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How to Buy, Sell & Trade Ethereum (ETH) in 2020

In this guide we list the best platforms to buy Ethereum, how to make your purchase step-by-step and how to sell your Ethereum.
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Author: John Ladeluca
Last Updated: 13 July 2020

While Bitcoin still remains the number one cryptocurrency of choice, Ethereum has firmly solidified itself as a close runner up. In a nutshell, Ethereum became the first blockchain project to facilitate smart contracts. This allows users to execute autonomous, secure, and immutable transactions without a third-party. Moreover, and unlike Bitcoin – Ethereum smart contracts can be used to exchange more than just digital currency. As such, its underlying cryptocurrency – ETH, is now a multi-billion dollar asset.

If you like the sound of what Ethereum offers and believe that it has a bright future, then we would suggest reading our guide on How to Buy, Sell & Trade Ethereum in 2020. Within it, we’ll show you how you can buy Ethereum for the first time, and what you need to look out for when choosing an exchange. We’ll also give you a breakdown of why so many people are choosing to back Ethereum as a long-term investment.

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    What is Ethereum?

    Launched as recently as 2015, Ethereum is a blockchain project that holds the second largest market capitalization in the industry. The project is often described as revolutionary because it brought smart contracts to the cryptocurrency space. Without getting too technical, smart contracts allow people to enter and honour agreements without needing to use a trusted third-party.

    Instead, the agreement is built into a smart contract in the form of code, which cannot be amended or manipulated by either party. Moreover, the smart contract is available to view by anyone that wishes to do so, which ensures that the network remains transparent. In a similar nature to Bitcoin, Ethereum is also backed by a fully-fledged blockchain, as well as a native cryptocurrency token in which it calls ‘ETH’.

    However, the Etheeum network performs significantly better than its Bitcoin counterpart. While Bitcoin takes 10 minutes to confirm a transaction, Ethereum averages just 16 seconds. Ethereum is also able to confirm more transactions per second than Bitcoin, averaging 16 over Bitcoin’s 7. At the time of writing, Ethereum has just over 108 million ETH tokens in circulation.

    As is the case with most of the cryptocurrency space, Ethereum has experienced a somewhat rollercoaster journey since its inception in 2015. When the token was first released into the market, you would have paid just $2.77. Fast forward to January 2018 and you would have paid $1,396 – illustrating a periodic increase of more than 50,000%. However, much like the rest of industry, Ethereum is worth just a small percentage of its previous all-time high.

    What are the Pros and Cons of Buying ETH?

    The Pros

    • Second largest cryptocurrency in terms of market capitalization
    • Transfer time of just 16 seconds (Bitcoin takes 10 minutes)
    • The first pioneer of smart contract technology
    • Heaps of developers are opting for Ethereum for their smart contract needs
    • Worth just a fraction of its 2018 all-time high
    • Backed by a team of highly talented developers

    The Cons

    • Yet to solves its scalability woes – still trapped at around 16 transactions per second
    • The team of core developers seem unable to reach a consensus on required upgrades to the network

    Where to Buy Ethereum Online?

    If you’re keen to jump on the Ethereum bandwagon and want to buy some tokens of your own, then you’ll be pleased to know that hundreds of cryptocurrency exchanges list it for sale. If you’re a first-time buyer that is yet to purchase or own any cryptocurrencies, you’ll also be pleased to know that you can buy Ethereum with everyday payment methods. Depending on the exchange you use, this can include a debit/credit card, bank account, or e-wallet.

    However, you still need to do some homework on your chosen Ethereum exchange, as no two platforms are the same. While some excel by offering super-low fees, others are more favourable in the payment method department. As such, we would strongly suggest reading through the 7 crucial factors to consider when choosing an Ethereum exchange that we have outlined below.

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    7 Things to Consider When Buying ETH:

    1. Choose Your Deposit Method

    If you’re a first-time buyer of Ethereum, then it’s likely that you will need to use a traditional payment method. This can include a debit or credit card, a bank transfer, or even buy Ethereum with PayPal. However, not all Ethereum exchanges offer these payment methods, so you are best advised to check this before signing up.

    Alternatively, if you are already in possession of a major cryptocurrency like Bitcoin, then it will probably be easier to make a crypto-to-crypto exchange. All you need to do is deposit the cryptocurrency into your chosen exchange, and then swap it for Ethereum.

    Cash

    • You can use a Bitcoin ATM
    • Use transactions P2P
    • Doesn’t need KYC
    • Harder to be used
    • Easier to be Scammed

    Credit/Debit Card

    • Quickest method
    • Best method for beginners
    • Most platforms accept it
    • High charging fees
    • Centralised and not anonymous

    PayPal

    • Allows Chargebacks
    • One of the biggest e-wallet providers
    • Safe and Secure
    • High exchange rates
    • Centralised and can identify their users

    Gift Card

    • You can gift it to anyone
    • Anonymous
    • Easier to find in a physical shop
    • Can be claimed by anyone
    • High ‘claiming’ fees

    2. KYC

    Although much of the cryptocurrency exchange space is unregulated, platforms are still required to meet and comply with anti-money laundering laws. This means that by using an everyday payment method, you will need to go through a KYC (Know Your Customer) process. This will require you to upload a copy of your government-issued ID, and supply a proof of address.

    If you don’t want to engage in a KYC process, then you simply won’t be able to use fiat currency to purchase Ethereum. Instead, you will only be able to perform a crypto-to-crypto trade. Ultimately, if the exchange allows you to buy Ethereum with an everyday payment method and it doesn’t ask for verification documents, then it is doing so illegally!

    3. Buying Ethereum vs Trading CFDs

    Depending on what your long-term investment goals are, you need to decide whether you want to purchase Ethereum and store it yourself, and simply invest in the form of a CFD. A CFD (contract for difference) is a popular investment vehicle that allows you to speculate on the price of assets without needing to actually own or store them.

    As such, you can invest in the long-term prospects of Ethereum without needing to worry about storing it in a private wallet. On the flip side, you won’t actually own Ethereum by investing in a CFD, so if 100% control is important to you, you’ll be better off buying it in its truest form.

    Buying ETH

    • You own the Ethereum tokens 100% outright – you will need to store them yourself in a private wallet
    • A great option if you’re thinking about the long-term prospects of Ethereum
    • You can transfer and move your Ethereum tokens to another wallet whenever you want
    • If stored correctly, your tokens will always remain in your control

    Trading Ethereum CFDs

    • Ethereum CFDs can be purchased quickly and easily
    • You don’t need to worry about the hassles of storing the tokens in a private wallet
    • The best option if you’re looking at the short-to-medium term credentials of Ethereum – Can be sold quickly
    • CFD brokers need to be regulated

    4. Do You Need a Wallet?

    If you are looking to purchase Ethereum with the view of storing it long-term, then you are going to need to obtain a private wallet. While third-party exchanges do give you the option of storing your tokens within their web wallet, this is the least secure way of keeping your funds safe.

    As such, you should choose an Ethereum exchange that allows you to withdraw your tokens out. Alternatively, and as we briefly noted in the section above, there is no requirement to worry about a wallet if you invest in Ethereum via a CFD, as you are simply speculating on the price as opposed to owning it outright.

    5. Compare Fees

    Regardless of which exchange you decide to buy Ethereum from (with the exemption of CFD brokers like Robinhood and eToro), you will need to make some considerations about fees. For example, if you’re looking to buy Ethereum with a debit or credit card, this can cost as much as 4-5% in fees. Similarly, you will also need to pay a trading fee when buying Ethereum. This is usually charged as a percentage of the amount you choose to buy.

    For example, if the trading fee is 1.5% and you purchase $2,000 worth of Ethereum, then you’ll pay a fee of $30. Fees can really start to add up in the cryptocurrency exchange arena, so you should ensure you have a firm grasp of what you’ll be required to pay prior to opening an account.

    6. Regulation and Security

    If you’re using a CFD broker to buy Ethereum, then the platform will need to be in possession of a license. These are typically issued by the likes of the Financial Conduct Authority (FCA) in the UK, or CySEC in Cyprus. Either way, using a regulated CFD platform affords you with a range of consumer protections that are typically not available in the cryptocurrency exchange space.

    On the contrary, exchanges are largely unregulated, so you do need to bear this in mind. If you are using an exchange to purchase Ethereum, you will also need to explore what security controls are in place to keep your funds safe. At an absolute minimum, this should include 2FA – which is where you will need to enter a unique code that is sent to your phone every time you log in or attempt to withdraw funds.

    7. How Easy is it to Use the Platform?

    Finally, you should also spend some time assessing whether or not your chosen Ethereum exchange is user-friendly You’ll want to make sure that the entire end-to-end purchasing process can be performed by beginners, such as registering an account, depositing funds, and placing your trade. Ultimately, you don’t want to join a new Ethereum exchange only to find out that the platform is suited for advanced users!

    Where Can I Store my Ethereum?

    As we have repeatedly noted throughout our guide thus far, you will need to make some considerations regarding the storage of your Ethereum tokens (unless you opt for CFDs). To do this, you will need to store them in a wallet. In a similar way to Bitcoin, Ethereum wallets can come in a number of different forms, so you’ll need to assess what your main priority is when it comes to ‘security vs convenience’.

    As such, we have listed the four main Ethereum wallet types currently in the market. Read through each one to determine the best wallet for your individual needs!

    1. Web Wallet

    A web wallet is an online wallet that can be accessed at the click of a button via a standard web browser. When you initially purchase Ethereum at your chosen exchange, this is how your funds will be stored by default. As convenient as this might sound, web wallets can be risky.

    This is because you do not have direct control of the wallet’s private keys, which is essentially the password required to move the funds. As such, if the exchange platform was hacked by a malicious actor, they might be able to gain access to your Ethereum tokens. This has happened many times in the past, and it often results in a loss of funds.

    2. Mobile Wallet

    A mobile wallet allows you to safely store you Ethereum tokens on your cell phone. You will initially need to download and install the wallet onto your phone, and then transfer the tokens externally from the exchange they are located on. Mobile wallets are really convenient when it comes to transferring and spending coins, as you can do this at the click of a button via your phone.

    Moreover, you also have the benefit of scanning a QR code from your phone, which removes the need to copy and paste an Ethereum address. Mobile wallets also come with a good level of security. On top of your standard screen lock password, you can install a PIN or password to prevent unauthorized access.

    3. Desktop Wallet

    If you’re happy to store your Ethereum tokens on your desktop device, then you will benefit enhanced security features over that of a mobile wallet. This is because you will be able to install a range of additional safeguards, such as 2FA. This ensures that access to your wallet requires a unique code that is sent to your mobile phone – so in effect, a bad actor would require both your devices at the same time to engage in malpractice.

    On the other hand, transferring funds in and out of your desktop wallet is going to be slightly less convenient in comparison to a mobile wallet, not least because you’ll need to have direct access to your device. You will also miss out on the ability to purchase goods in-store, which you can only do with a mobile wallet.

    4. Hardware Wallet

    The final option that you have at your disposal when it comes to storing your Ethereum tokens is that of a hardware wallet. As the name suggests, you will be storing your tokens in a physical hardware device. The device will never be connected to the internet, so you won’t need to worry about having your Ethereum hacked remoted.

    In order to move funds from the hardware wallet, you will need to enter your secret PIN. If you forget it, or the device is lost or stolen, then you can regain access to the device by entering your passphrase. Although this option is by far the most secure, it is also the least convenient. However, this shouldn’t matter if you are intending on holding the tokens for a long time.

    Multi-Function Wallet?: Why not consider obtaining an Ethereum wallet that can be installed on both your desktop and mobile devices? This will give you the best of both worlds. You’ll benefit from enhanced security as well as the ability to transfer funds as and when you need to.

    Where can you Spend Your Ethereum?

    Unlike Bitcoin, you will have very few opportunities to spend your Ethereum tokens in the real world. The technology wasn’t really created for that purpose anyway, as it is more suited for the deployment of smart contract agreements. As such, most people buy Ethereum for the purpose of investing if they are not looking to use the technology to engage with the network.  Ultimately, although there are still a number of online merchants that will accept Ethereum, these are few and far between.

    How to Sell Ethereum?

    If you are in a position where you are ready to sell your Ethereum tokens at a profit, or you simply want to cut your losses to free up some much-needed capital, then the good news is that the process is as easy as making a purchase. In fact, the process is essentially the same as buying Ethereum, albeit, in reverse. As such, you will first need to transfer your Ethereum tokens into a third-party exchange that supports fiat currency. Once you’ve done that, you’ll then need to exchange the Ethereum for a fiat currency like USD.

    Finally, you then need to transfer the funds back to your bank account. Take note, if you have not used your chosen exchange previously, you will need to go through a quick KYC process to verify your identity. This is to ensure that the platform remains compliant with anti-money laundering laws.

    Ethereum vs. Bitcoin – What’s the Difference?

    Although Ethereum carries a lot of similarities with Bitcoin, it also differs in a number of ways.

    1. Transaction Times: It takes about 16 seconds on average for Ethereum to confirm a transaction, while Bitcoin takes 10 minutes.

    2. Transactions/Second: Although both cryptocurrencies are lagging in the scalability department, Ethereum can confirm about 16 transactions per second in comparison to Bitcoin’s 7.

    3. Fees: Both Bitcoin and Ethereum base their transaction fees on network demand. As such, the fees will increase as the network gets busier, and visa-versa when demand is low.

    4. Centralization: Bitcoin and Ethereum are both decentralized projects that operate on the blockchain.

    5. Supply: Bitcoin will eventually be capped to 21 million coins, which is expected to occur in the year 2140. On the contrary, there is no cap to the amount of Ethereum tokens that can be created, with 5 new tokens minted every 16 seconds. At the time of writing, this stands at just over 108 million ETH.

    6. Use Case: The Bitcoin system was created as a means to challenge fiat currencies such as the USD, EUR, and GBP. Ethereum and its underlying smart contract protocol was created to facilitate trustless agreements without a third-party.

    7. Founders: While the founder of Bitcoin is an anonymous developer known simply as ‘Satoshi Nakamoto’, the founder of Ethereum – Vitalik Buterin, is the public face of the project.

    8. Market Cap: As the number one cryptocurrency in terms of market capitalization, Bitcoin is worth significantly more than Ethereum. At the time of writing, Bitcoin and Ethereum are worth $130 billion and $15 billion, respectively.

    9. Price: There is also a huge disparity in price. Bitcoin is currently worth just over $7,500, while Ethereum costs $143.

    10. Miners: Although Bitcoin and Ethereum both use the proof-of-work mining algorithm, Ethereum is looking to one day make the transition over to proof-of-stake. Bitcoin has no intention of moving away from proof-of-work.

    Conclusion

    In conclusion, although Ethereum was only launched in 2015, it has already amassed a multi-billion dollar market capitalization. This is incredible when you consider that the project is still in its infancy. The overarching reason that Ethereum has grown so quickly is that it is behind the smart contract phenomenon. This allows people – regardless of where they are based, to engage in trustless agreements over the internet. Interestingly, its underlying cryptocurrency – ETH, was created to help fuel the network. However, everyday users are buying the token as a means to speculate on the future price of the Ethereum.

    In this respect, those who backed Ethereum during its very early days would have paid little over $3 per token. Crucially, had you fallen into this niche group of believers and held on until January 2018 when the token hit $1,396, you would have been looking at gains of over 50,000%. Although you might have missed the boat last time, Ethereum is now worth just a fraction of its previous all-time high, so you can still buy the asset on the cheap if you believe in the project’s long-term viability.

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    FAQs:

    Ethereum vs EOS: what’s the difference?

    The two cryptocurrencies are hardcore rivals of each other. Ethereum is a second-generation blockchain featuring smart contracts and decentralized applications (DApps). The cryptocurrency’s main purpose (compared to Bitcoin) is to not only function as a payment system but to standardize and facilitate the development of DApps. Ethereum is all about decentralization; the community believes this the feature the cryptocurrency has to prioritize. On the other hand, the first priority of EOS is scalability. Like in the case of Ethereum, EOS is unable to maintain decentralization, scalability and security at the same time. Therefore, the efficient scalability of EOS comes with the cost of being more centralized than most cryptocurrencies (including Ethereum). EOS uses the Delegated Proof of Stake (DPoS) algorithm with 21 nodes producing new blocks. This allows the network to achieve scalability of over a thousand transactions per second.

    Ethereum (ETH) vs Ethereum Classic (ETC): what’s the difference?

    If you have read the last FAQ section, you may have learned that the DAO fork resulted in a chain split, creating today’s Ethereum (ETH) as well as Ethereum Classic (ETC). As the part of the community wanted to claim back the lost funds of the DAO attack, they have decided to go with a fork. These users stayed with Ethereum. However, others stated that “code is law” and the Ethereum blockchain is immutable. Therefore, they rejected the upgrade and stayed with their own blockchain, Ethereum Classic.

    How do I buy Ethereum anonymously?

    To buy Ethereum anonymously, you’ll have to purchase the cryptocurrency locally. One good site is Localethereum.com where you can connect with sellers in your area. Another option to buy Ethereum anonymously is to use an exchange where you don’t have to verify your identity (like Binance - the service has high account limits).

    Where can I purchase Ethereum with cash?

    There are two options to buy Ethereum with cash: by using an Ethereum ATM or by meeting up with a person locally. For the first option, you can use services, such as Coin ATM Radar, which shows you the ETH ATMs nearby you. You can connect with local Ethereum sellers by using Localethereum.com, a peer-to-peer marketplace for ETH traders.

    Can you recommend a secure Ethereum wallet?

    The safest Ethereum wallet is a hardware wallet as it requires a PIN via a hardware device to verify your transactions and to log into your wallet. The two best hardware wallets are the Ledger Nano S and Trezor. Both support ETH with the wallets storing your coins offline. If you don’t want to buy a hardware device, Atomic (desktop), Exodus (desktop), and Jaxx (mobile) are all good options for an Ethereum wallet.

    What’s your Ethereum price prediction?

    Unfortunately, we can’t predict Ethereum’s price. What we know is that cryptocurrencies will stay with us for a long time, and as adoption increases, so will the price. That’s all we can say about our Ethereum price prediction.

    Ethereum vs Bitcoin: what’s the difference?

    Bitcoin is the first cryptocurrency, created by Satoshi Nakamoto with the purpose to build a peer-to-peer electronic payment system. That means Bitcoin is mainly used for payments and as a store of value. On the other hand, Ethereum is a whole operating system that makes the development of decentralized applications (DApps) easier. So, comparing Ethereum vs Bitcoin: ETH is more focused on DApp creation along with other features of the Ethereum blockchain than maintaining a payment network where the users can send, receive, hold, and own BTC.

    Where can I find the Ethereum white paper?

    The official Ethereum white paper can be found on Github. For more information on Ethereum, check the official site of the cryptocurrency.

    What determines the Ethereum value?

    According to its developers, the Ethereum value depends on the platform that is made for having numerous different types of DApps developed on it. There’s no central entity, all development in the Ethereum network is completely decentralized. So, we can say that the more (useful) DApps are developed, there’s a chance that the Ethereum value will increase. And a large price surge can create an effect, in which more DApps are developed, further increasing the Ethereum price.

    What’s the best way to buy Ethereum?

    While credit cards present a convenient and fast way to buy cryptocurrency, they usually cost more than other payment methods like bank transfers. However, the fees vary by platform; at some brokers, credit card payments are free while at another part of service providers these transactions can cost as much as 10%. If you prefer cost-efficiency, then bank transfers seem like the best option for you, especially if you are located in the European Union with access to low-cost SEPA transactions. While this payment method costs a lot less than others (like credit card transactions), bank transfers are not so time-efficient as they take at least a few days to arrive.

    Is Ethereum a scam?

    No, Ethereum is certainly not a scam. The cryptocurrency’s network is developed and maintained by one of the most respected names in the industry like Ethereum founder Vitalik Buterin. The coin is full decentralized as well as secure, and it has generated many profits for early investors and traders.

    Should I invest in Ethereum?

    Before you decide to invest in Ethereum, you have to answer a few questions yourself. Do you have the required financial background to make the investment? Did you do a thorough background check on the cryptocurrency? Have you analyzed historical price charts? If yes, are you satisfied with the results? In case all of your answers are yes, then you may go for investing in Ethereum.

    Should I buy Ethereum this year?

    We can’t predict the future price of Ethereum. Not this year and not in the other ahead. And, honestly, no one can provide you with an accurate prediction for the coin’s value. Therefore, we can’t advise you to buy Ethereum this year as you have to determine that for yourself. If you think the coin’s price will certainly surge by the end of the year, you may continue with investing in ETH.

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    John Iadeluca is the founder of the Wall Street hedge fund Banz Capital. He's a blockchain developer, quant, and consultant that specializes in the digital asset sector. He is an authority on blockchain and has written for a number of publications including Forbes.com.

    7 thoughts on “How to Buy, Sell & Trade Ethereum (ETH) in 2020

      1. Hello Drakewn22, these timeframes are usually good opportunities to buy the cryptocurrency. So, naturally, we would encourage you to invest in Ethereum as its price is correcting. However, with the highly-volatile state of the market, we can’t be absolutely sure if a correction is a good buying opportunity or not.

    1. As a con we see that Ethereum is stored in crypto wallets. But I just don’t realize why is that such a big problem?

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