How To Buy Ethereum | evening standard


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Launched in 2015, Ether is the world’s second largest cryptocurrency by volume behind Bitcoin. It can be traded as an investment (ticker: ETH) and is the native currency of the Ethereum software platform.

While Bitcoin and Ethereum both use block chain to support their cryptocurrencies, Ethereum uses more sophisticated technology that allows it to run applications. It was the first platform to develop smart contracts such as non-fungible tokens (NFTs), which can be used to represent real-world objects such as digital artwork.

As a result, Ethereum has been singled out as a key player in the development of the next generation of decentralized exchanges and applications.

Ether has rewarded investors with a dramatic price increase from £250 to nearly £2,300 over the past five years. However, it’s been a bumpy ride, with a steep drop of more than 40% from its record price of over £3,800 in November 2021.

Investors also faced a 27% one-day price drop in May 2021 after China announced a cryptocurrency ban.

Unlike Bitcoin, Ether has no capped maximum volume to “mine” new coins. However, it is becoming increasingly difficult to mine and the rumored move to “Ethereum 2.0”, a proof-of-stake model, could eliminate mining altogether. “Miners” would no longer have to compete to solve the same pattern, as with the current proof-of-work model, but would be selected to validate new blocks of data and earn Ether.

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Ether is the second most widely accepted cryptocurrency, but there is still some way to go before bitcoin is caught, with a relatively limited group of retailers accepting Ether as a direct form of payment.

Here we look at the process of buying Ethereum, as well as other ways to invest in cryptocurrency.

Please note that investing in cryptocurrencies is a high risk proposition and you may lose some or all of your money. There is no guarantee that you will make a profit.

The Financial Conduct Authority (FCA), the UK’s financial regulator, regularly issues warnings about the risks associated with the crypto sector.

Crypto-assets are unregulated. The FCA says those who buy cryptocurrency are “highly unlikely to have protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them.”

How to buy Ethereum in 4 steps

1. Find a stock exchange or broker

The first step is to choose a crypto broker or exchange.

A cryptocurrency broker provides an online mechanism to facilitate your contact with a cryptocurrency exchange.

A cryptocurrency exchange is an online platform that brings buyers and sellers together to trade cryptocurrencies.

With some exchanges, you can buy crypto using normal currency, such as British Pounds. Others require you to use one form of crypto to purchase another. Here you will need to find a second exchange to buy coins that your chosen exchange is using, before you can start trading.

With brokers, check the rules regarding keeping your cryptocurrencies away from a given platform. Some brokers prevent clients from transferring crypto holdings out of their account. This could become a problem if you decide to house your cryptocurrencies in a crypto wallet.

The FCA has a UK list ofregistered crypto asset companies.

2. Choose a payment option

After choosing an exchange or broker, you will need to add funds to your account before you can start trading. Depending on the provider you have chosen, you can add money by debit or credit card, from your checking account, via an electronic transfer, a payment service or from a cryptocurrency wallet.

There are usually different transaction fees for each payment method. However, it is worth reviewing these fees to maximize the amount of money to invest in Ethereum. Credit card payments are generally treated as a cash advance and subject to a higher interest rate than other forms of payment.

However, going into debt to buy highly volatile assets is not recommended.

3. Place an order

Once you have transferred money to your account, you can buy Ethereum. You need to enter the stock symbol for the currency (ETH), select the appropriate button from your trading menu, and enter the amount you wish to invest.

4. Choose a safe storage option

It is important to note that cryptocurrency exchanges are not covered by regulatory protection such as the Financial Services Compensation Scheme UK. Despite investments in cybersecurity measures, suppliers remain exposed to the risk of theft or hacking.

You risk losing your Ethereum investment if you misplace or forget your account access codes. It is also essential to ensure that your Ethereum is kept in a secure storage location.

You may have little choice in the storage mechanism if you buy Ethereum through a broker. However, if you use a crypto exchange and trade major currencies, you will likely have access to an integrated wallet (or preferred partner) where you can keep your Ethereum safe.

If you prefer not to use the provider your exchange is associated with, you can transfer your Ethereum from one exchange to a separate “hot” or “cold” wallet:

  • Hot Wallets: Online-stored crypto wallets that work on internet-connected devices, such as tablets, computers, and phones. They are convenient but may pose a greater risk of theft due to their internet connection.
  • Cold Wallets: External devices such as USB sticks or hard drives that are not connected to the internet and therefore potentially more secure. However, you will lose access to your Ethereum if you lose or misplace the codes.

Transferring Ethereum to a hot or cold wallet may incur fees, depending on the exchange.

Alternative ways to buy cryptocurrency

If you prefer not to buy cryptocurrency through an exchange or broker, there are two indirect ways to gain exposure to cryptocurrency assets.

1) Invest in cryptocurrency-connected businesses

One option is to buy shares in companies that use or own cryptocurrencies such as Ethereum and the blockchain that powers them. These may allow you to gain some exposure to cryptocurrency through tangible products or services subject to regulatory oversight.

Here are some indicative examples of companies, although they are not recommendations:

  • Nvidia (NVDA): a technology company that designs and sells processing units specifically for mining currencies such as Ethereum.
  • PayPal (PYPL): The global payments platform has expanded its offering to allow customers to buy and sell select cryptocurrencies with their PayPal and Venmo accounts.
  • Square (SQ): The small business payment service provider that has purchased millions of dollars worth of Bitcoin since October 2020.

You will need aonline investment platform or trading app buy shares in listed companies. Please note that the usual investment disclaimers apply and there is no guarantee that stock market investments will return any money.

2) Invest in crypto exchange-traded funds

Another option is to invest in funds based on holding cryptocurrencies such as Ethereum. Exchange-traded funds (ETFs) are “passive” investments that typically track traditional stock market indices such as the FTSE 100 or S&P 500.

Crypto ETFs are relatively new products that are currently only available in certain jurisdictions such as the United States. They are not yet available in the UK.

Trade with eToro

Trade a variety of assets including stocks, ETFs and cryptocurrencies; for novices and experts alike

Open account

CFDs are complex instruments and come with a high risk of losing money quickly due to leverage. 68% of retail investor accounts lose money when trading CFDs with eToro. Investing in crypto-assets is unregulated in most EU countries and the UK. No consumer protection. Your capital is in danger.

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