How to buy Ethereum

Ethereum is the second largest cryptocurrency by market cap, and needless to say it’s very popular in the crypto world. If you are interested in owning some Ethereum, we step you through the process.

What is Ethereum?

Ethereum is a blockchain platform designed to house decentralised applications (known as DApps) and cryptocurrencies. It is generally regarded as having some of the best blockchain technology in terms of innovation, security, and openness for developers to build upon, which is part of the reason why it has become so popular.

What can you do with Ethereum?

Its native cryptocurrency is called Ether (ETH), which can be used as a payment method for various goods and services where cryptocurrencies are accepted, and it can also be traded for other cryptocurrency or fiat. Additionally, the Ethereum network can also host other cryptocurrencies using its ERC-20 token compatibility standard, and to date, this has been the most popular use case for Ethereum.

How do you buy Ethereum?

You can buy Ethereum in four easy steps:

1. Compare and choose a cryptocurrency exchange or trading platform

To buy and sell cryptocurrency you will need to sign-up to a cryptocurrency trading platform. When deciding on the platform to use there are a few things to consider, including: the fees, how easy it is to use, whether it’s based in Australia or overseas and the coins you can trade on the platform. You will also need a wallet to store your cryptocurrency. A growing number of platforms are now allowing you to create a wallet, as well as buy and sell on the exchange. For more on wallets see below.

2. Sign-up and verify your identity and email address

This step tends to be pretty straightforward, although depending on the platform you use the process may differ slightly. You’ll likely need a few pieces of ID before you can set up your account, so it is a good idea to have on hand including your drivers licence, passport or proof of residence.

When setting up your account, you will choose your username, password, fill out any personal information and set up the 2-factor authentication (which provides an added layer of security), and verify your email address.

3. Link your bank account, select a payment method and make a deposit

Once you have added your bank account and selected your preferred payment method (Poli and PayID/Osko are two common methods), you can make an AUD deposit into your account, which is typically free. However, some platforms charge additional fees for currency conversions, for example, between fiat currency and cryptocurrency.

Related article: Cryptocurrency fees explained

4. Go to the buy section and select Ethereum

Now that you have some funds you can purchase some Ethereum. Go to the buy/trade crypto section and select Ethereum, enter how much AU$ you want to invest or how much of the coin you want to buy, double check it’s all correct and confirm your purchase.

Which wallet can you use to hold Ethereum?

When you buy cryptocurrency you’ll also need a place to store it. There are typically two storage options: a cold wallet or a hot wallet. A cold wallet stores your crypto in an offline hardware device that you will need a private key, similar to a password, to access it. The benefit of storing your crypto offline is the added security.

Hot wallets refer to cryptocurrency which is stored online and connected to the internet. Although this option is more convenient, it doesn’t safeguard your crypto from data breaches and hackers.

There are a few wallets that you can use to store Ethereum in Australia. For cold wallets you could consider:

• Ledger Nano X
• Ledger Nano S
• Trezor Model T

And, for hot wallets, there is:

• Bread
• Metamask
• Exodus

Related article: Opinion: The Best Cryptocurrency Wallets in 2022

What can you buy with Ethereum?

Although the use of Ether as a currency isn’t widespread, there are a few places that will accept it as a form of payment. These places include: Overstock, Gipsybee and Shopify which are popular online stores. In the US, other major retailers, like Whole Food, Bed Bath & Beyond and Home Depot will accept Ether through the Flexa app. However, retailers in Australia are yet to embrace the cryptocurrency.

Ethereum is also the most common form of payment in the NFT market. So if you are considering purchasing or even selling an NFT you will generally need Ethereum.

Related article: How to buy an NFT?

Should you buy Ethereum?

Whether cryptocurrency, including Ethereum, is the right investment for you, is dependent on your personal circumstances. Before you invest in anything, you should consider your goals, current situation and tolerance for risk. Cryptocurrencies are notoriously volatile and while there is the potential for great gains there is also the potential of great losses. It’s also best to fully understand what you’re investing in, how it works and if it has any real-world functionality.

Cover image source: Wit Olszewski/Shutterstock.com