Ethereum

Ethereum 101: A Complete Guide To Understanding What It Is, How To Buy It And Where To Buy It!

October 10, 2019

By Team Basil Zaff

Introduction

Ethereum is one of the hottest digital currencies at the moment. Ever since 2017 when its value went to more than $1,000 people have been buying it in hopes to catch on the next big digital currency trend. This guide is to provide you with a complete understanding of Ethereum so that you understand what it is, how to buy it and where to find it. After reading this guide, you should walk away with a pretty good understanding of where to buy it and how it works. You’ll also read on how to store it and more! Basically, this is your go-to guide on everything about Ethereum!

Given crypto is ever-changing and never easy to understand, my mission is to make this guide as easy to comprehend as possible. But before I show you how to buy it, you’ll need to explain to you how it works. Really, it’s so much more than digital currency and has the possibility to change the way businesses work and function. But if you already have a basic understanding of what Ethereum is, then you can skip this next section and start at the “How To Buy Ethereum” section instead.

To start off this guide, I’m going to first have to explain to those not in the know what Ethereum is. To first understand what it is, you must understand the technology that it uses, which is a “blockchain.” Simply put, a blockchain is a network of global databases that’s operated and shared by several computers. These computers are called “nodes,” and they all work together as one to transfer information throughout the database. By doing this, they can secure code using cryptography. So if one of the nodes should fail, the database won’t be shut down and it can’t be hacked, which means it’s decentralized. This basically means that it doesn’t operate out of just one center.

For example, if you go to a website that crashes, it means that it’s located at one location and that server crashed. But with blockchain, that would never happen because of the network of computers all working together. This means that the information is shared everywhere, so it’s decentralized and not in one place.

Bitcoin was the first cryptocurrency to use blockchain technology. When Ethereum was first introduced in 2015, it was known then as “Blockchain 2.0,” because it improved the way the technology operated thanks to the introduction of “smart contracts.” This is sort of like a promise that can’t be broken. Once it’s put into place, no one can change it, thus providing a better way to do business that’s now more secure.

To give you a better idea of how a smart contract works, let’s say that your job wants to pay you in Ether, which is the currency of Ethereum. Your job will make a smart contract that then tells the Ethereum blockchain to pay your salary to you in Ether on the 15^th of every month. Smart contracts allow you to program and automate transactions on the blockchain.

Now, let’s say you buy a car. You’ll pay the amount of Ether for the car by sending it to the smart contract, then the ownership will be sent to you using the Ethereum blockchain. The transaction is verified by all the other computer nodes across the planet and added to the blockchain.

You might be wondering what’s so great about a smart contract. Well, it basically does away with the need for a third party in various transaction scenarios. The aforementioned examples would require a third part company. Your job would need a bank to pay you. But instead, the smart contract will tell the blockchain to process your check each month. Plus, if you worked abroad, you’d have to pay international bank fees and a smart contract would eliminate this. For the car examples, you won’t need a broker as the third party. Many love cutting out the middleman with smart contracts because it saves them time and extra money!

Now you have a better understanding of what smart contracts are and that blockchain operates Ethereum. But what powers it? What pays for it? Well Ether (ETH) is Ethereum’s currency and is what powers this cryptocurrency. The nodes that run Ethereum are paid in Ether for doing all the work. It pays for the electricity costs and provides them with a profit. The work done by the nodes is referred to as “mining.”

Because there’s a high demand for Ether, it’s highly liquid. It can easily be converted to cash or fiats. The price has also increased a lot because it’s in high demand right now. Millions of people are investing in it and making money from it.

Now that you have a better background on what is Ethereum, how it works and what fuels it, now it’s time to figure out how to buy Ethereum.

If you’re wondering why you need to buy Ethereum, the better question to ask is why you shouldn’t! As the second most popular cryptocurrency on the planet, there are many good reasons as why you should buy it.

Our world runs on a centralized model. This means that everything is controlled by someone. Interest rates, taxes and more area ll controlled by banks and governments. But Ethereum and its smart contracts provide the world with a new and more convenient model, which is a decentralized one. It’s important to be part of it because it’s considered to be the future of our economy.

The price of Ethereum is always increasing and will continue to rise each year. Although it wasn’t the first cryptocurrency on Earth, it’s learned from Bitcoin’s mistakes and made vast improvement. Bitcoin’s transactions can take up to ten minutes or more to process. But Ethereum’s transactions only take a few seconds at most.

Since Ethereum is changing the way the planet works by eliminating the need for third parties, the value of it is hard to pinpoint and place a price on, which makes it very volatile. The price changes each day. But the general long-term forcast is that Ethereum will only continue to increase as it becomes more popular.

When the rest of the world finally uses Ethereum for its purposes, then that’s when we will find out how much it’s really worth. But still, you can make money buying and selling Ether (as well as other cryptocurrencies).

Now you have a better comprehension of why people invest in Ethereum, so now it’s time to learn how to buy it!

It’s fairly easy to buy Ethereum and you can do it using three easy steps!

The first thing you’ll want to do before buying any Ether is to buy a digital wallet so that you can store it somewhere. A digital wallet is made to store digital currency (depending on which wallet you use). For Ethereum, you have to use one that’s compatible with Ethereum. There are several different digital wallets to choose from. You can get web-based ones that are available on web browsers, software wallets that allow you to download your digital currencies or a hardware wallet that is something that you connect to your computer via USB.

Web-based wallets might be convenient, but they are the least safe option and you should never use it. But if you do, go with MyEtherWallet, Mist or MetaMask. If you do use MyEtherWallet, bookmark it to your browser for added security. To do so on Chrome, click on the store while you’re on the website and then it’ll be put below your address bar whenever you open a new tab. Never type in the website from the browser.

These wallets are ones that you download to your computer, phone or tablet and have better security than web-based ones. You should use Jaxx or Exodus (but it’s not available on mobile). What’s good about both options is that you can use them to convert from one cryptocurrency to another!

The best option is a hardware-based wallet and they are the safest to store your cryptocurrencies in. These are small electronic devices that connect to your computer via USB. You set up an account and then your crypto will be saved on the blockchain there. However, you can’t access it without your hardware wallet. So as long as you keep it safe here, you can’t get hacked. The best ones are Ledger Nano and TREZOR. But whichever one you choose, you’ll have to make an ETH address once you have created, downloaded or purchased the wallet. When you purchase Ethereum, this is the address where you’ll send it.

You can choose how you’d like to buy Ether since digital currencies are an open marketplace. This provides you more control so that you can build your portfolio however you please. To know how to buy Ethereum, you’ll need to know where to buy it first. You can purchase some at various online exchange platforms. Or you can use ShapeShift to convert your other cryptocurrencies into Ether or buy from someone else on LocalEthereum.

If you buy Ether using fiat currencies of the globe, you’ll need to open your own account at one of the following exchanges. You’ll just need a credit card or bank transfer to purchase Ethereum.

Coinbase

As the most popular digital-currency platform exchange, you’ll like that it’s also the most user-friendly. You simply visit the site on your computer or download the app. You can pay using bank transfer and it’s one of the easiest way to buy Ethereum. However, it’s not available in every country, though. The fees are 1.49% to 3.99% and depend on each payment method. The higher fees are from debt/credit cards. To buy Ethereum with Coinbase, you’ll need to:

Open a Coinbase account by going to the website to sign up.
Go to your email to verify your email address using the email the site sent you.
Log in and then verify your number, using the code that it will send you via SMS.
Once you’re signed up, you’ll need to add your payment method, choosing either a bank transfer or debit/credit card.
Choose Buy/Sell next to Ether and then punch in the amount of Ether you want to buy using your fiat.

CEX.io

Another easy-to-use exchange is CEX.io (the website is easier to navigate than the app, though). A huge advantage to using CEX.io is that it’s available to use in more countries than Coinbase. To buy Ether with CEX.io, you:

Sign up for an account on CEX.io’s website or app. Type in your details or login with Facebook.
Go to your email to find the email CEX.io sent to verify your address.
CEX.io will then ask you to enable two-factor authentication for an extra layer of security to keep your account safe.
The next page will ask you to Buy BTC when you first land on it. Click on that and you will then see a menu and from there select ETH instead.
To buy ETH, you’ll see For USD. If you want to use a different fiat currency, select USD and enter whatever you want in that menu. But you can only buy EUR or GBP to buy Ether on the platform.
Choose the amount you want and click buy.

Coinmama

Coinmama was first launched in 2012 and is easy for beginners to use. But you can only purchase Bitcoin and Ethereum on the site. It features low fees and accepts bank transfers and debit/credit cards. You can only use USD and EUR on the site. To buy Ether using Coinmama, you’ll want to:

Sign up at the site by registering on the homepage. Then enter your details on the form before clicking Register. Go to your email to find the email the site sent you to verify your email address.
Once you’ve verified your email, you’ll want to login to your account and click on My Account to select Verify my account to the left. Fill out the form to include your national identification. Then you’ll need to upload copies of the front and back of your passport or national identity card. Take a photo of yourself while holding a piece of paper that has Coinmama written on it with the current date.
Once you’ve take the photos, attach them to the online form and the upload them. But it’s good to know that you’ll need to verify your account every time you want to invest in larger amounts of Ether. The first verification allows you to purchase up to $10,000.
To buy, click on ETHER on the menu section that’s on the top of the website. Then choose the amount you want and just click Buy Now.
Choose Credit/Debt Card via Simplex.
Add your wallet address (the one you created in Step 1) when it prompts you to and click Complete Payment. Type in your details and choose to Pay Now.
Your Ether will be sent to your wallet from Coinmama. It’ll take a few seconds, or even up to an hour if the Ethereum network is super busy. Then if it’s really, really busy, it can take longer (but it’s an issue that Ethereum is trying to fix).

Now that you have your Ether, it’s time to send it to your wallet that you created in Step 1. It’s much safer to store your Ether in the hardware wallet than it is on an exchange. I’ll demonstrate how to send your Ether to your wallet from both Coinbase and CEX.io. If you bough Ether on Coinmama, you won’t need to do anything else since it’ll be sent right to your wallet when you purchase it.

Sending Ether From Coinbase

The first step is to select Send/Request from the menu that’s located at the top of the website.
Enter the address of your wallet that you made in Step 1.
Enter how much Ether you’ll want to send before clicking on Send Funds
The site will send you a SMS message with a code that you’ll then enter into the box before clicking confirm.

Sending Ether From CEX.io

Click on the Finance tab that’s in the top of the menu on the main page.
Scroll all the way down until you see ETH.
Click on withdraw and then type in how much ETH you want to send in the box to the right (it’s right below Select Currency And Amount).
Enter the address for the wallet that you made in Step 1 into the box that’s located in the center of the page then click on withdraw.

Know that you know where to buy Ethereum and how to buy it, it’s time to go out and finally do it. Ethereum is a great investment and I hope this guide provided you with enough information so that you can make your final decision on purchasing some.

Payment

If you want to pay using GBP, you should go with Coinbase since the other exchanges don’t accept it. Coinmama only accepts USD and EUR, but CEX.io accepts RUB, USD and EUR. So if you use USD ore EUR, you can use any of the three exchanges I mentioned before. But if you want RUB, only CEX.io will do.

Location

If you live in the States and want to buy Ethereum, you’ll have to use Coinmama or Coinbase. That’s because CEX.io is only available in a few U.S. states. But if you live in China, Germany, France, South Africa or Japan, you won’t be able to use Coinbase, so you’ll have to go with CEX.io or Coinmama (it’s in every country!).

Fees

Each platform has its own fees. Coinbase is up to 3.75%, while CEX.io is 3.5% + %0.25. Coinmama is up to 6%, which means don’t use Coinmama if you care about fees.

User Friendly

If ease of use is important to you, then you’ll definitely want to go with Coinbase. Both the website and app (available on Android and iOS) are very easy to use.

Coinmama sends your Ether right to your wallet so that you don’t have to go through the trouble of doing it yourself. CEX.io is also user friendly, but not as much as Coinmama and Coinbase.

So there you have it – the rundown on Ethereum! Hopefully you have enough information to make an informed decision on whether or not you should invest in Ether. Investments are risky and you should also conduct a bit of your own research. By my advice it to take the plunge and make the investment!