The Ultimate Guide to Buy Ethereum (ETH); All You Need to Know

Johnson Gitonga
Updated: Jun 15, 2022, 15:30 UTC

Ethereum, the second most popular cryptocurrency, has its unique technology, features, and qualities that might threaten Bitcoin as the number one crypto. In this guide, we will cover how to buy Ethereum, best exchanges, ETH features and more.

how to buy ethereum

Being the second most popular cryptocurrency is no mean feat especially if you are not a mere imitation of the master.

Ethereum has charted a beautiful but risky path to distinguish itself from Bitcoin and claim its place as a unique blockchain.

But how?

In this guide, we will discover all about Ethereum (ETH).

What is Ethereum?

The Buterin Story

When Bitcoin was getting all sorts of attention as a breakthrough in the scaling of digital currencies in 2011, a father brought the earth-shaking blockchain technology to the mathematical genius who was his teenage son.

Dmitry Buterin may not have known at the time, but his son, Vitalik Buterin, would evolve in a few short years to co-found and spearhead the most disruptive blockchain after Bitcoin, known as Ethereum.

At the time, Vitalik was a student and a tech blogger who was brought up in Canada.

Mihai Elisie, 23, who was working in Poland at the time, had noticed Vitalik’s unique writing in crypto blogs. He asked the young Buterin to join him in founding Bitcoin Magazine. The young lad promptly accepted and became the magazine’s chief techie writer.

Later, after conceptualizing the massive potential proposed by Satoshi’s invention, Buterin dropped out of college, contacted and started working with Dr. Gavin Wood to develop Ethereum. The Programming started in 2013 and, by January 2014, The Ethereum Blockchain was introduced to the world.

With it, Vitalik Buterin changed the Distributed Ledger technology… for the better, for good.

Definition of Ethereum

Put simply, Ethereum is a source of all sorts of open source (or free) applications that are based on the blockchain technology.

Applications enabling transactions that cannot be altered because of the immutable and decentralized nature of the blockchain is a huge addition to blockchain technology, especially when its innovation promises the immutable digitization of the world’s assets that do not directly involve money. Such applications were first made possible on the Ethereum blockchain.

Ethereum is therefore introduced as the blockchain that would ‘do for everything else what Bitcoin did for money.

The Ethereum Community

The blockchain has a very dynamic community. It consists of individuals and organizations, working together to develop and secure the network. These entities collectively assist in the realization of the Ethereum dream. They include;

  • Core developers: Vitalik Buterin leads a team of developers who are dedicated to the implementation of the wishes of the rest of the community through hard coding of agreed rules into the cryptographic algorithms that created the blockchain.
  • The miners; Though the blockchain is moving from mining to staking, miners run the nodes that confirm transactions, update the ledger and secure the platform.
  • Independent Developers; Creators of the smart contracts and the dApps, independent developers give life to the blockchain.
  • Researchers who are the technical capability of the blockchain’s fraternity to dream and bring complex ideas into context.
  • Clients: The reasons why any blockchain is formed. They make the transactions and give the blockchain life.
  • Organizations: The blockchain is funded and facilitated by organizations that use the decentralized applications.

How to Buy Ethereum (ETH) – A Step-by-Step Guide

Buying Ether is amazingly simple due to its popularity. It has three steps.

Step 1 – Get an Ethereum Wallet

Before you buy your ether, you need to either buy or install the wallet on which to store your ether.

There are various types of wallets that can hold Ethereum. For the Ethereum official wallet click here.

Ethereum Hardware wallets are the most secure way of storing Ether. The main ones are Ledger and TREZOR.

Electrum Software wallets are ideal for starters who may have little holdings or no funds to buy hardware wallets. They are free software wallets but are less secure because they are often connected to the internet and can, therefore, be hacked. The main ones are Exodus, Jaxx, and MyEtherWallet.

Step 2 – Buy Ether from the best exchanges

Many exchanges provide Ethereum (ETH). In this article, we review the processes for Coinbase and Binance.

Acquire Ethereum with Credit Card through Coinbase

Coinbase is the largest Bitcoin broker in the world. However, it also offers Ethereum, Bitcoin Cash, Litecoin.

After signing up and going through the security authentication, you can then Log in and deposit fiat currency. Finally, go to the buy/sell button to acquire your ETH.

Coinbase will keep refreshing the devices you use to access your account through email verification, even after the verification step after sign-in. This is a welcome added security feature.

Coinbase is available in 32 countries worldwide, mainly in Europe, Canada, the US, and Singapore.

Buying Ethereum (ETH) at Binance

Being a crypto-to-crypto exchange, the main way to acquire Ethereum at Binance would be to import Bitcoin (or other cryptocurrencies that you previously own) and use the funds to purchase Eth.

Enter Binance, get to the site registration page where you put in your details and password. Then log in to Binance.

You will have to go to your email to click on the verification code sent to you on email.

Binance will take you to the 2FA page, where you use the Google Authenticator on your mobile device to provide you with a constantly updating authentication code. It provides increased security.
Once in Binance, go to ‘funds’ – ‘Deposits and withdrawals’;

Scroll down and find BTC and click on the corresponding deposit button.

binance deposit and withdrawls

Import Funds and Buy Ethereum

You will be given the BTC Address on which to send your funds. Do not send any crypto to an address belonging to another.

Binance will deposit your BTC immediately after 30 confirmations.

Once you have the funds on Binance, proceed to Exchange – Basic and select the Eth pairing as follows;

binance 3

Once the pair is selected, go to the dashboard below the graph on the exchange.

Buy as much Eth as you can afford with the BTC you have on the platform.

binance 4

Step 3 – Transfer your crypto to your secure wallet

No crypto is entirely safe on an exchange or online wallet. Sending ETH to the chosen offline wallet is an important and easy step that protects your holding.

Trading Ethereum Through CFD’s 

CFD stands for Contracts for Difference. This means that you can open a trading position to speculate on the increase or decrease of an asset you don’t necessarily own, by leveraging a percentage of the price.

Plus500 (*77% of retail CFD accounts lose money)offers Ethereum CFD trading along with other cryptocurrencies. The broker has endeavored to be regulated in many jurisdictions, with the current ones being the Financial Conduct Authority of the UK, Cyprus Securities and Exchange Commission, and the Australian Securities and Investments Commission.

To open an account via Plus500 is a simple process and all requires is a minimum deposit of 100 USD/EUR/GBP to open an account.

Once you apply, you can deposit your funds and start trading. You get to explore on your own.

However, you cannot send your crypto to another wallet from a forex exchange; you can only cash out to fiat.

Technologies Supported by Ethereum

Ethereum Smart Contracts

A smart contract is a cryptographic computer protocol that facilitates, monitors, verifies or enforces the execution of an agreement immutably and exactly as programmed. It accomplishes this without the burden of expensive and inefficient third parties and human error.

It carries the potential of eliminating most need for lawyers, auditors, witnesses, banks, experts, governments or trustees.

With the blockchain technology, witnesses become honest nodes operating anonymously in the distributed network, across the world, executing hard-coded consensus algorithms to satisfy themselves that all the conditions for executing the agreement have been met, and hence enabling the contract to execute expected outcomes.

Introducing the technology in 1994, Nick Szabo envisioned a way of creating trackable and irreversible contract outcomes by use of a computer protocol that would be superior to pen and paper contracts.

According to him, smart contracts would;

  • facilitate mutual monitoring of both parties’ performance inside the contract,
  • Verify the successful completion of a contract, or of a condition therein.
  • guarantee selective distribution of contractual details to ensure only necessary information is passed
  • be self-enforcing and autonomously deployable to minimize human intervention.

In 2009, Satoshi provided the first successful use-case for smart contracts when he created the blockchain.

With it, he ensured the security of smart contracts’ outcomes through the decentralized Byzantine Fault Tolerant (dBFT) algorithm,  made possible by the distributed nature of the blockchain.

He made it possible to assure privity, anonymity, observability, and enforceability of smart contracts like the ones that run Bitcoin.

Soon, Vitalik Buterin posited that Ethereum would use the technology to bring any business to the blockchain.

Ethereum Decentralized Applications (dApps)

dApps, as they are commonly known, are programs that are designed to do for ‘everything’ what bitcoin did for money. They are complex smart contracts, or many smart contracts working in harmony.

We can, therefore, say that decentralized applications are computer software programs that are deployed on a blockchain to perform more complex tasks than smart contracts.

Dapps have self-incentivizing features (i.e., have resident tokens that fuel its operation) and run on the distributed ledger technology. Anything short of this is not a Dapp. It is just computer software.

What are decentralized autonomous organizations or DAOs?

Calling a DAO a company can be confusing, though it is tempting. A DAO is simply a for-profit entity that exists on a distributed network, working autonomously, and relying on hiring humans to perform certain tasks that cannot be automated.

A consensus is achieved through voting on who to employ, what to do, how to spend money, how to share profits etc.

Ethereum members created the inaugural DAO in May 2016, bullishly named ‘The DAO‘. However, it died a premature death due to a security breach in August of the same year that drained it of $50 million worth of Eth before the blockchain hard forked to stem the theft.

This was the first indication that the technology would not be deployed as easily as originally thought due to security.

Ethereum vs. Bitcoin: How is Ethereum Different than Bitcoin?

Bitcoin Recap

As he labored hard to break the age-old kleptocracy that existed in the governance of money, the pseudonymous Satoshi Nakamoto had no illusions that he was onto an explosive but necessary odyssey.

We paid him no heed when, in 2009 January, he brought the blockchain to the world.

He would often plead with fellow cryptographers to participate in bitcoin mining. By May 2010, Laszlo Hanyecz, one of the geeks, made the first ever purchase of a good with bitcoin, and the era of cryptocurrencies begun.

Since then, bitcoin has gone through it all to record one of the most incredible appreciation records of any asset in trading history.

It has suffered staff desertion (including Satoshi himself), price dumps and hard forks.

It has enjoyed price hikes, been targeted by all manner of regulators, and fought off crime abetting claims to record a high of almost $20,000 by December 2017.

And that is huge, considering that bitcoin achieved dollar parity only in February 2011.

As the gold standard of cryptocurrencies, no altcoin coin has ever surpassed it in market capitalization or unit price.

Ethereum and Bitcoin: Comparison of the Blockchains

When you look at the two blockchain use cases, the niches are stark in contrast, and this is instructive when understanding the different opportunities they hold for different interested parties.

A quick pairing of the two cryptocurrencies gives us a clear picture of the main differences as depicted below;

Feature Bitcoin Ethereum
Current Price $ 8,053.00 $ 809.00
Market Cap $ 136 Billion $ 80 Billion
Consensus Algorithm Proof of Work Proof of Stake
Current Market Dominance 35% 17%
Current Supply 16.8 Million 97 million
Total Availability 21Million Not Defined
Block Size 1 MB N/A. Uses gas limit so block sizes can vary
Block Time 10 minutes 10-20 seconds
Transaction per Second 7 15
Decentralization Achieved Achieved
Coin Creation Distributed Mining Proof of Stake
Main Feature Cash Transfer Smart Contracts and Dapps
Year of Creation 2009 2014
Price on Jan 1st, 2016 $ 434.33 $ 0.948
Price on Jan 1st, 2017 $ 1,003.08 $ 8.18
Price on Jan 1st, 2018 $ 14,112.12 $ 773

Ethereum’s main objective is to enable the creation of decentralized applications that will reshape main global markets and bring them to the trust less unassuming distributed mainstream. It, therefore, allows for other blockchains to be built on it.

Bitcoin seems primarily solves the problem of expensive and slow transfer of money, worldwide. While Bitcoin chooses a decentralized ledger

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How can you Spend/Use Ether?

Ether is mainly designed to work as the fuel that allows you to access the Ethereum Blockchain. It may not scale into a mainstream currency, but is a good bet for crypto speculators.

Being the main gateway for most ERC20 tokens which account for most of the crypto coins, Eth is a good bet for increased demand as we delve deeper into the decentralized application era, and owning it at the right time is a good thing.

This means that Eth can be used for many applications that deal with anything from gaming, entertainment, medical, and a myriad of other dApps.

ICO’s and Ethereum

Due to the decentralized applications that are possible on its blockchain, Ethereum has enabled the onset of online crowd sales for business ideas that scale to become profitable.

Ideas that would never have been funded by banks and other traditional financial institutions of yesterday.

When an idea like that is broadcast to the public, and a date for the crowd sale is announced, it is known as an initial coin offering. Or an ICO, which is a play on the more mainstream IPO.

Final Thoughts

Ethereum is easily the broadest crypto to understand. It has a very elaborate and well-structured growth curve.

When the Casper algorithm is finally established, the blockchain promises very good prospects for growth.

However, it must be said here and now that all investments in crypto are risky, and no information presented in this article should be taken as solid financial advice.

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