, as the network will not hold the keys.
While centralized exchanges feature built-in wallets, commonly referred to as exchange wallets, standalone wallet apps called digital or crypto wallets are also available, which allow you to store your crypto directly through them.
If you want total control of your crypto, a digital wallet may be your best bet. These wallets come in software and hardware versions, each with differing advantages.
If you don’t already own crypto, you’ll need to decide how you want to fund your purchase. Typically, exchanges accept bank transfers from linked accounts, credit or debit cards, or sometimes payment services such as Apple Pay.
Buying Ethereum in 4 Simple Steps
1) Set up an Account
After selecting a platform, set up an account. Depending on the platform, you may need to provide some personal information, proof of identification, and, in some cases, proof-of-address and other identification documents.
This is especially true for platforms that allow you to link your crypto account to a bank account. This often triggers legal “know your customer” requirements.
2) Fund the Account
Next, you’ll need to fund your account for your crypto purchases. You may be able to simply deposit money from a bank account, debit or credit card, or a method involving wire transfers.
Each of these options may have associated transaction fees, so read the fine print on any fees the platform charges, as well as your credit card or payment service.
For example, many credit cards view crypto purchases as cash advances, not standard purchases. So there may be a cash advance fee as well as interest charged on the amount advanced until it is paid off.
3) Buy Ethereum
Once your account is funded, you can buy ETH. You’ll need to choose the amount you want and when you want to purchase it. Keep in mind that some cryptocurrencies may cost thousands, or, in the case of Bitcoin, tens of thousands of dollars. So you may end up purchasing a fractional amount.
Also, on some exchanges, you can specify whether you want to buy at the current market price or at some predetermined threshold. For example, if you think the price of ETH will be dropping soon, you may set up a “limit order” to buy only at or below a certain price.
4) Store Your Ethereum
Once your purchase is complete, you’ll need to keep your ETH safe. Some platforms like Binance.US store it for you.
Another option is to use a digital wallet, as we mentioned earlier. In this case, you’ll transfer your ETH from the platform to your digital wallet for safekeeping and retain full control over it.
Some crypto platforms also offer digital wallets that are seamlessly linked to their processes to keep things simple.
How to Sell or Trade Ethereum
Once you’ve purchased ETH, you may choose to hold it for the long term, sell it if it appreciates in line with your shorter-term goals, or use it as you would currency (for transactions that accept it).
To sell your ETH, you simply place a sell order on your crypto platform. For exchanges that support it, you may be able to place limit orders — only sell if it reaches a certain price target — in addition to market orders.
To trade ETH, tap into your exchange’s capabilities. Some decentralized exchanges will allow you to trade crypto with peers without an intermediary.
Some vendors will also accept ETH for purchases. Search online for a current list of apps, websites, and stores that accept it. You can even use your Ethereum to purchase NFTs by connecting your digital wallet with an NFT marketplace.
Things To Consider When Buying Ethereum
If you are new to buying ETH, it’s important to be disciplined, have clear goals, and understand the asset you’re considering. It’s also important to pick the right crypto platform. Doing so can offer the flexibility you’ll need to achieve your goals.
Like other tradable assets, cryptocurrency prices can be volatile, so ensure you have a strategy in place before you get started.
Before You Buy: Choosing the Right Crypto Platform
After looking at how to buy, sell, and trade Ethereum in more detail, you can better understand this token and its place in the world of crypto.
Before you purchase ETH, be sure to understand the fee structure of the crypto platform you have chosen and get familiar with its security features, such as two-factor authentication, to keep your personal information and your crypto safe.
Binance.US provides state-of-the-art security features and low, transparent fees so that you can do more with your money.
No matter what your goals are with digital assets, Binance.US helps you get involved in the cryptocurrency world in a way that makes sense to you.
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