Long-established as one of the world’s top three cryptocurrencies, Ether is the native currency of the Ethereum network, which has genuine practical potential in a diverse range of industries.
Where to buy Ethereum
Read on to find out more about Ethereum in 2020 or skip ahead to our step-by-step buyers guide if you’re up to speed and ready to invest in Ether (ETH).
What is Ethereum?
Ethereum is an open-source blockchain platform that can be used by developers to build and run decentralised applications. Ether is the Ethereum network’s native currency. So, the first thing to take on board is that Ethereum isn’t, strictly speaking, a cryptocurrency, Ether is.
Ether’s popularity and market value has grown as a by-product of its use by developers on the Ethereum network and, of course, the fact that it can be bought, sold and speculated on over crypto exchanges and trading platforms.
Ethereum 2.0 is scheduled for launch in 2020, promising higher transaction throughput and a new Proof-of-Stake security model.
How does Ethereum work?
Ethereum was effectively developed to replace the internet’s established client-server model with a decentralised blockchain. In this respect its aims go beyond the those of Bitcoin, which was developed to provide a radical electronic payment system.
The Ethereum network pushes the blockchain concept further in an effort to remove third parties from the data control equation altogether. This process is powered by a decentralised international network of ‘nodes’ run by volunteers around the world.
In practice Ethereum can used by developers to create smart contracts across a wide range of industries, from banking to betting.
How to buy Ethereum online – step-by-step guide
Step 1. Get a suitable wallet
A wallet allows you to store your Ether securely. It’s a good idea to have one ready before you invest – it’s a far safer way to store cryptocurrency than leaving it on the exchange. There are plenty of good options on the market, including:
- Ledger Nano X: Ledger Nano X is a hardware wallet, which means you can store your ETH (along with 30 other cryptocurrencies) offline on a super-secure wireless device.
- TREZOR Wallet: Hardware wallets such as the TREZOR wallet offer maximum security, but at a price that may put some beginners and casual traders off.
- Coinomi Wallet: If you want an Ether compatible wallet that will work on your phone, look no further than the Coinomi Wallet. This multi-coin wallet supports iOS, Andriod phones and there’s also a Mac/Windows/Linux desktop client.
Step 2. Find an Ethereum exchange
There are plenty of exchanges on offer if you want to buy and sell Ether. Each has advantages and disadvantages, so it’s a good idea to do a bit of research. To get you started, here are two of our favourite Ethereum exchanges:
- Binance: Widely considered to be the best, most dependable place to buy cryprtocurrency, Binance is the world’s biggest crypto exchange. It offers a huge crypto marketplace and fees that compare favourably with its main competitors, plus a well-designed mobile app.
- Bitpanda: If you can’t find what you’re looking for at Binance, the next best place to buy Ether is BitPanda. If you’re on mobile, you can download the Bitpanda app and buy ETH on the go.
Step 3. Withdraw your Ether
In the interests of securing your tokens, it’s a good idea to move your currency out of the exchange and into your wallet as soon as possible. To withdraw your ETH to your wallet you need to generate an address then paste it in the relevant field of your exchange account.
How to trade Ethereum – step-by-step guide
You needn’t worry about getting a suitable wallet if you’re only interested in trading Ether – trading involves taking a position on a currency rather than acquiring it. This means you can potentially make a profit from Ether without the hassle and security risk of owning it.
Step 1. Find a broker
As one of the most popular cryptocurrencies, Ether is available to trade at all the crypto-friendly brokers. Plus500 and eToro are two of the most popular crypto trading platforms but it’s worth checking our listings to track down a broker that suits your needs.
Step 2. Deposit money
Most trading platforms will allow you to deposit Fiat money (USD, GBP, EUR etc.). It’s worth noting that trading platforms offer leveraged trading, which means you don’t have to put down the full value of a trade. Instead you can pay a deposit, known as a ‘margin’. This means you can potentially make bigger profits and, of course, bigger losses.
Step 3. Decide how you’d like to trade
There are two methods to trade cryptocurrencies: CFDs (contracts for difference) and Spread Betting. Both methods essentially entail speculating on the price movements of your chosen currency. If you aren’t sure which option to go for, we recommend researching the differences between spreads and CFDs.
Step 4. Start trading
If you’re a complete novice we recommend starting with a demo account and familiarising yourself with the process and the platform. Cryptocurrency trading is extremely volatile, which means you can make and lose money very quickly. Cryptocurrencies are prone to fluctuation, which makes them an intriguing prospect for traders who look to exploit volatility.
As a crypto trader you’re speculating on your currency’s price movements by taking a short (sell) or long (buy) position. If you think ETH will fall in value you should take a short position, if you think it will rise in value you should take a long position.
You may choose to incorporate leverage into your trading strategy. Leveraged trading allows you to put up a fraction of the trade’s value as a deposit or ‘margin’. This can be risky, though, so make sure you have a stop loss in place for damage limitation.
- Well-backed and widely utilised across a multitude of industries
- Impending 2.0 launch promises significant improvements including a much-heralded shift from Proof of Work to Proof of Stake
- Ethereum is a relatively well-planned project with a credible track record – not something you can say of all cryptos
- ETH 2.0 launch may not be entirely plain sailing
- Standing as the leading enterprise blockchain isn’t guaranteed if up and coming rivals can develop more quickly