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You may have heard of Ethereum due to the role it plays in creating NFTs (non-fungible tokens). Or maybe you’ve noticed that it’s the second most popular cryptocurrency and want to get in on the action.
Either way, Ethereum is one of two cryptocurrencies that investment experts recommend newbies to stick with (the other being Bitcoin), as it is more established than other lesser-known cryptos. . So if you’ve decided that cryptocurrency has a place in your wallet, accept the risks, and are ready to buy some, here’s where to start.
BEFORE INVESTING IN CRYPTO
Experts say it’s smart to keep your crypto investments under 5% of your overall portfolio. Crypto prices fluctuate wildly from day to day, and experts also say it would be wise not to invest more than what you would be willing to lose if the market collapsed completely. Crypto investments should also never get in the way of other financial priorities such as 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 a price history to support its potential as a store of value, but there is also an interesting innovation with Ethereum that highlights the coin’s usefulness.
[READ MORE]: What is Ethereum
The Ethereum blockchain can be used by developers to create applications, called decentralized applications (aka DApps). To access this network, developers must purchase the token associated with Ethereum, Ether (ETH). Likewise, if users want to interact with a decentralized application, they have to 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 rise in the long term. But as with any cryptocurrency investment, the price of ether is likely to experience many ups and downs, especially in the short term. This volatility is why investment experts recommend keeping all cryptocurrency investments below 5% of your total portfolio and only investing what you are willing to lose.
What is Ethereum worth?
Ethereum was launched in 2018 and its all-time high is over $ 4,000 in May of this year. Over the past year, its price has fluctuated between around $ 300 and $ 4,000 per coin.
Like most cryptocurrencies, the price of Ethereum fluctuates a lot. Price fluctuation should be anticipated with any crypto investment. If you are bothered by short-term price fluctuations, you might be better off reconsidering your cryptocurrency investment.
It’s also important to remember that Ethereum – like any cryptocurrency – is only valuable because people think it is. Its price is not tied to any commodity or currency, so it is subject to intense fluctuations depending on external factors such as media attention or proposed crypto regulations.
How to buy Ethereum
1. Choose a cryptocurrency exchange
You cannot buy cryptocurrency through a bank or online brokerage firm like Fidelity or Vanguard, so you will need 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 allow you to buy Ether, but we recommend that you stick with a few of the more popular exchanges like Coinbase, Gemini, or eToro. . Ethereum is also one of the few types of crypto that you can buy on platforms like Venmo or PayPal. Different platforms come with fees, security measures, and may include other features. So it’s a good idea to do your research before signing up.
2. Fund your account
You will likely need to provide some personal information and verify your identity to sign up for an account with a crypto exchange. Then you can connect your bank account or debit card to fund your account. There will likely be some fee differences depending on which method you choose.
Funding your account doesn’t mean you’ve actually bought Ethereum, and like any investment account, you don’t want to leave your uninvested money in your account. To actually invest, you will need to buy Ethereum at this point.
3. Place an order for Ethereum
Once your account is funded, you will be able to exchange your US dollars for Ethereum. Just indicate the amount in USD that you want to exchange for Ethereum. You will likely buy Ethereum single coin stocks, depending on the price of Ethereum and how much you want to buy. Whatever amount you buy will be displayed as a percentage of a total Ether Coin.
4. Store your Ethereum
If you only have a small amount of crypto, it’s easier to leave your investment in your exchange account. But a digital wallet can offer more security if you want to move your holdings to more secure storage. There are many types of digital wallets and they offer different levels of security.
[READ MORE]: A crypto wallet can help you keep your coins safe. Here’s how to decide if you need it)
Should you invest in Ethereum?
Cryptocurrency is a highly volatile speculative investment. It’s not for everyone and you need to make sure you have enough tolerance for risk before investing. If you decide that cryptocurrency is right for you, experts recommend sticking with the two most well-known cryptos, namely Bitcoin and Ethereum.
Make sure to keep any investment within 5% of your total portfolio, only invest what you would be willing to lose in the end, and never at the expense of other financial goals like paying down debt. or saving for retirement.
Even though experts recommend sticking with well-known coins like Ethereum, that doesn’t negate the risk associated with investing. Cryptocurrency is a new asset class and no long term data is available to prove its long term performance. If this risk is too great for you, go for a safer long-term investment like a classic index fund through a conventional retirement account like an IRA or 401 (k).
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