How to Buy Ethereum, and What You Should Know Before You Invest

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You may have heard of Ethereum because of the role it plays in the creation of NFTs (non-fungible tokens). Or perhaps you’ve noticed it’s the second-most popular cryptocurrency, and want to get in on the action.

Either way, Ethereum is one of two cryptocurrencies that investing experts recommend beginners stick to (the other being Bitcoin), because it’s more-established than other lesser-known cryptos. So if you’ve decided that cryptocurrency has a place in your portfolio, are OK with the risks, and are ready to buy some, here’s where to start.

BEFORE YOU INVEST IN CRYPTO Experts say it’s smart to keep your crypto investments under 5% of your overall portfolio. Crypto prices fluctuate wildly by the day, and experts also say you’d be smart not to invest more than you’d be OK losing if the market dropped out altogether. Crypto investments should also never get in the way of other financial priorities like saving for emergencies, paying off high-interest debt, and saving for retirement using more conventional investment strategies.

What is Ethereum?

Before you start buying coins, it’s important to understand exactly what you’re investing in. Ethereum has price history to support its potential as a store of value, but there’s also interesting innovation happening with Ethereum that highlights the coin’s utility.

[READ MORE]: What Is Ethereum

The Ethereum blockchain can be used by developers to create applications, known as decentralized applications (aka DApps). In order to access that network, developers need to buy Ethereum’s associated token, ether (ETH). Similarly, if users wish to interact with a decentralized application, they must pay in ether.

Like Bitcoin, investors can buy and hold ether as a long-term investment, with the hope that its value will continue to increase over the long-term. But as with any cryptocurrency investment, the price of ether is likely to see plenty of ups and downs, especially in the short-term. This volatility is why investing experts recommend keeping any cryptocurrency investments to less than 5% of your total portfolio and to only invest what you’re OK with losing.

What Is Ethereum Worth?

Ethereum launched in 2018, and its all-time high is over $4,000 in May of this year. In the past year its price has fluctuated between around $300 and $4,000 per coin.

Like most cryptocurrencies, Ethereum’s price fluctuates a lot. Price fluctuation should be anticipated with any crypto investment. If near-term price fluctuations bother you, you might be better off reconsidering investing in cryptocurrency at all.

It’s also important to remember that Ethereum — like any cryptocurrency — only has value because people think it does. Its price is not tied to any commodity or currency, so it’s prone to intense swings based on external factors like media attention or proposed crypto regulation.

How to Buy Ethereum

  1. Choose a Cryptocurrency Exchange

You can’t purchase cryptocurrency through a bank or an online brokerage like Fidelity or Vanguard, so you’ll have to use a cryptocurrency trading platform. There are a ton of cryptocurrency exchanges out there, ranging from easy-to-use systems to complex dashboards for advanced traders.

Since Ethereum is so popular, most cryptocurrency exchanges will let you buy ether, but we recommend sticking to a few of the more-popular exchanges like Coinbase, Gemini, or eToro. Ethereum is also one of the few types of crypto you can buy on platforms like Venmo or PayPal. Different platforms come with different fees, security measures, and may include other features, so it’s a good idea to do some research before you sign up.

  1. Fund Your Account

You’ll likely need to provide some personal information and verify your identity to sign up for an account with a crypto exchange. Then you’ll be able to connect your bank account or debit card to fund your account. There will likely be fee differences based on the method you choose.

Funding your account doesn’t mean you’ve actually purchased Ethereum yet, and like with any investment account you don’t want to leave your uninvested money sitting in your account. To actually invest, you’ll need to purchase Ethereum at this point.

  1. Place an Order for Ethereum

After your account is funded, you’ll be able to trade your U.S. dollars for Ethereum. Simply put in the amount of USD you’d like to trade for Ethereum. You will likely be buying shares of a single Ethereum coin, depending on Ethereum’s price and how much you want to purchase. Whatever amount you purchase will be shown as a percentage of a total ether coin.

  1. Store Your Ethereum

If you only have a small amount of crypto, it’s easiest to leave your investment in your exchange account. But a digital wallet can offer more security if you want to move your holding to more secure storage. There are many different types of digital wallets, and they offer different levels of security.

[READ MORE]: A Crypto Wallet Can Help Keep Your Coins Safe. Here’s How to Decide If You Need One)

Should You Invest in Ethereum?

Cryptocurrency is a highly volatile, speculative investment. It’s not for everyone, and you should make sure you have enough risk tolerance before you invest. If you decide cryptocurrency is right for you, then experts recommend sticking with two most well-known cryptos, which are Bitcoin and Ethereum.

Make sure you keep any investment to less than 5% of your total portfolio, only invest what you would ultimately be OK with losing, and never at the expense of any other financial goals like paying off debt or saving for retirement.

Even though experts recommend sticking with well-known coins like Ethereum, that doesn’t negate the risk associated with the investment. Cryptocurrency is a new asset class, and there’s no long-term data available to prove how it performs in the long-run. If this risk is too much for you, stick with a safer, long-term investment like a classic index fund through a conventional retirement account like an IRA or 401(k).

Why Bitcoin, Ethereum, and Dogecoin All Fell This Week

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What happened

Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH), and Dogecoin (CRYPTO:DOGE) are down 9.38%, 14.56%, and 17.44% respectively in the past seven days as of 9:00 a.m. EDT. They are now trading at $46,000.54, $3,378.97, and $0.2479 per coin respectively. After a record bull recovery, cryptocurrencies are witnessing significant fatigue amid more regulatory scrutiny, internal strife, and “altcoin rotation,” which is similar to sector rotation for stocks.

So what

When Bitcoin’s market cap approached $1 trillion, both governor Stefan Ingves of Riksbank (Central Bank) Sweden and governor Alejandro Diaz of Bank of Mexico criticized the currency as a stable medium of exchange, citing its significant trading volatility.

As for Ethereum, the coin is witnessing a low-scale “civil war” after the network became increasingly unfriendly to miners due to co-founder Vitalik Buterin’s desire to reducing its energy consumption. Out of a total of around 9,000 Ethereum nodes, or computers running software to keep the public ledger in order, 6,500 have disappeared from the network in the past two weeks. They’ve likely hard-forked and migrated to a new chain along with a subset of dissatisfied miners.

Lastly, Dogecoin is facing a great deal of uncertainty after the chairman of the U.K.’s Financial Conduct Authority, Charles Randell, targeted celebrity influencers such as Kim Kardashian for promoting high-risk altcoins that could very well turn out to be scams. Dogecoin is one of the most heavily promoted altcoins out there, touted by celebrities such as Tesla’s CEO, Elon Musk, and the billionaire owner of the Dallas Mavericks, Mark Cuban. What’s more, a meme competitor coin called Wifedoge seems to have diverted investors' attention of late with its sudden rise.

Finally, keep in mind that investors have been pulling funds out of major cryptocurrencies all week to participate in the Solana (CRYPTO:SOL) mania. The decentralized applications token has risen to around $200 apiece from roughly $1.50 at the beginning of the year.

Now what

The overall market cap of cryptocurrencies has nearly doubled since their nadir in May and is long due for a pullback. Even though blockchain innovations, such as the decentralized finance space, are rapidly gaining traction and may grow to as much as $800 billion next year, it can take quite some time for the market to take off again. So consider buying the dip in the meantime.

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In this article:

Shares of crypto-related stocks, including Marathon Digital Holdings Inc (NASDAQ: MARA), Riot Blockchain Inc (NASDAQ: RIOT) and Bit Digital, Inc. (NASDAQ: BTBT) are trading higher amid an increase in the price of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).

Bitcoin is trading 2% higher at around $46,791.80 on Thursday.

Ethereum is trading 3.6% higher at around $3,509 on Thursday.

Marathon Digital shares are also trading higher after the company announced DMG Blockchain will join Marathon’s mining pool, MaraPool.

Marathon Digital focuses on mining digital assets. It owns crypto-currency mining machines and a data center to mine digital assets. The company operates in the digital currency blockchain segment and its cryptocurrency machines are located in Canada.

Marathon Digital is trading higher by 6.8% at $39.82 per share.

Riot Blockchain is focused on building, supporting and operating blockchain technologies. The company’s portfolio consists of Verady, Tesspay, Coinsquare and others.

Riot Blockchain is trading higher by 4.2% at $31.65 per share.

Bit Digital, Inc. engages in the bitcoin mining business. The company was formerly known as Golden Bull Limited and changed its name to Bit Digital, Inc. in September 2020.

Bit Digital is trading higher by 2.7% at $11.38 per share.

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