During the pandemic, a lot was happening in the investment market. For example, more people were investing in blue chips such as Tesla, and the bulls were running all over.
A good portion of the investors discovered bitcoin and other cryptocurrencies. The investment space has not been the same since then. The options in the investment world grew significantly.
While ethereum is not as popular as bitcoin in the crypto market, it is making long strides to catch up. If you are thinking of making forays into the world of ethereum, the following guide may be handy.
What is Ethereum?
Ethereum is the brainchild of Vitalik Buterin, a former tech blogger and student in Canada. Vitalik dropped out of college after coming across Satoshi’s conceptualization of bitcoin and realizing its massive potential.
He contacted Dr. Gavin Wood, and together, they worked on developing ethereum, which grew to be the second-best crypto after bitcoin. By January 2014, ethereum was conceived, and the rest is history. Ethereum would go on to revolutionize distributed ledger technology.
But what is ethereum?
Typically, ethereum is the source of all open source applications. The applications of blockchain technology are not alterable, thanks to blockchain innovation. The asset is as good as bitcoin, and therefore an excellent investment for people looking for options apart from bitcoin.
The ethereum network has its currency called ether or ETH and draws several similarities to bitcoin. Among them is that both ethereum and bitcoin are decentralized. But there are differences between the two.
Differences Between Ethereum and Bitcoin
The purpose for creating ethereum is quite different from that of creating bitcoin.
Created in 2009, bitcoin was to be an alternative to government-issued currencies. On the other hand, ethereum was created as a network for decentralized contracts. Ethereum is to the contracts while bitcoin is to fiat. Based on this, you can see that ethereum and bitcoin are not in competition. They are complements of each other.
Ethereum Community
The ethereum dream is to develop and secure the network, and this is where the dynamic ethereum community comes in. But who is in this community?
The Ethereum community has an able team of core developers led by Vitalik Buterin, who make sure stakeholders’ wishes are taken care of. These developers use hard coding to ensure the integrity of blockchain technology.
On the other hand, miners run the nodes responsible for confirming the transactions in the network. They update the ledger and ensure the network is secure.
The community also has researchers that provide the necessary technical capability into the various complex ideas conceptualized by the community. They breathe possibilities into their dreams.
On the other end are Independent developers that create the Apps and smart contracts and are responsible for breathing life into the blockchain. But we also have clients, an essential part of the community. Without them, there would be no need for blockchain.
Lastly, some organizations fund and facilitate the blockchain and also use the decentralized applications.
How You Pick a Platform for Trading
There are several platforms that you can use to trade ETH. The most popular and respected among them include Gemini, Binance, Kraken, Coinbase, and Bisq.
- Gemini is the only platform at the moment that protects customers against data breaches. It has insured wallets. Other benefits include earning interest on cryptos.
- More advanced traders will find Binance a great platform. The platform is less simplistic, offers lower fees, and is a great place to trade ETH and other altcoins. Some traders swear that Binance is the best platform for ETH buying.
- Kraken stands out for its fantastic customer service and superfast bank withdrawals. If you are the kind of trader that needs a bit more holding of hands, this platform is the one to use.
- Coinbase has one of the most straightforward interfaces and is easy to navigate. As a result, it is an excellent place for beginners. Some of its shortcomings include higher fees than some of the other platforms.
- Bisq’s strength is decentralization, with servers spread all around the world. That means the platform is more resistant to breaches than most of its peers. But accessibility is a little less given that you can only use wire transfer to make purchases.
How You Purchase Ethereum
There are several ways to acquire ETH. For this demonstration, we are going to use the most effortless and the safest.
1. Download a Safe Browser
You can access your digital wallet and buy ETH using a browser like Safari or Chrome, but Brave is preferable. It is private, fast, and secure.
2. Create an Account
The most challenging step when buying crypto assets is in choosing the Exchange. Each has its advantages and disadvantages, and this makes it more challenging. What may seem like the best option to some may not to another person.
But for simplicity, we are going to use Coinbase, the most popular and straightforward to use.
Creating an account may feel like a laborious process, but really, it is not. You will need to take a photo of your ID and wait for the approval. You will also need to wait for the funds’ transfer from your bank. All this process can take around a few hours.
3. Install a Digital Wallet
For the ETH of other digital coins purchased, you will need a digital wallet to hold them. Digital wallets can either be hardware or soft wallets.
The former is physical and sometimes more secure than the latter. Soft or digital wallets are online.
Another secure way of storing ether is through the ethereum official wallet or some great hardware options such as TREZOR and Ledger.
If you choose the online wallet, MetaMask and Electrum Software wallets are great. Keep the seed phrase very safe to ensure the safety of your coins. The 12-word string acts as the skeleton for the digital wallet. Losing it is similar to losing your digital coins.
4. Buy ETH and send it to your wallet
With everything set up, the next step is to purchase the crypto coins. But you have to purchase them from the most secure exchanges such as Binance and Coinbase.
If you signed up with Coinbase, log in and deposit into your account, and make sure it is enough fiat to complete the ETH purchase. Next, navigate to the buy/sell option to acquire your ethereum.
You are free to put in any amount you are comfortable with. Coinbase keeps refreshing and using your email. Don’t worry about it too much as it is an important security feature.
If using Binance, you will need to import bitcoin before buying ETH.
Enter the site and sign up using your details and then log in. The site will take you to the 2FA page, which will constantly keep refreshing for added security.
Navigate to Deposits and withdrawals and scroll down to BTC and deposit the necessary amount. Binance will give you the address on which to send the funds. Be careful not to send it to someone’s account.
Once the funds are in Binance, go to Exchange and select the right pairing. Purchase as much Eth as you need and move to the next step of transfer.
Sending the digital coins to your wallet is simple.
For this case, we are using MetaMask. Find the MetaMask extension in the browser you downloaded in the first step. Account 1 is visible inside the extension, and it will have a series of numbers and letters when you hover your cursor over it. Copy them and paste them on the Address section under Send on Coinbase.
The ETH will appear in the wallet in a couple of minutes.
Please note that no online or Exchange is safe for the storage of the ETH. Therefore, make sure you transfer the ETH to an offline wallet to protect your holding.
5.Hold your ETH
Easy peasy! You’ve finally purchased your ETH and can finally use it as you will or even hold it. Most people use ETH to purchase altcoins that you cannot buy with fiat.
How You Use or Spend Ether
Someone may ask, ‘why do you need to purchase ether?’ The simple answer to that is that ether is a sort of doorway into the ethereum blockchain.
Ether may never transition into a mainstream currency, but it is excellent for cryptocurrency speculators. The majority of the ERC20 tokens use ether as the main gateway.
That means demand for ether is going to rise as the decentralization of applications grows in popularity. In other words, owning ETH may prove a wise investment decision.
Final Word
Ethereum is only after bitcoin as the most popular crypto asset. The crypto’s growth curve is elaborate and well-structured, and that means it has the potential to be an excellent investment. No doubt there are good prospects for growth, but that does not mean you should throw all caution into the air. Always be careful when dealing with crypto investments. A rule of thumb, don’t invest more than you are ready to lose, even for promising assets such as ETH.
