How to Invest in Ethereum?
The sound of cryptocurrency coins echoes across the world and many people find it enticing enough to try their hand at investing in cryptos.
Ethereum (ETH) is no different from others in that respect and its rapid growth surely gives wind to its sails. But, is it really a lucrative investment opportunity and should you really invest in it in the long run?
Let’s find this out.
Investing in Ethereum using centralized exchanges
Before you take out your wallet, you better be sure that you actually know how to invest in Ethereum. First, you’ll first have to open a crypto wallet to store it and look for a cryptocurrency exchange that allows buying and investing in Ethereum in your region. Most major centralized exchanges offer a custodial wallet service, which allows you to send and receive cryptocurrencies.
These include exchanges like:
- Coinbase (click here to read review)
- Kraken (click here to read review)
- Binance (click here to read review)
- Bitfinex (click here to read review)
- Bitstamp (click here to read review)
- eToro (click here to read review)
If you want to learn more about these exchanges, check out our exchange reviews section. The registration and account creation in each of these exchanges is free of charge.
In any case, these exchanges offer you to use either your fiat currency or another cryptocurrency to buy Ethereum. The registration process is simple: you have to sign up for an account, verify your identity and put some funds in it.
Bear in mind that crypto exchanges are excellent options for beginners, while more experienced users will appreciate their customer support, security and the ability to use credit cards for transactions.
Get a secure Ethereum wallet
Once you registered on an exchange and bought your first Ethereum, you can either leave it on an exchange or transfer it to your private wallet. Unlike with banks, it is not recommended to leave your purchased cryptocurrency on a specific exchange for a long period of time.
The best security practice is to download and install a private Ethereum cryptocurrency wallet. The recommended Ethereum wallets include:
No matter which wallet option you choose, you can easily transfer your ETH from the exchange to it.
Peer-to-peer (P2P) and instant exchanges
If you are looking to invest in Ethereum, peer-to-peer (P2P) exchanges represent a viable alternative, especially if you don't want to trust centralized exchanges and have your own ether wallet.
P2P exchanges operate as web-based platforms that allow you to connect with other users and buy or sell Ethereum based on mutually agreed arrangements. This means that you can either pay your seller via PayPal, credit card or even hard cash, in case you decide to meet up in person.
The most popular platform for this type of investment today is LocalCryptos (formerly known as LocalEthereum, you can read its full review here). Still, these platforms may be home to various scammers, so you better exercise a healthy dose of caution here.
Still, investing in Ethereum via P2P exchanges takes time. A far more time-saving alternative is investing in Ethereum via an instant exchange.
Instant cryptocurrency exchanges are web brokers that allow you to buy and exchange cryptocurrencies without depositing your funds into a custodial wallet. In most cases, they do not even offer an option to register and verify user accounts, making them a more secure and privacy-friendly option.
In order to buy Ethereum using an instant exchange, all you need to have is a valid Ethereum wallet address (see above). The whole process of investing and payment processing takes up to 30 minutes or so.
The most popular crypto instant exchanges are:
- Changelly (click here to read review)
- ChangeNOW (click here to read review)
- Switchere (click here to read review)
Learn more about these exchanges by checking out our reviews here.
Key things to know before you invest in Ethereum
Whatever option you choose, there are a few more things to know before investing in Ethereum aka ether.
The first thing to know is that the Ethereum market is still volatile, just like it is the case with any cryptocurrency. This makes them slightly riskier compared to traditional investment enterprises. Still, your investment can pay off handsomely, too, since Ethereum is among the three most popular cryptocurrencies used for all types of transactions today.
Also, the most popular approach to investing in Ethereum is buying it when its price is low and selling it later when it goes up. Once the prices go down, you can re-buy it and re-sell in yet another investment cycle. Yet, you have to be aware that waiting too long for either buying or selling can make you lose on your investment. You can try to mitigate this by hiring a consultant or doing research on price trends, but this can cost additional time and money. If you're a beginner in the crypto or investment world, such day trading is likely to result in a loss of money.
If you made a decision to invest in cryptocurrency despite the volatility and risks, know that the best approach remains to invest for the long-term.
Since no one knows what the future may hold, the golden rule is to invest in Ethereum only as much as you are willing to lose.