Ethereum is one of the most widely used cryptocurrencies, coming in second only to Bitcoin in terms of market value. In the two years concluding on February 22, 2022, Ethereum's value rose by approximately 900 percent, but traders had to hang tough and wait through the volatility of crypto. Even so, it's easy to see why it's a popular choice for crypto investors looking for a high rate of return.
How to acquire Ethereum, is a question for those who want to grab a potential opportunity.
What does Ethereum stand for?
Although it can be used as a means of payment, Ethereum can also be used to create digital apps, mint non-fungible tokens, and use self-executing smart contracts (NFTs). The term "cryptocurrency" doesn't cover it all; Ethereum is more correctly referred to as a token that powers these many features.
Ethereum was launched in 2015, and it runs on a blockchain-based decentralized network. Every digital currency transaction is recorded in the blockchain, which acts as a form of permanent log of all token transactions. The transactions are verified and the integrity of the data is maintained by a decentralized network of computers.
An instruction on how to buy and sell Ethereum
A broker or exchange can assist you place trades if you're interested in purchasing Ethereum. Here's a step-by-step guide on how to acquire Ethereum.
1. Find a crypto broker or exchange
To buy Ethereum, the first step is to find a broker, app, or exchange that can facilitate the transaction. The good news is that you can now trade Ethereum on a wide range of crypto exchanges, apps, and brokers thanks to the widespread adoption of the cryptocurrency. A fresh bank account may not even be necessary for this purpose.
A finance app like Robinhood or Webull, for example, could be an option if you're looking to acquire Ethereum as a supplement to your usual investments. If you're already a customer, you won't have to open a new account to obtain Ethereum and a variety of other investments (stocks, ETFs, options, and more).
PayPal and Venmo, which you may already have on your phone, allow you to purchase Ethereum.
A crypto exchange can allow you to trade various types of crypto coins, but not other types of investments, if you're trying to expand into the crypto world. There are more than 100 different crypto coins that may be traded on some of the most popular cryptocurrency exchanges.
Among the other things to think about are:
The price of trading. Some companies charge a fixed cost, while others provide volume-based discounts for larger purchases. Other companies offer commission-free trading, but mark up the price of the cryptocurrency by incorporating a built-in spread.
Safety. What level of security can you expect from your trading platform or broker? If you're going to use an exchange, make sure it's financially sound and well-known. A bankrupt exchange could leave you with nothing if it goes out of business. With a broker, your assets are divided and often insured against bankruptcy as well, which isn't case.
Custody. Do you want to be the one in charge of your crypto currency? If so, an exchange is definitely the best option for you. The majority of brokers don't offer this feature.
Profits from staking. Make sure you're looking for an exchange that offers staking rewards to Ethereum investors.
2. Create an account
You'll need to open an account with your broker or exchange once you've chosen one. Some basic personal and financial information, as well as answers to a few questions, will be required. In general, it takes less than 15 minutes to create an account and check out the site. Depending on the firm, you may also be asked to prove your identification in one of several methods.
3. Make a cash deposit
As part of the account-opening procedure, or soon after, many companies allow you to deposit money. Your bank account must be linked to a broker or crypto account before you may send money. In most cases, but not always, you can use a debit card to make a deposit at a crypto exchange.
Depositing cryptocurrency into your account on a crypto exchange is also a common option.
Once the money you've deposited into your account has cleared, you can purchase Ethereum. With brokers and exchanges, you can purchase Ethereum with U.S. dollars. You can buy cryptocurrency with other cryptocurrencies in your account if you're using exchanges that allow crypto-to-crypto trading.
In the event that you'd prefer to keep your Ethereum in an exchange's wallet rather than your own, you can now transfer them to your crypto wallet. Otherwise, you can keep it in the wallet provided by the exchange itself. In short, self-custody of your assets comes with other risks, including the possibility of being locked out of your account.
Brokers will continue to take care of your position if you use one.
Is it a good idea to invest in Ethereum?
The riskiest investments are those involving cryptocurrencies, such as Ethereum. Cryptocurrencies are not backed by any assets or cash flow of an underlying business, therefore it's crucial to know what you're investing in with crypto. Contrast this with a stock, which is supported by the company's assets and cash flow.
Consequently, the price of bitcoin is determined only by the demand of others. A boost in price is expected if other investors become more confident in its long-term prospects. The price will drop if they become more pessimistic. The "greater fool hypothesis of investing" is what financial analysts refer to it as. One of the reasons Warren Buffett refuses to invest in bitcoin is because of this.
Understanding what your investment relies on is critical when you're dealing in cryptocurrency like Ethereum or other cryptocurrencies. Don't put your life savings at danger by trading with money you're unwilling to lose.
Since there are so many ways to acquire Ethereum, it's important to figure out which broker or exchange is best suited to your needs. To buy Ethereum at a standard broker, you don't need to register a special account. This is because Ethereum is one of the most popular cryptocurrencies. Cryptocurrency is, of course, extremely risky and may not be appropriate for all investors.