How to Invest in Ethereum

If you had bought in at its high, you’d be sitting with half that value just a month later. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.

How to Invest in Ethereum

Instead of buying ETH in one sitting, you can buy some periodically, such as every month or week, in smaller quantities. This strategy helps in offsetting the negative impact of short-term market volatility, making it suitable for high-conviction investors. However, the upsurge in DeFi and NFT applications has aggravated Ethereum’s long-time Achilles heel – scaling – which the protocol has struggled to massively improve ever since Crypto Kitties exposed this in 2017. Ethereum’s EIP1559 upgrade, which “burns” ETH (see here), will also help to control the issuance of ETH and its scarcity.

Store Your Ethereum

In most cases, you’ll deposit money from a bank account, like your personal checking or savings account. You can also generally complete wire transfers, use a debit card or deposit money from PayPal. While competing layer-1 chains are sprouting up in all directions and growing their How to Invest in Ethereum users, this hasn’t stopped Ethereum from continuing to dominate the smart contract market with tokens, dapps and NFTs. Mining ETH is the process of contributing your computing power to help validate transactions in Ethereum’s proof-of-work (PoW) network in return for ETH rewards.

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What’s more, historically exchanges that have been hacked have reimbursed any losses. A major advantage of using an exchange is that once you’ve purchased your ETH, you may also be able to store it in a crypto savings account to earn yield, which is an easy and convenient way to passively grow your investment. Cryptocurrency exchanges are the gateway to the crypto-economy and one of the easiest ways to purchase and hold Ethereum. They essentially combine the features of a trading platform and a crypto-bank, allowing you to buy, sell and trade cryptocurrencies as well as access crypto-financial services like lending, borrowing and payments.

Determine Your Level of Risk

If privacy is highly important to you, then this is one of the few options remaining to purchase ETH anonymously. Most exchanges are accessible to all experience levels and the experience is similar to purchasing stocks, ETFs and other assets. If you’ve never invested before and are looking for the most beginner-friendly experience possible, consider an exchange like Coinbase or Gemini which are tailored towards beginners. If you’ve got a bit of investing experience under your belt already, then consider Binance US, KuCoin which will offer you additional features and more advanced trading options. ETH is the native cryptocurrency of the Ethereum ecosystem and is used to pay for transactions on the network, similar to paying a toll for using a road. Furthermore, a small amount of ETH is destroyed with every transaction, which should make ETH more scarce and valuable over time as the supply reduces and demand increases.

Obviously, both of these are very different, which means you need to thoroughly research exactly what it is you’re buying when you purchase an Ethereum-based ETF. Ether (ETH) is the second-largest cryptocurrency by market cap and is the native asset of the Ethereum blockchain and economy. While part of the same product, ETH and Ethereum are distinctly different – Ethereum is a blockchain network, and ETH is the currency used on that network.

How to Sell Ethereum

Ethereum is extremely popular, with over 116 billion coins currently in investors’ hands. But just because it’s one of the more well-known cryptocurrencies doesn’t mean it’s right for you. That’s why it’s important to consider your risk tolerance along with the diversity and stability of the rest of your investment portfolio before buying Ether.

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