Essential Steps to Buy Ethereum, and What You Should Know Before Make Investment
Cryptocurrencies have emerged with diversified investment opportunities for investors by providing innovative schemes for generating passive income. Like Bitcoin, Ethereum has also become the center of attraction as it is playing a critical role in creating blockchain applications and Non-Fungible Tokens (NFT). You probably have heard about it and must have noticed it’s the second most popular digital currency after bitcoin as it managed to gain the live market capacity of $352,678,656,766 USD.
In addition to this, you might hear the fact that Ethereum is one of the most fruitful cryptocurrencies that financial advisors suggest entry-level investors invest in and the other is bitcoin as they are more reputable and more developed coins than the other 16,000 currencies circulating in the crypto ecosystem. So, if you are up to making the investment, and are determined to cope with the potential risk, here is what you need to watch for before you get started.
What is Ethereum and How to Buy for Investment?
Before you get started and invest in Ethereum, it’s suggested to have a complete understanding of the cryptocurrencies in which you are looking to invest in. Ethereum has a strong background to back its capabilities including storing the value, but on the other side with technological advancements, some major innovations are happening with Ethereum that further uplift the importance as well as the utility of the coin.
Ethereum blockchain is among the most used distributed ledger that is utilized by the cryptocurrency or blockchain developers to develop applications called decentralized applications (DApps). However, to access or become a part of the network, the programmers are required to buy ether, which is driven by Ethereum. In addition to this, if customers need to use DApps they are mandated to pay in ether only.
Like bitcoin and other cryptocurrencies, you can buy ethereum as an investment, with high hopes that the market price will surge and help to make profits in the long run. Whereas, you also need to have in mind that the cryptocurrency holds volatility which means if the price increases it can also drop at the next point, this particular trend can be seen in short-term investments. Thus, due to the high volatility risk, crypto analysts suggest investing tiny or less than 5% of your funds for investment purposes.
Will ethereum become the next big prophecy to become the next decentralized world’s super computer?
Let’s dive into some steps through which you can buy and invest in Ethereum.
#1 Determine Your Level Of Risk
There is no way of correctly determining the volatility risk associated with the Ethereum, buying it is a gamble. While investing in any assets has its own risks, cryptocurrencies are more prone to price variance. Therefore, you can see ether has had a significant rise in the price and profit return in recent years yet it also has some major price drops. Notably, the price of ethereum went high to EUR 3,000 in May 2021 and suddenly dropped to EUR 1,300 a month later. That’s one of the cases of extreme price volatility. That is why it’s suggested to determine your risk tolerance level. Thus, invest what you can afford to lose.
#2 Choose a Cryptocurrency Exchange
As Ethereum is a decentralized currency, it is not issued by the government or regulatory authority. Therefore, you can not buy Ethereum through an online brokerage house or bank, so you need to choose a digital crypto money exchange or platform. However, there are hundreds of different kinds of exchanges ranging from centralized to decentralized, both having different kinds of opportunities and services.
Since ETH is among the popular coins, almost all the cryptocurrency platforms and exchanges will allow you to buy or invest in ethereum, but financial advisors suggest sticking with the most- popular and well-reputable like Coinlager crypto online exchange, Coinbase, etc. In addition to this, ethereum is one of the coins that you can also buy from payment service providers like PayPal. However, the trading or investing fee charges may vary from exchange to exchange, including the security measures along with customer identification programs. Thus, it’s viable to do your research before picking an exchange.
#3 Fund Your Ethereum Account
To make an account on a cryptocurrency exchange or platform, investors need to input personally identifiable information (PII) like name, ID card number, driving license and any other relevant data in order to verify their true identity. Once the ethereum account has been set up you will be permitted to pair your bank account or digital coin credit card with the exchange’s account in order to top up the account instantly. However, the fee charged would be different according to the service you are going to choose.
In addition to this, making deposits in your account doesn’t mean that you have bought ethereum coins and it’s suggested not to hold fiat currency in your investment account. Thus, at this point to actually invest you need to buy ETH.
#4 Place an Ethereum Order
Once the exchange account has been set up and funded, investors will be applicable of trading their fiat currencies for cryptocurrency. To do so, you need to simply input the amount that you need to invest in ethereum. However, if you are making a small transaction you might get a tiny part of the ethereum coin, the quantity depends on how much money is invested. Whatever amount of ETH you purchase will be represented in the percentage of the entire ethereum coin.
#5 Store Ethereum
If you have made a tiny investment to fulfill your small-term goals, it’s recommended to hold your ethereum in your exchange account or to make it more secure and transfer them into your personal cryptocurrency wallet. However, like digital crypto money, there is a wide range of wallets, based on your requirements you can easily pick that suits you the most.
Should You Invest in Ethereum?
Digital crypto money has a high volatility rate, making it a speculative investment option. However, cryptocurrency investments are not for everyone, they require high-risk tolerance of financial problems or loss before you make an investment. Thus, investing your funds in ethereum has always been worth it, except for those investors who purchase at the top of the bubble. Even then, if they hold the ethereum for the long-term they would still be in profit. However, instead of holding them, trading them with other cryptocurrencies is considered the best strategy for making more profits. In addition to this, having the exceptional capabilities of providing accessibility for investors and assisting them to grow in the long-term ethereum is considered a viable investment option. Therefore, by investing funds in ethereum smartly and trade instead of holding them, you can generate a huge sum of profits.
Also, learn more about the difference between bitcoin and ethereum.