How To Buy Ethereum For Dummies
According to a report released last year, half of the United States population has purchased cryptocurrency. The report, published by cryptocurrency hardware wallet provider Trezor, includes the results of a survey of more than 1000 individuals. The survey found that 27 percent of people are open to acquiring cryptocurrency in the future, and 47 percent want to learn more before they do. (That’s where we come in.)
Those are high rates of adoption and interest for a market that was created just a decade ago. And that’s likely because of the success cryptocurrencies have had over the years as their value has increased dramatically.
Leading the cryptocurrency pack is Ethereum (ETH, Ether). In April 2021, the price of ETH reached an all-time high when it hit $2,773. While Bitcoin takes the top spot in the cryptocurrency field, ETH is the second most valuable, well-known secure and stable of the bunch. Ether also boasts the second-highest market cap at $250 billion.
Now that we’ve peaked your interest, we’ll help you figure out how to get in on the action.
- What is Ether?
- Taking the First Step
- What’s an Exchange?
- What’s a Wallet?
- What Platforms are Available?
- How to Buy Ether Using Lumi Wallet
- How to Buy Ether Using the MEW App
- Safety First
What is Ether?
Ether is the native cryptocurrency of Ethereum, a decentralized, open-source blockchain with smart contract functionality. Ethereum went live in July 2015 and is currently the most actively used blockchain.
The blockchain system replaces the storage of consumer data, including financial records that is traditionally associated with payment systems. In the Ethereum blockchain system data is stored in blocks that are chained together in chronological order. This makes the system less vulnerable to hacking because no one company is storing it
Ether serves as the fuel for the applications on the Ethereum network, but what does that mean? Essentially, ETH tracks and facilitates transactions in the network. Apps on Ethereum’s blockchain network require processing power. To pay for this processing power, users pay a small fee anytime they use the apps to perform certain functions. The cost of each function, or transaction, carries a different fee depending on how much processing power it requires. Ether is the currency used for making these payments.
However, like other cryptocurrencies, ether has value outside of the Ethereum network. Put simply, ETH is digital money that you can use on the internet. Ether is like cash because it doesn’t require a third party to process or approve transactions. It is secured by cryptography, allowing you to securely make peer to peer payments.
Initially, ETH was launched with a supply of 72 million coins. By 2017, that number had climbed to 96 million. There is not a supply cap on ETH and today, there are more than 110 million coins.
Ethereum vs. Ethereum Classic
In order to fully understand ETH and the Ethereum network, it’s important to familiarize yourself with the difference between Ethereum and Ethereum Classic. The two entities are essentially two different platforms. They were created after $150 million worth of ETH was stolen by a hacker in 2016. After the hack, Ethereum and Ethereum classic split and developed their own blockchains. These two blockchains are identical up until the time of the attack when they split off in different directions.
Today, these two networks are vastly different. Ethereum Classic has only retained 10 percent of the Ethereum network’s original users. The rest moved to the new Ethereum. As a result, the current prices of the two currencies are miles apart. As of this writing, ETH is at $2,441 while ETC is at just $25.
Taking the First Step
Now that you understand more about ETH and the blockchain network behind it, let’s discuss how to get your hands on some.
There are many options for buying ether right from your phone. The process can involve purchasing ether from an exchange and transferring it to a mobile wallet, going through an exchange that also offers a wallet platform, or purchasing ETH directly through a wallet platform.
Luckily, many mobile platforms give users the ability to buy and access ETH directly from their phones. In this next section, we’ll give you information on exchanges and wallets and how you can easily buy ETH in minutes.
What’s an Exchange?
Cryptocurrency exchanges are websites that allow users to buy, sell, and exchange ETH and other digital currencies for traditional currencies. Some exchanges cater to numerous types of cryptocurrencies while others specialize in one specific type of cryptocurrency.
There are several different types of exchanges that include trading platforms, direct trading, and brokers. Direct trading platforms allow peer-to-peer trading without a fixed market price. These platforms let sellers set their own exchange rates. Traditional trading platforms connect buyers and sellers and collect a fee for each transaction. And finally, broker websites allow buyers to purchase cryptocurrency at prices established by the broker running the site.
What’s a Wallet?
Before you can actually make your first ether purchase you need a crypto wallet.
Wallets are software applications that allow you to store your ether, make transactions, and keep tabs on your balance. However, wallets don’t actually store your ETH. Your ether is actually stored on the blockchain which maintains the record of your transactions. But even this isn’t tangible storage in the traditional sense.
Essentially, your wallet lets you interact with the blockchain. In order to interact with the blockchain you need a public address which is known as your public key, which is made up of a randomly generated string of case-sensitive letters and numbers. You also need a private key or password that is necessary for making transactions and accessing any cryptocurrency that’s shared with you. Your public key allows you to purchase cryptocurrency while the private key is what enables you to write in the public blockchain ledger and spend cryptocurrency. A wallet allows you to store the public and private keys or addresses you need.
There are many different wallets you can choose from so in order to decide which wallet is right for you, it’s important that you understand how wallet software and cryptocurrencies work.
Full node wallets require users to download the entire Ethereum blockchain, which is often many gigabytes in size. Light clients don’t require users to download a full blockchain, making them a perfect option for newbies.
Exchanges are a popular way to buy ether and they usually offer their own wallet. However, exchanges aren’t as secure as other options for actually storing the ETH you buy. Several exchanges have been hit by cyberattacks and exchange users have lost money as a result.
A hardware wallet is a more secure option. These wallets don’t connect to the internet, which reduces the risk of digital theft. This kind of wallet is perfect for users who plan on storing large amounts of ETH, but it’s a big investment for newbies.
Desktop, mobile, and online wallets are both secure and perfect for newbies. These options are easy to set up and less intimidating than other options that require a lot of upfront knowledge. Many of them also let you purchase and store ETH from one secure platform. Mobile wallets in particular make the ether buying process even easier and more accessible by bringing it right to your fingertips.
Mobile wallets are considered light wallets because, as previously discussed, users aren’t required to download the entire blockchain.
Mobile wallets rely on miners or nodes to provide them with accurate information about the current state of the Ethereum network. These wallets are perfect for buying, selling, and making other transactions from anywhere at any time.
With a wallet that is connected to your smartphone or tablet, you can make transactions on-the-go from wherever you have a connection.
Ultimate Wallet Guide
Become crypto-literate with this wallet deep dive.
What Platforms are Available?
Now that you understand exchanges and wallets it’s time to choose the platform that works for you. Here’s a list of some of the options we trust.
This platform allows users to ETH through third-party exchanges like Changelly and Simplex. This Ethereum-compatible mobile wallet is available on smartphones running on either iOS or Android systems. Jaxx Liberty allows users to see their cryptocurrency holdings, pricing, news and rewards all in the same app. Users do not have to register or provide personal information. Instead, the wallet’s private keys are attached to the device.
This wallet bills itself as the most versatile global app. It features 168 fiat currency representations, is readable in 25 languages, and compatible with 125 blockchains. It allows for instant conversion of cryptocurrencies and is available for Android and iOS. Coinomi enables users to purchase ETH through the third-party exchange Simplex.
This is an anonymous crypto wallet that allows you to buy ETH directly from the app. Available on Android and iOS, this wallet has a simple design that is perfect for beginners. Users can purchase ETH with visa and mastercard credit cards as well as ApplePay. It also lets you invest and build a portfolio.
This wallet is available for Android and iOS and lets users secure, manage, exchange and buy ETH in a user-friendly interface. Users can buy ETH directly through Atomic by using a credit card or bank transfer. Users also earn 1% cashback for buying and exchanging crypto through the Atomic app.
MyEtherWallet is a free, Ether specific mobile wallet that claims to be the Ethereum blockchain’s original and most-trusted wallet client. The easy-to-use, open-source platform allows users to generate wallets and interact with smart contracts from their iOS or Android smartphone. MEW is powered by the Simplex exchange and lets users purchase ether with a credit card.
This application makes it easy to buy and sell ETH and other cryptocurrencies. Powered by crypto payments infrastructure provider MoonPay and exchange platform Coinmama Users can buy ETh using a credit card, Apple Pay, bank transfer, or debit card. The app is available on Android and iOS devices and supported in 28 countries throughout the E.U. and U.K.
How to Buy Ether Using Lumi Wallet
Each of the previously mentioned platforms has a slightly different process for buying ether.
Let’s use Lumi Wallet as an example to walk you through the process.
Step 1: Create an account
Start by downloading the app for iOS or Android. Next you’ll have to create a PIN code and write down your 12-word mnemonic phrase. Your mnemonic phrase is the only way to restore your mobile wallet if you lose access so it’s important to keep it somewhere safe. To access your phrase, go to ‘Settings’ and tap on ‘Backup wallet’.
Step 2: Set your amount
Enter the amount of U.S. dollars you want to spend or the amount of ETH you want to buy.
Step 3: Add credit or debit card
Next, you need to enter your credit or debit card information, including card number, expiration date, name, and security code. You’ll also need to provide your billing address including country, city, and a ZIP code.
Step 4: Verification
On this platform you’ll need to provide your email, phone number, and date of birth. And, if this is your first time using Simplex to buy cryptocurrency, you’ll also need to verify your email and phone number with the exchange. You’ll also need to upload a photo of your ID and enter the details.
Once you’re done with these 4 steps, Simplex will start processing the payment. Ethereum transactions take around 20 seconds to go through. Once your payment has been processed, your transaction will be added to the blockchain.
How to Buy Ether Using the MEW App
Now lets look at how to buy ether using the MEW app.
Step 1: Download the app
Start by downloading MEW Wallet on your iOS or Android phone. Next create a new wallet and you’ll receive a unique public address and color combination tied to your new account. Don’t forget to create a strong pin code.
Step 2: Backup your account
This is one of the most important steps for beginners and is crucial to recovering you account. Write down your 24 word recovery key and be sure to keep track of this information. Next, you’ll have to take a quick test to make sure your account is secure.
Step 3: Buy ETH
This is pretty simple. Click “Buy Ether” in the app and specify the amount you’d like to buy. You can purchase up to $250 worth of ether at a time. The app will redirect you to Wyre or Simplex where you’ll enter your financial information and finish the purchase.
A few things to remember before you pull the trigger and make your first purchase. It’s important to note that since mobile wallets don’t require users to download the full blockchain, they’re viewed by some as easier to hack.
Thus, there are still some security measures users should take to ensure their ether is protected.
- It is vital for users to keep their private key or password secret and safe.
- Your private key is the only way to access your funds which means if someone else can access it, or you lose your key, your ETH will be lost as well. For this reason, it’s important for users to ensure their phones are secure.
- This means putting enabling your phone’s lock screen and making sure your phone’s operating system is up to date with the latest security updates.
For an extra layer of security, check out The Most Common Crypto Scams to avoid.