How to Buy Ethereum (ETH)
To buy Ethereum, you can turn to a crypto-currency exchange, a digital wallet or a CFD broker. This article discusses the pros and cons of each approach in detail.
#1. Trade CFDs on the price of Ethereum
Buy or sell CFDs (Contract for Difference) on the price of Ethereum through regulated brokers like AvaTrade.com, HotForex.com or eToro.com. When you buy a CFD, you aren't buying crypto-currency. Instead, you are speculating on the price of Ethereum using the US Dollar or the Euro. Buy a CFD if you expect the price to rise, with a view to sell it later for more, to realise a profit. Or sell a CFD if you expect the price of to fall, with a view to buy it later for less, to realise a profit.
When you trade CFDs, you'll never be at risk of having your crypto-currency stolen or hacked. This is because you don't own assets. You are simply speculating on price changes.
CFDs allow you to profit from rises and falls in the price of Ethereum. Interestingly, you can sell a CFD (go short), without owning Ethereum, because you are only speculating on changes in price. Open a demo account to see for yourself.
If you leverage your trades, you will pay interest on your borrowings. This form of interest is known as "swap fees" in the industry's jargon. We suggest opening a demo account first to familiarise yourself with your broker's platform and market dynamics.
#2. Buy Ethereum through an electronic wallet
You can also buy Ethereum through Skrill.com and Neteller.com, two regulated electronic wallets. These platforms are similar to PayPal: first fund your account, then shop online without sharing your card or bank account details. Once you've opened an account with Skrill and added funds, you can buy Ethereum and other crypto-currencies online. Skrill allows you to place conditional buy or sell orders that only execute once certain price points have been reached. You can also buy crypto-currency over time through scheduled purchases.
Skrill and NETELLER offer a safe and easy way to buy Bitcoin online. Open an account in minutes and fund it through a bank transfer or card payment. You can use your account immediately, albeit with lower deposit and withdrawal limits until your account is verified.
Both platforms have transparent pricing. Skrill charges a 1.50% fee on orders above EUR 100, and just 0.50% when you perform a peer-to-peer transaction. NETELLER charges a 1.50% fee when you convert Ethereum into EUR or USD, and a 3% across other fiat currencies.
When you buy Ethereum, you can only profit from increases in price. This means you'll need to time your purchase around a dip in the market, or buy if you expect prices to continue to rise. Otherwise, you'll have to bide your time, which you may find frustrating.
#3. Buy Ethereum through an exchange
Crypto-currency exchanges like HitBTC or Binance bring buyers and sellers together. They act as a marketplace, aggregating orders and establishing prices. In the early days of Bitcoin, exchanges were largely unregulated and noticeable price differences existed between exchanges. However, this has changed as crypto-currency has become mainstream and professional investors are active market participants.
Crypto-currency exchanges provide an authentic buying experience. Binance shows buy and sell orders in real time; this provides transparency and could also help you predict the likely future direction in prices.
Crypto-currency exchanges have always had a poor track record at security. According to the Wall Street Journal, "insufficient levels of defense have made some exchanges simple to breach".
Once you have bought Ethereum, you'll want to store your coins in a digital wallet, away from the exchange. However, finding a digital wallet you can trust is easier said than done. Alternatively, you could store your coins offline, but could then be exposed to theft or loss.
Opening and funding an account with a crypto-currency exchange remains a low and frustrating experience, particularly if you are a non-US resident. If you are looking to enter the market quickly to take advantage of fast falling or rising prices, you may want to consider alternatives.
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