How to Buy Ethereum: A Step-by-Step Guide
Looking to venture into buying Ethereum, but not sure where to start? Who can blame you - the value of Ethereum has sky-rocketed since it was first launched in 2015. Fortunately, investing in this innovative digital currency has never been so easy for your average Joe.
These days, all you need is an internet connection and a payment method such as a debit card or PayPal, and you can start buying Ethereum within minutes!
Without further ado, let’s dive into the ins and outs of how to buy Ethereum - the second most valuable cryptocurrency in the world. We’re going to talk about how you can invest yourself, what fees to consider, and how to choose a good Ethereum broker to make the purchase with.
How to Buy Ethereum in 5 Steps
To buy Ethereum, the first step is to Open an accout with a regulated exchange, depost funds, select Ethereum from the platform list, and lastly check & confirm Ethereum has added to your Wallet.
We have put together a simple 5 step walkthrough on how to buy Ethereum right now:
Step 1: Sign up with a regulated Ethereum exchange
Step 2: Fund your account
Step 3: Find the cryptocurrency and select ‘Ethereum’
Step 4: Decide how much Ethereum you want to buy
Step 5: Confirm your Ethereum buy order. The digital coins will be put into your wallet.
Step 1: Choose an Online Ethereum Broker or Exchange
In order to buy Ethereum, you must first sign up with a reputable broker or an exchange. By signing up with a broker, like eToro, you can buy Ethereum in a direct manner.
Should you decide to go with a third-party exchange as mentioned above, you are able to convert Ethereum from another crypto-asset such as Bitcoin or Ripple.
Having said that, we must advise that using a licensed broker is the most stress-free option. The rules and regulations that go hand in hand with a license offer Ethereum investors safety from scammers in the space.
Not only that but buying Ethereum via a broker is a much easier and more cost-efficient way to invest in the digital coin.
We’ve listed below some other important things to consider before you select a platform.
As noted above, it is highly recommended you only sign up with a regulated broker. This way, you know that your hard-earned cash is in the hands of a trustworthy company.
Ultimately, it goes without saying that there are heaps of sharks in the crypto investing space. Crypto wallet hacking is not unheard of either. So the best thing to do is prioritize safety when choosing a broker to buy Ethereum.
Third-party exchanges are usually unregulated spaces. Granted, you may be able to apply leverage but you are putting your capital at risk. Whereas by electing to sign up with a broker like eToro - you at least have regulatory protection.
For example, the platform holds licenses with ASIC (Australia), the FCA (UK), and CySEC (Cyprus). Under this regulation, eToro is legally obliged to hold your funds in a separate tier-1 bank account to its own.
It must also follow strict anti-financial crime procedures like KYC. (Know Your Customer). eToro is also registered with FINRA - which is crucial for those looking to buy Ethereum in the US.
When it comes to payment methods, it has to be said that buying Ethereum was far from easy in the early days. In order to purchase crypto coins, you had to sign up to a potentially untrustworthy exchange, and could only use a bank wire transfer to deposit.
There have been many horror stories of yesteryear, with investors having to wait weeks at a time to see the funds hit their account - if ever.
In stark contrast to this, these days you can deposit near enough instantly as some Ethereum brokers accept debit and credit cards, as well as the super convenient e-wallets (think Paypal, Skrill, Neteller).
We must point out that although many platforms accept bank wire transfers - this is the slowest method of depositing. This can take anything from 2 to 7 working days to hit your account.
Fees and Commissions
Make no mistake about it, buying Ethereum via an online broker comes with fees. This is perfectly normal with financial service providers. When it comes to the amount expected, this varies by quite a lot.
That said, the lion’s share of Ethereum brokers charge clients variable fees. Coinbase, a well-known cryptocurrency platform, charges just short of 1.5% for each and every position.
To clarify, this means you would be charged 1.5% of your stake to buy Ethereum. You must again pay the same fee percentage, relevant to the value of the investment, upon selling.
- Put simply, if you place a $1,000 buy order on Ethereum, you would need to pay a $15 fee (1.5% of $1,000) at Coinbase.
- When it comes to selling your Ethereum coins, if at the time they were worth $1,500 - your fee would be $22.50.
- In our hypothetical scenario, that’s $37.50 in commission for entering and exiting the Ethereum market.
Coinbase also charges almost 4% for funding your account with a debit card. This might not sound like a lot, but considering if you deposited $1,000 you would be charged $39.99 - these fees can soon add up.
On the contrary, social trading platform eToro is a low-cost Ethereum broker, charging 0% commission in the same scenario as above. When it comes to depositing fees - if you don’t pay in US dollars, you pay a small 0.5% for them to exchange it for you - that’s it.
Other Important Factors
As well as the aforementioned factors like fees, regulation, and depositing methods - you will see below a list of other considerations when choosing a platform to buy Ethereum.
- User-friendliness: When searching for a broker to buy Ethereum, you need a platform that is beginner-friendly and super easy to navigate. The ideal online broker will make finding your chosen asset and placing an order a smooth and stress-free experience.
- Minimum Investment: Before signing up to a brokerage platform to buy Ethereum, make sure the minimum investment required isn’t beyond your means. For beginners, and people unaccustomed to such a speculative and volatile market - it’s advised to stick to low investments to start with. Our guide found that eToro allows you to buy Ethereum for as little as $25!
- Storage: We are going to talk about storage further down this page. However, let us just say that whilst online broker eToro will look after and store your Ethereum for you - some might require you to store your own coins. This means withdrawing them to your private crypto wallet. We wouldn’t advise the latter if you are new to Ethereum.
Step 2: Come up With an Investment Plan
Prior to actually buying Ethereum via your crypto platform of choice - it is important to first come up with an investment plan!
Having a clear idea of your own goals, based on realistic expectations, is the best way to start. Because of this, we’ve created a list of key considerations you might want to use before you buy Ethereum.
Long-Term or Short-Term
Do you fancy yourself as a long-term or short-term Ethereum investor?
Long-term investors tend to keep positions open for anywhere from 6 to 12 months - some as long as years or even decades. This is commonly referred to as a ‘buy and hold’ strategy,
On the contrary, short-term Ethereum investors instead look to make gains from short-term price fluctuations.
Ethereum, much like Bitcoin, can be highly volatile. The value of Ethereum, in particular, has been known to shift by more than 10% in a single day.
This volatility can lead to some great gains, if the right decisions are made, at the right time. Equally, it can be disastrous if the price of Ethereum moves against you.
Target Ethereum Price
Having a target Ethereum price is entirely optional, however, it is a strategy used by many experienced crypto-asset investors.
For instance, if you bought Ethereum at $300 on an initial stake of $5,000 - to double your investment to $10,000 you will need the digital currency to hit a price of $600.
At one point in 2015 - Ethereum was priced at $0.42. 3 years later, the price was $1,432. That illustrates an outstanding growth spurt in such a short period of time.
Consider Regular Investments
It can be a daunting prospect, the thought of trying to correctly time the digital currency market. The main reason is that things can change drastically on a second-by-second basis.
People have been buying and selling stocks for over 200 years, whereas Ethereum has been active for just five. Don’t let this scare you off, as every tradable asset started somewhere.
Due to the unpredictability of currencies, it’s advisable to invest bite-sized amounts into Ethereum, regularly. This is because you would likely find that opting for a gung-ho approach to this volatile market would be disastrous for your investing budget.
Subsequently, the best option is probably to buy Ethereum via a low-cost broker like eToro. As we touched on earlier, the platform enables you to buy Ethereum for a minimum of just $25 on each purchase.
As you can imagine, this makes it easier to buy Ethereum, little and often - for example on a monthly basis. By making a purchase on a regular basis, you can take advantage of ‘dollar-cost-averaging’. In a nutshell, this enables you to buy Ethereum at a different price each time - averaging out the volatile ups and downs of the market.
Have you considered buying Ethereum?
Step 3: Open an Ethereum Broker Account
As soon as you have made a final decision on which Ethereum broker you want to use - you then need to open an account. If you have ever bought stocks or traded forex before, the process here is no different.
Essentially, you need to tell the Ethereum platform who you are. You will be prompted for basic information when signing up to any online broker - such as your full name, address, nationality, email address, mobile number, and national tax number.
If you are not asked for this information, it is suggested to check the legitimacy of the Ethereum brokerage. As we covered earlier, all licensed brokers must adhere to strict KYC procedures - which include asking you to prove who you are.
If you want to get started right away, you should note that a large number of Ethereum platforms may take up to a week at a time to manually verify your identification documents.
The good news, however, is that modern brokers make the process easy. For instance, crypto-investor favourite eToro, uses an automated ID system. This means that you can usually start on your Ethereum adventures virtually straight away!
Step 4: Deposit Some Funds
After the opening of your new brokerage account, you need to put some money in it so that the provider can carry out your orders.
It’s important to know which payment methods are accepted by the Ethereum platform you are considering signing up to. You might find that some brokers only accept traditional wire bank transfers.
Others accept a wide variety of payment types - such as eToro, which supports credit and debit cards, as well as ultra-convenient e-wallets Neteller, PayPal, and Skrill.
Nine times out of ten, you will be required to meet a minimum deposit amount. The minimum deposit at cryptocurrency platforms should be between $50 - $200 - but this is entirely dependent on the broker in question.
Step 5: Set up a Trading Order
Now that you have funded your new account - you need to tell your Ethereum broker what trading position you want to place. This is done by placing an order, as we covered earlier.
We’ve included below a list of different order types that you will likely come across when you buy Ethereum online.
There are cryptocurrency platforms that will enable you to benefit from both the rise and the fall of Ethereum. This is achieved by using buy and sell orders.
It’s really simple if you believe the price of Ethereum will increase - create a buy order!
Limit or Market Order
As we mentioned, the price of Ethereum shifts just about every second, due to supply and demand. Many brokers, such as eToro, offer clients ‘limit’ and ‘market’ orders to take full advantage of short-term price shifts in the digital coin market.
For those unaware, a ‘limit’ order enables you to choose the specific price at which you want to buy Ethereum.
- Let's hypothesize that Ethereum is quoted at $410.00. However, you do not want to enter the Ethereum market until the price reaches $490.00.
- Your limit order means that when Ethereum increases to $490.00, the broker platform will execute your position for you.
- Your order will be outstanding until you cancel it or the limit price is reached.
In terms of ‘market’ orders, they are often utilized by newbies due to their simplicity. In a nutshell, you place a market order when you want your Ethereum broker to execute your position immediately - at the current, or nearest price.
You will usually find that the price has shifted slightly. As we said, Ethereum prices fluctuate on a second-by-second basis - so this is unavoidable with a market order.
At the risk of pointing out the obvious, you can’t create an Ethereum order without specifying how much you are willing to stake on your position - or rather, how much you want to buy.
As long as you meet the minimum deposit required by the Ethereum platform, you can stake as much as you like. As we said, it’s advisable to take it easy.
You can buy Ethereum for as little as $25 at platforms like eToro, making it perfect for beginners. Other brokers might require hundreds to invest in the digital coin.
Once you have filled in all of the relevant fields required - including buy/sell, market/limit, and stake value - you can go ahead and confirm your position.
You should now see that Ethereum has been added to your portfolio on the broker’s website.
Step 6: Storing Your Ethereum
Ethereum is not a tangible currency, such as the banknotes and coins we are used to. Instead, digital currencies are stored on a blockchain which is essentially a decentralized ledger.
With this in mind, Ethereum is kept in a digital crypto-wallet, which can be downloaded to your mobile phone or to your home computer. Many experienced crypto investors opt to take full control of their Ethereum by putting all of their digital coins into a private wallet.
This can be quite complex, ergo, newbies are better off purchasing Ethereum via a regulated and well-respected online brokerage firm. By leaving your crypto coins with a platform such as eToro, you don’t need to worry about transferring the coins to a decentralized crypto wallet.
Step 7: Selling Your Ethereum
As we have mentioned throughout our How to Buy Ethereum Guide, the aim is to correctly predict the price movement of this digital currency. Moreover, at some point, it is highly likely that you will want to cash out.
If you decide to use a regulated Ethereum broker - it generally takes seconds to cash out your crypto-asset. This is done by electing to ‘sell’, and withdraw the cash back to the same payment method you used to deposit.
If on the other hand, you decided to buy Ethereum via a third-party exchange, the cashing out process would be a little more awkward. In this scenario, you would be required to send the coins from your own private Ethereum wallet. Then, transfer it into the wallet of the exchange you chose to sign up to.
That’s not all, as you would subsequently need to exchange your Ethereum into a fiat currency - such as Euros, US dollars, or British pound, for example. This currency exchange will come at a cost.
Other Ways to Buy Ethereum in 2021
Below you will find a list of alternative ways to buy Ethereum.
Buy Ethereum Debit Card
One of the easiest ways to buy Ethereum is via a debit card. Transactions are often immediate, and the majority of trading platforms will allow you to have your investment proceeds sent to the same card when it comes to cashing out.
Simply fill in your card details, and fund your account with the minimum amount required. Commonly seen debit cards at online Ethereum brokers include Visa and Visa Electron, Maestro, and Mastercard.
Buy Ethereum Credit Card
If you fancy buying an Ethereum credit card, this is entirely possible. However, we should note that there is a chance your credit card issuer will implement a ‘cash advance fee’.
This is because investment deposits are often classed in the same light as ATM withdrawals.
Our How to Buy Ethreum Guide found that this tends to be a fee of around 3% of your purchase value, albeit, check this with your card provider.
Buy Ethereum Paypal
When it comes to buying Ethereum in the online space, another option is PayPal. E-wallets are fast becoming one of the most popular payment methods.
Electronic wallets like PayPal usually allow for instant transactions and an extra layer of security. The only regulated broker that we know of that allows you to buy Ethereum with Paypal is eToro. It also supports Skrill and Neteller.
Whilst on the subject of ways to buy this digital currency, we should mention Ethereum ATMs. They are just the same as the ATMs we all use to draw physical money out - except you can put tangible money into the machine in exchange for Ethereum.
Much like traditional ATMs, there will often be a charge for a withdrawal, or in this case - exchange. We found that the majority of these physical Ethereum ATMs charge 10% or more.
Whilst it might sound easier to use a more familiar ATM to obtain Ethereum - it’s actually more convenient, not to mention cheaper, to do it via an online broker like eToro
eToro – Best Broker to Buy Ethereum
eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
How to Buy Ethereum 2021 - The Verdict
In this How to Buy Ethereum Guide, we have covered a plethora of different factors to consider when making a purchase online.
Hands down, the most popular, convenient, and cost-efficient way to do this is by using a regulated broker.
For instance, by electing to sign up to a platform like eToro, you will be protected by the regulation of three different jurisdictions. Best of all you can buy Ethereum on a commission-free basis, and fund your account with various payment types.
The whole Ethereum buying process outlined above took less than 5 minutes. Create an account, Verify your Mobile phone number, Add a payment method, buy Ethereum and Check your Ethereum digital wallet.
How easy is it to buy Ethereum?
It is super easy to buy Ethereum these days if you choose a user-friendly Ethereum broker. It’s a good idea to select a platform with a variety of accepted payment methods and an easy to navigate website. This will make placing orders a breeze.
What is the safest way to buy Ethereum?
Buying Ethereum can be daunting. However, the safest way to buy this digital-asset is via a regulated broker. Reputable bodies responsible for this regulation include the SEC (US), ASIC (Australia), and the FCA (UK). Look out for a license number on the brokerage website.
Can I buy $100 of Ethereum?
Yes, you can buy $100 worth of Ethereum. With respected broker eToro, you can buy Ethereum for as little as $25!
Can you lose money on Ethereum?
Yes. There is potential to make a loss when buying any asset. The price of Ethereum, and any other digital coin, fluctuates on a second-by-second basis. If you successfully predict the market and sell Ethereum for more than you initially paid - you will make money. If you don’t, you will make a loss.
What is the most Ethereum has been worth?
To date, the most Ethereum has ever been worth is $2,022. This all-time high occurred in 2021.