Ethereum is a name that will frequently pop up whenever you are doing research of any kind on cryptocurrency, and for good reason. It is one of the top-ranking cryptocurrencies on the market. It only makes sense that one would want to “get in on this,” so to speak. To do that, you will need to know how to purchase this digital currency.
What exactly is this cryptocurrency?
Let’s first elaborate on what Ethereum is before we get into how you can purchase it.
Ethereum is a decentralized software that runs smart contracts, which are defined as being self-executing settlements that have the terms and conditions of an agreement between the buyer and the seller written directly into the lines of code. The Ethereum system enables these specific types of contracts, as well as Distributed Applications (DApps), to be built and run without any control, fraud, or interference from a third party entity.
As stated on its website: “These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.” This allows any developer to create markets, store registries of debts or promises, transport funds in accordance with the instructions that were given long in the past (this could be in the form of either a will or a futures contract), and many other things that have yet to be invented. All of this can be carried out without the need for a middleman.
How to purchase
This platform is the foundation for its own virtual currency, which is called Ether (ETH). Probably the easiest and the most popular method of purchasing Ether is doing so through an exchange. Ether is – according to the CoinMarketCap – the second most valued, stable, and acclaimed cryptocurrency behind the most popular of them all, Bitcoin. With that in mind, finding an online exchange that both operates within your command and trades with Ether won’t be that difficult of a task.
It is important to note that the process of buying Ether will often vary from one exchange to another. Having said that, though, the principles are very much the same in the grand scheme of things.
These are the most basic steps that need to be taken if you wish to purchase Ether:
- Register at an exchange
Before you register with a decentralized exchange, you will have to make sure that it operates in the country you are currently living in and that it accepts the currency you wish to trade with. This registration process will usually require you to submit a few general pieces of personal details.
- Complete the identity checks
Full identity checks are included in the process, especially when it comes to conducting a deposit or withdrawal. In order to properly pass these checks, you will most likely need to provide a ‘proof of address’ as well as a piece of photo identification. These are carried out with Anti-Money Laundering (AML) regulations and ‘Know Your Customer’ (KYC) protocols.
For those who don’t know, AML is a term that is primarily used in both the financial and legal industries as a way to describe the legal controls that require financial institutions to detect, report, and prevent money laundering activities. KYC is a standard form that is used throughout the investment industry that ensures clients that investment advisors understand detailed information regarding their risk tolerance, knowledge in investments, and financial position.
To learn more about KYC, read one of my previous articles, entitled “What is KYC?”
- Choose a method of deposit
Depending on which exchange you choose to participate in, there are various types of banking procedures. These are frequently a mixture of bank wire transfers, credit and debit card payments, SEPA (Single Euro Payments Area), PayPal, or Skrill payments, among many other methods. There will typically be a small fee for each deposit method that is charged by an exchange. As a side note, the fee details can often be found in either the ‘about’ section or the footer of an exchange’s website.
- Make a deposit in US Dollars, Euros, etc.
A majority of exchanges will accept US Dollars and Euros. Other major fiat currencies like British Pound Sterling, Russian Ruble, Chinese Yuan, Japanese Yen, and more are accepted on some of the exchanges as well. Each exchange will typically charge a fee for each deposit method and it will usually take at least several hours for your deposited funds to eventually appear in your exchange account; again, this all depends on the exchange and the chosen method of deposit.
- Purchase ETH with your deposited funds
As soon as your fiat currency has arrived into your exchange account, you can now use this currency to buy Ether. The level of user-friendliness associated with this process will vary depending on which exchange you are participating in, with a good number of them striving to make this particular process as easy as possible. Once you have acquired Ether, it is highly recommended that you withdraw it into a specified wallet of your choosing.
If you live in a country where banking is either restricted or inaccessible, then purchasing Ether with cash might be the best route for you to take. Fortunately, there exists a decentralized marketplace where buying Ether with cash is possible: LocalEthereum.com. This is an anonymous platform where users are able to buy and sell Ethereum by using various types of payment methods, and that includes cash. Those who are selling are verified by phone and email, and those who are buying are able to rate the seller on each trade. This helps to build a trusted profile for any future buyers that may show interest.
There are some who would prefer a more ‘peer to peer’ route when it comes to buying Ether, avoiding KYC and AML and in some instances, purchasing larger quantities. While this activity may be frowned upon – at least depending on your country’s regulators – it is possible to do so through an online peer-to-peer exchange like the aforementioned LocalEthereum.com.
Now that you understand the steps that need to be taken, you can begin the process of purchasing Ether for yourself. Additional research into the subject would certainly be beneficial, but this article is a strong start to the overall procedure.