How To Buy Ethereum – Forbes Advisor UK


While Bitcoin is the leading cryptocurrency based on the value of its coins in circulation, Ethereum is not far behind. With a market capitalization of over £240 billion, it is the second leading form of cryptocurrency and is supported by business leaders such as Mark Cuban, the American billionaire businessman and TV personality.

In addition, it has been a profitable investment option. If you invested £1,000 in Ethereum in August 2015, your investment would have been worth over £1.6 million six years later.

Here’s how to get started buying Ether, the official name of the token most commonly called Ethereum due to its association with the Ethereum platform that feeds.

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Investing in Ethereum may be easier than you think. Here’s how to get started in just five steps:

1. Determine your level of risk

There is no way around it: buying Ethereum is a gamble. While all investments have some risk associated with them, CRYPTOCURRENCIES they are especially vulnerable to price fluctuations. Just think of the impact a couple hundred characters can have on the price of cryptocurrencies: When Tesla boss Elon Musk tweeted last year that his company would no longer accept Bitcoin as payment, for example, the value of the currency fell 15%.

Although Ether has had impressive returns in the past, it has also had some significant crashes, sometimes in surprisingly short periods of time. Notably, it went from a high of almost £3,000 per coin in May 2021 to less than £1,300 a month later, a drop of more than 50%. That’s some pretty extreme volatility.

That’s why it’s important to consider your risk tolerance along with the diversity and stability of the rest of your investment portfolio before buying Ether. Experts recommend that you never invest more in crypto than you can afford to lose.

2. Choose a crypto exchange

Buying Ether is more complicated than buying stocks or mutual funds through your brokerage account. Cryptocurrencies are not traded on major exchanges like those in London or New York, and many brokerages do not offer crypto investments.

To buy cryptocurrency, you must first create an account with a cryptocurrency exchange. In practical terms, it’s like the brokerage platforms you may be most familiar with: crypto exchanges allow buyers and sellers to exchange fiat currencies, such as pounds and dollars, for cryptocurrencies such as Ethereum, Bitcoin, or Dogecoin.

If you don’t have a cryptocurrency exchange in mind yet, take a look at our list of the best cryptocurrency exchanges to find the right one for you. Although the trading platforms of some exchanges can be complex, most offer a simple buying interface for beginners, although they may charge higher fees than the main trading platform.

A couple of key points: When choosing an exchange, make sure it offers a crypto wallet to store your investments. The vast majority do, but if yours doesn’t, you’ll have to get your own.

And if you’re a true beginner, you can always use a platform like Robinhood or Cash App. This will greatly simplify the process of buying crypto for you, but it comes with a hidden cost: you can’t withdraw your Ethereum investment to put it in a wallet. from a third party or use it to pay for online purchases.

Using one of these simplified platforms will mean that your crypto can only be traded within the platform you purchased it on. Therefore, you will need to withdraw money from that platform and then buy it back from a crypto exchange to keep it in a separate wallet.

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3. Fund your account

Before you can buy Ethereum through a crypto exchange, you need to fund your account. In most cases, you will be depositing money from a bank account, such as your checking account. In general, you can also use a debit card or deposit money from a payment provider.

When choosing a funding method, check the crypto exchange’s fees as they may vary depending on the method. For example, a platform may charge a fee of a few percentage points for a debit card transfer.

One caveat: some platforms allow you to buy crypto with a credit card. While that may sound tempting, credit card companies generally consider cryptocurrency purchases to be cash advances. Depending on the card you have, you may be required to pay a higher interest rate and cash advance fee in addition to the fees from the crypto exchange.

4. Buy Ethereum

Investors buying stocks, pooled/pooled funds or exchange traded funds are limited by market hours. For example, the London Stock Exchange trades between 8:00 am and 4:30 pm and is closed on weekends and public holidays.

Cryptocurrencies like Ethereum work very differently. Because they are decentralized currencies, you can buy and sell them throughout the day.

To buy Ethereum, enter its ticker symbol, ETH, in the “buy” field on your exchange and enter the amount you wish to buy. If you don’t want to buy a full Ethereum token or don’t have enough money in your account for a full coin, you can buy a fraction of one. For example, if the price of Ethereum is £2,000 and you invest £100, you will buy 5% of an Ether coin.

5. Store your Ethereum

After your Ethereum purchase has been processed, you need to store your cryptocurrency. While some platforms will store it for you, some people choose to store their investments themselves to reduce the likelihood of them losing their crypto due to a hack.

This is understandable, but it is also important to note that most major exchanges secure their clients’ holdings and often store the majority of their assets offline to prevent massive theft. Also, historically exchanges that have been hacked have refunded any losses.

But if you want peace of mind regarding your crypto, you can choose to move it to one of two types of third-party wallets:

  • hot wallet: A hot wallet is connected to the Internet and can be accessed from a computer or smartphone. They are convenient and are usually provided by cryptocurrency exchanges at no additional cost, although you can also use your own if you prefer to have your crypto off the exchange. However, because they are still connected to the Internet, they are at higher risk of security breaches.
  • cold wallet: Cold wallets, on the other hand, are external devices completely disconnected from the Internet. Depending on the type you choose, they usually cost between £30 and £150, although even more expensive versions are available. While cold wallets are less convenient than hot wallets (you have to manually connect them to the internet every time you want to access your crypto), they are more secure and can make sense if you own a significant amount of Ethereum or other cryptocurrencies.

Ethereum sale

To sell your Ethereum, simply go back to your cryptocurrency exchange and enter the amount you want to sell.

However, if you are selling a substantial amount of crypto, you may want to consult a tax professional. Despite its decentralized nature, proceeds from a cryptocurrency sale are potentially subject to capital gains tax.

Should I buy Ethereum?

Ethereum is extremely popular, with over 116 billion coins currently held by investors. But just because it’s one of the most well-known cryptocurrencies doesn’t mean it’s right for you.

Before you buy a volatile investment like Ether, you’ll want to make sure you’ve done your research and that your finances are in good shape. Ideally, you should have a large ‘rainy day’ fund, be exposed to minimal debt, and have your pension arrangements in good standing. Even if you can check all those boxes, it is important to diversify your portfolio, so only part of your investments should be in Ethereum or other cryptocurrencies.

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