How to Buy Ethereum in 2024 – Beginners Guide

Are you looking to invest in Ethereum (ETH)?

With its proprietary blockchain network, known for its smart contract functionality and decentralized applications, Ethereum has become the second-largest cryptocurrency by market cap (only preceded by Bitcoin).

All this popularity has attracted the attention of a huge number of investors wanting to invest in this coin. With that in mind, we’ve created this guide to help you understand how to buy Ethereum from a crypto exchange.

On top of that, we’ve also included some of the top places where you can buy Ethereum, together with its investment potential. We’ll also look into the safety and legal implications when purchasing Ethereum.

Where to Buy Ethereum – Best ETH Exchanges Reviewed

Since Ethereum is the second-largest asset my market capitalization, it’s supported by some of the best crypto exchanges. However, most crypto exchanges are unregulated – so you need to tread carefully. Moreover, you also need to consider investment fees, account minimums, storage, liquidity, and other important factors.

If you’re wondering what’s the best place to buy Ethereum, then continue reading:

1. Kraken – Competitive Fess With Impressive Security Record

Founded in 2011, Kraken is one of the oldest cryptocurrency exchanges and is trusted by millions of users worldwide. The platform is user friendly and with 246 cryptocurrencies available, appeals to both beginners and experienced investors.

Kraken supports the use of a variety of payment methods for those looking to buy Ethereum. Users can choose from debit and credit card, wire and bank transfers as well as third party providers like Apple and Google Pay.

Crypto purchase fees are competitive. Kraken users can be expected to pay 3.75% for debit card purchases and 1.5% for bank transfers. Trading fees are also hard to beat. The platform uses a maker-taker fee structure that rewards high-volume traders with lower fees.

Kraken provides a range of products and services you would expect to find from the world’s 6th largest crypto exchange by volume. Registered users can trade with spot and leverage, stake their tokens for passive returns and also purchase unique NFTs.

At Kraken, user safety and security are the number one priority. With zero security incidents since its 2011 launch, Kraken is one of the safest places to buy crypto today.

With industry leading standards, 95% of Kraken funds are secured offline in cold storage. What’s more, regular Proof of Reserve audits  ensure deep liquidity is always on hand to support all transactions.

Kraken’s commitment to user security is evident through their ISO/IEC 27001:2013 and SOC2, Type certification and demonstrates the company’s adherence to the highest international security standards.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

2. eToro – Suitable Trading Platform to Buy Ethereum in 2024 

If you’re a complete beginner investing in cryptocurrencies for the first time, eToro is the best place to buy Ethereum. eToro is a user-friendly investment platform that was founded in 2007. It’s used by novice investors who want a simple yet safe place to buy cryptocurrencies.

eToro is a popular exchange used by over 30 million investors worldwide. In terms of the investment process, eToro’s minimum deposit requirement starts from $10. Most investors deposit funds with a debit card or e-wallet, as payments are processed instantly. Although, you can also transfer funds from your bank account—but this increases the minimum to $500.

Once your eToro account has funds, you can then buy Ethereum. The minimum investment is $10 per trade. This means you can buy a small fraction of one Ethereum token – rather than needing to risk over $1,600. eToro also offers a custodial web wallet, where assets are protected by cold storage and analytic behavior machine learning. Your account is also protected by two-factor authentication making it one of the safest ways to buy Ethereum.

Not only is the eToro web wallet safe – but it makes it convenient to sell your Ethereum tokens. At the click of a button, you can cash out your Ethereum investment 24/7 – directly from your web wallet. eToro is also suitable if you want to buy other cryptocurrencies. For example, you can buy Dogecoin, Shiba Inu, Uniswap, Bitcoin, and Litecoin.

If you don’t know which cryptocurrencies are worth buying, eToro has a solution – smart portfolios. It offers several smart portfolios that track the top trending cryptocurrencies, which are automatically rebalanced and reweighted for you. Some smart portfolios contain over a dozen different cryptocurrencies, which is great for diversification.

However, eToro smart portfolios might not be suitable for budget investors, as they come with a $500 minimum. A more affordable option is eToro’s copy trading service. This requires a minimum of $200 and allows you to copy successful investors like-for-like. You can choose an investor based on their average trade duration, past performance, risk rating, maximum drawdown, and other key metrics.

When it comes to fees, eToro charges a flat commission of 1% on cryptocurrencies. That’s $1 for every $100 invested. Although this is more expensive than other crypto exchanges, eToro doesn’t charge deposit fees on deposits in USD, but conversion fees may apply to deposits in other currencies. In contrast, most crypto exchanges charge between 3-5% on debit card and e-wallet payments. For example, Gemini charges 3.49%.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

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3. Binance – 0.1% Trading Commissions and Reasonable Debit/Credit Card Fees  

Binance is one of the best ways to buy Ethereum if your main focus is low fees. That said, Binance’s pricing structure is a bit confusing, as fees vary depending on the payment type, currency, and how to choose to buy Ethereum. For example, if you want to deposit funds in GBP or EUR with a debit/credit card, you’ll pay 1.8%.

Although this is more expensive than eToro, it’s below the industry average. That said, debit/credit card payments in other currencies are charged different fees. For example, ARS deposits cost just 1%, while AUD is more expensive at 2%. Some currencies are charged a flat fee instead – so check out Binance’s fiat fees table. In addition, Binance also charges trading commissions.

If you buy Ethereum via its spot trading exchange, you’ll pay a maximum commission of 0.1%. However, if you opt for the more user-friendly ‘Instant Buy’ option, this costs 0.5%. Commissions are discounted by 25% if you hold BNB tokens in your Binance wallet. However, this likely won’t be an option if you’re investing in cryptocurrencies for the first time.

Binance also offers ways to earn interest on your Ethereum tokens. For example, you can earn APYs of 3.58% when staking Ethereum. Alternatively, you can earn 1.18% when depositing Ethereum into a flexible savings account. That said, you’ll need to consider the safety of your funds before joining Binance. For instance, Binance is currently being sued by the SEC for “placing investors’ assets at significant risk”. What’s more, Binance was hacked in 2022 for a reported $570 million.

4. Bybit – Excellent Derivatives Trading Platform With Low Fees

Bybit is one of the largest derivatives trading platforms with over $60 billion in trading volume within a 24-hour period. This makes Bybit one of the best exchanges to buy Ethereum, and more importantly – trade it.

Buying Ethereum costs 0.1% in fees or less, depending on your trading volume and VIP status. You can also buy ETH coin with a card, Google Pay, and third-party providers like Mercuryo and Banxa. The last few options come with slightly higher fees, but if you want to have your ETH within a minute, it could be worth it.

Investors who aren’t in a hurry can buy Ethereum by making a fiat deposit via bank transfer, which comes with 1% fee. Once you have your funds in your account, buy ETH with 0.1% fees.

Bybit is also an excellent option for traders. Aside from low trading fees, derivatives trading comes with high leverage of up to 100x, which lets you multiply your wins as well as losses. If you want to increase the number of ETH without trading, stake it on the Bybit platform for an APR of up to 7%.

5. KuCoin – Popular Crypto Exchange With no Fiat Deposit Fees

KuCoin is a popular crypto exchange serving more than 30 million users across 200 countries. This may not be the largest exchange by trading volume, but it offers the same features as the largest exchanges.

For example, buying Ethereum on the spot market costs 0.1% or less, depending on your trading volume. However, if you pay your fees with KCS tokens, you get 0.08% trading fees. This could be a game-changer for investors constantly buying and selling Ethereum and other cryptocurrencies.

Other alternatives include buying Ethereum with a card, from a third-party provider like Banxa and Simplex or via peer-to-peer exchange. Fiat deposits have no fees, making it one of the cheapest ways to buy Ethereum.

Once you have your ETH, withdraw it to your cold storage wallet or stake it with KuCoin Earn and get up to 4.6% APR. If you want to start trading, choose between spot trading, derivatives trading with leverage or use trading bots to automate your strategies.

6. PrimeXBT – Multi-Asset CFD Trading Platform 

PrimeXBT is a CFD platform where you can buy cryptocurrencies, including Ethereum, commodities, stock indices and forex. If you want to trade Ethereum, PrimeXBT offers up to 200x leverage, which can help you maximize your gains, but maximize your losses as well.

If you already own Bitcoin or stablecoins, you can deposit directly into your PrimeXBT account and trade them for Ethereum. There’s also a fast option to buy Ethereum with a card via Coinify where you can pay 3.7% in fees or with a SEPA transfer with 2% fees.

Other fiat deposit options include Perfect Money and AdvCash, which only accept US dollar transfers. Once you buy Ethereum, you can hold it or withdraw it to another wallet.

7. MEXC – Pay Zero Commissions on Ethereum Spot Trades

With more than 10 million customers across 170 countries, MEXC is one of the biggest crypto exchanges in the world. Along with Ethereum, investors can trade more than 1,000 cryptos on the MEXC exchange. 

One of the best features of MEXC is its zero-commission trading structure for spot trading cryptos, including Ethereum. For future traders, the fee starts at just 0.02% per transaction. High-risk investors can also apply up to 10x leverage when margin trading Ethereum. 

With this popular exchange, you can use advanced charting indicators to analyze market trends. MEXC uses high-performance mega-transaction matching technology, which supports fast and efficient trading. This top exchange processes up to 1.4 million transactions per second. 

Through the ‘MEXC Savings’ feature, investors can stake ETH and earn up to 4.80% APYs (Annual Percentage Yields). Those looking to diversify their portfolios can access and invest in new projects through the MEXC launchpad. 

MEXC offers 24/7 customer service and uses two-factor authentication and KYC forms to verify users on the platform. You can purchase Ethereum using several payment methods, including global bank transfers, peer-to-peer transfers, and debit and credit cards. 

8. OKX – Low-Cost Trading Exchange Offers Discounts Through its Native Token

The next top cryptocurrency exchange to start trading ETH with is OKX. Launched in 2014, OKX is used by more than 50 million people. 

You can trade ETH and more than 300+ cryptos, paying a starting fee of just 0.1% per transaction. To earn further trading discounts, you can purchase OKB, the native token. Depending on your OKB holdings, the trading fee reduces to as little as 0.08% per transaction. 

OKX also supports passive-income earning opportunities through its ‘Simple Earn’ feature. The platform supports on-chain staking and offers up to 3.89% APYs for Ethereum. While the Ethereum network requires a minimum stake of 32 ETH, you can stake as little as 0.01 ETH with OKX. 

One of the unique features of OKX is that it gives out cryptocurrency loans. Through this mechanism, investors offer a part of their digital assets as collateral and receive crypto-based loans.

Advanced traders can manage sub-accounts with OKX, and also track historical market data using tools such as candlestick patterns, aggregate trades, and order book data. New investors can access educational information and guides through ‘OKX Learn.’ 

OKX supports payments via Neteller, P2P trading, SEPA transfers, and debit/credit cards. 

9. Margex – Trade Ethereum on Leverage with this Crypto Derivatives Platform

On Margex, investors can access derivatives trading on Ethereum and a number of other digital assets. With as little as $10, investors can take out margin trades on Ethereum and apply up to 100x leverage. 

This highly liquid platform executes trades after connecting with over 12 of the top cryptocurrency exchanges. Thus, Margex ensures it is getting the best possible price for investors. 

The platform uses the best bank-grade security standards, ensuring your funds are safe. Furthermore, 100% of all users’ assets are stored in cold storage. Margex deploys MP Shield to avoid price manipulation. This tool protects clients from any drawbacks created by price manipulation. 

Trading derivatives on Margex incurs a fee of 0.06% per transaction. The platform is also developing spot trading features for Ethereum and other cryptos. Beginners can use the copy trading feature and copy the exact trades of skilled investors on the platform. 

Staking mechanisms are also supported on Margex. Payments can be made on Margex using VISA, Mastercard, GPay, PayPal, and ApplePay. 

10. Coinbase – Top Crypto Exchange With Over 100 Million Customers

Coinbase is another top cryptocurrency exchange that lets you purchase Ethereum. Launched in 2012, Coinbase is used by more than 100 million customers across 100 countries. 

Notably, you can trade Ethereum and more than 250 other cryptos with Coinbase. The ETH token can also be staked on Coinbase to generate annual yields. Thus, passive income seekers may benefit by using this crypto exchange. 

Coinbase charges a variable fee when purchasing Ethereum or any other cryptos. For instance, there is only a $0.99 fee when trading under $10. However, the fee for trading between $50 – $200 is $2.99 per transaction. Coinbase also charges a spread fee per transaction. 

This crypto exchange stores 98% of customers’ funds in cold storage, protecting it from any online hacks. Coinbase is also FDIC-insured for balances up to $250,000. For further security, Coinbase makes new users complete a two-factor authentication process. 

With Coinbase Earn, users can now get free crypto tokens by learning more about the crypto and blockchain space. Coinbase recently went public in 2021, listing shares on the US Nasdaq exchange. 

Users can make crypto deposits using multiple payment methods including debit/credit cards, and bank transfers. Debit/credit cards attract an additional 3.99% fee per transaction. 

Offer: Sign up and get up to $200 in crypto¹

Terms: ¹Valid for new users who make a cryptocurrency purchase on Coinbase. Limited while supplies last or Coinbase revokes this incentive at its sole discretion. Coinbase reserves the right to change the terms, eligibility criteria, and payouts for all incentives at any time, for any reason. Void where prohibited or if Coinbase determines that the customer is not eligible for the offer. Terms apply.

What is Ethereum?

Ethereum is both a blockchain network and a cryptocurrency. It was launched in 2015 and is now the second-largest blockchain project by market capitalization. Ethereum shares many similarities with Bitcoin. For instance, Ethereum is a decentralized network, meaning no single entity has control.

Moreover, Ethereum is a digital asset, meaning it only exists in virtual form. And, just like Bitcoin, Ethereum transactions take place on a wallet-to-wallet basis. However, Ethereum offers many benefits over Bitcoin. For a start, Ethereum enables developers to deploy smart contracts. These are virtual agreements that follow a set of rules.

Smart contracts are executed when pre-defined conditions have been met and they’re fully autonomous. Because of this, thousands of other cryptocurrencies have built their projects on the Ethereum network. This is beneficial, as other projects need to pay transaction fees in Ethereum.

Ethereum is also a lot more efficient than Bitcoin. This is because Ethereum now uses the proof-of-stake consensus mechanism. In simple terms, this consumes significantly less energy than Bitcoin’s proof-of-work system. It also ensures faster and more scalable transactions. All that being said, Ethereum does not have a limited supply of tokens like Bitcoin. This means that, unlike Bitcoin, Ethereum is not suited as a store of value.

The Basics of Buying Ethereum

When you buy cryptocurrencies like Ethereum, the investment process is similar to other assets. In a nutshell, you’ll make money if the price of Ethereum increases after you invest. And conversely, you’ll make a loss if you sell Ethereum for less than you originally paid.

Here’s a quick example of how an Ethereum investment works:

• Suppose you buy $1,000 worth of Ethereum. At the time of the investment, Ethereum is trading at $1,600 per token.
• You keep your Ethereum tokens in your exchange web wallet for three years.
• Ethereum is now worth $7,000. When compared to your cost price of $1,600 – that’s an increase of 337.5%
• You decide to cash out. Your initial investment was $1,000 – so with gains of 337.5%, you’ve made a profit of $3,375.
• Including your original investment, you receive $4,375 in total.

Just like stocks, Ethereum’s value increases and decreases based on market forces. However, Ethereum is a lot more volatile than blue-chip stocks, so do bear this in mind. For example, consider that Ethereum was priced at almost $5,000 in November 2021, 7 months later, Ethereum hit lows of just over $1,000. Since then, Ethereum has hit 52-week highs of over $2,100.

Ethereum’s price action is determined by demand and supply. Demand for Ethereum is often high during the bull market. This means more people want to buy Ethereum, which helps drive up its price. During a bear market, there is less interest in Ethereum. As selling pressure increases, so does its value.

Ethereum Use Cases 

Both the Ethereum blockchain and ETH tokens have a clear use case. The Ethereum blockchain enables projects to build decentralized applications (dApps). These dApps utilize smart contracts, which enables them to operate without a centralized authority.

As we mentioned earlier, thousands of dApps currently operate on the Ethereum blockchain. These are called ERC20 tokens. One of the most popular Dapps on the Ethereum blockchain is Decentraland. This is a metaverse project that allows users to socialize and buy virtual plots of land. Each transaction within the Decentraland metaverse requires an Ethereum smart contract.

Now, every time an Ethereum smart contract is deployed, transaction fees need to be paid. The only currency accepted is ETH – the native cryptocurrency of the Ethereum blockchain. Therefore, ETH has a solid use case, as ERC20 projects need it to pay fees. This makes ETH one of the best utility tokens in the market.

How We Ranked the Best Places to Buy Ethereum

Let’s look at how we ranked the best platforms to buy Ethereum.

Safety and Security

Crypto exchanges are centralized platforms – meaning you need to trust that your investments are safe. Unfortunately, there have been many exchange hacks over the past few years. While some exchanges have compensated their users (e.g. Binance), others haven’t.

We’ve also seen large-scale exchanges go bankrupt – such as FTX. Therefore, you should consider the safety of your funds when choosing the best way to buy Ethereum. In our view, the most important safety metric is regulation. And not any regulatory body – we prefer tier-1 licenses from reputable organizations.

For example, if you’re in the US, you’ll want to choose an Ethereum exchange that’s regulated by FINRA. And if you’re based in the UK, your chosen exchange should be regulated by the FCA.

Another safety metric to explore is the security practices employed by the exchange. In other words, what security controls does it have in place to ensure your Ethereum tokens are kept away from hackers?

Some of the security controls to look for include:

• Cold Storage: Leading Ethereum exchanges keep the majority of client-owned cryptocurrencies in ‘cold storage’. These are offline wallets that aren’t at risk of being hacked, as they’re never connected to the internet. Look for exchanges that keep at least 90% of client funds in cold wallets.
• 2FA: Two-factor authentication or 2FA is also important. In addition to your username and password, 2FA requires an additional code when logging in. The 2FA code can only be accessed from your registered smartphone. This offers an additional layer of security on your account.
• Risk Management: The best Ethereum exchanges have risk management teams in place. They are tasked with monitoring transactions and identifying suspicious activities. eToro goes one step further by using analytic behavior machine learning. This makes the risk management process more effective, as it’s completely automated.

Minimum Investment Requirements

After Bitcoin, Ethereum is one of the most expensive cryptocurrencies to buy. Right now, it trades at around $2,900. During the prior bull market, Ethereum was trading at almost $5,000. Because of this, most investors will buy a small fraction of one Ethereum token.

That said, investment minimums will vary depending on your chosen Ethereum exchange. You’ll also need to check what the minimum trade size is. At eToro, you can buy Ethereum for just $10.

Fees

Fees are also important when choosing a place to buy Ethereum. The majority of exchanges make money from payments and trading commissions. As such, you’ll need to check both of these fee types before opening an account.

In terms of payments, eToro offers the cheapest way to buy Ethereum. This is because it only charges 0.5% on debit card and e-wallet deposits. Moreover, there are no fees on payments denominated in US dollars, but payments in other currencies may incur a conversion fee.

However, we also found that eToro charges high commissions. After making a deposit, you’ll pay 1% when buying and selling Ethereum.

As you can see, while some Ethereum exchanges offer low commissions, they charge high deposit fees (and vice versa). But overall, our calculations show that you can buy ETH with the lowest fees with eToro. Especially if you’re planning to buy Ethereum with a debit card or e-wallet – even when factoring in the 1% trading commission.

User-Friendliness

If you’re buying Ethereum for the first time, then you’ll need to choose a user-friendly exchange. The process of opening an account, depositing funds, and buying Ethereum should be seamless.

The most beginner-friendly exchanges is eToro. You simply need to type in how much Ethereum you want to buy and confirm the investment.

Binance is more suited for experienced traders, considering the tools on offer. For example, it offers cryptocurrency derivatives, margin accounts, and high-level charting tools.

Supported Cryptocurrencies

In addition to Ethereum, there are thousands of other cryptocurrencies in the market. Some of these cryptocurrencies actually operate on the Ethereum blockchain – they’re called ERC20 tokens. An example of ERC20 tokens are Uniswap, Shiba Inu, Chainlink, and Tether.

However, there are also cryptocurrencies with their own blockchain networks, such as BNB, Bitcoin, Cardano, and Solana.

This enables you to create a diversified portfolio. Not only will this reduce your exposure to Ethereum but you might generate higher gains with other cryptocurrencies. As such, when choosing the best place to buy Ethereum, consider what other cryptocurrency markets it supports.

For example, Binance supports 350 supported markets.

Accepted Payment Methods

Make sure your preferred payment method is supported when exploring Ethereum exchanges. The easiest and safest way to buy Ethereum is with a debit/credit card or e-wallet. However, these payment methods often come with a 3-5% fee – so check this before proceeding.

If your chosen exchange uses a third party to process payments, you might pay even more. MoonPay and Simplex, for example, are notorious for charging high fees.

If you prefer using a bank account to deposit funds, you’ll usually find this is fee-free.

Investment Tools

Some investors are happy buying and selling cryptocurrencies on a DIY basis. In this instance, it’s worth choosing an Ethereum exchange that offers research and analysis tools. For example, financial news, real-time pricing charts, indicators, and market insights.

On the flip side, some investors prefer to take a hands-off approach. If this sounds like you, eToro’s crypto smart portfolios might be of interest. Not only do smart portfolios allow you to diversify but they’re professionally managed by the eToro team. Therefore, your portfolio will automatically be rebalanced.

For example, the ‘Crypto Equal’ smart portfolio contains 21 cryptocurrencies. In addition to Ethereum, this includes Chainlink, Bitcoin, Solana, Stellar, XRP, TRON, and Litecoin. This smart portfolio has grown by 452% since its inception in 2017.

Another investment tool to look for is staking. This allows you to generate passive income on your Ethereum holdings. Staking also helps keep the Ethereum network secure. Binance is a popular option for staking Ethereum, as APYs are competitive at 3.58%.

Wallet Storage

Some investors will buy Ethereum and withdraw their tokens to a private wallet. Some of the best crypto wallets are MetaMask, Trust Wallet, and Exodus.

However, beginners prefer to keep their Ethereum tokens with the exchange they purchased them from. This is similar to keeping shares in your stock brokerage account.

Most crypto exchanges have an in-built web wallet. This is where your Ethereum tokens will be stored until you decide to cash out.

As web wallets are custodial, you won’t have access to their private keys. This is because the exchange is responsible for safeguarding the wallet.

eToro offers safe web wallets that come with many security controls – such as two-factor authentication and cold storage.

Is Ethereum a Good Investment?

If you’re exploring how to buy Ethereum, you’re likely doing so for investment reasons. In this section, we discuss Ethereum’s investment thesis – allowing you to make an informed decision.

Ethereum is One of the Best-Performing Assets of All Time

Not only is Ethereum one of the best-performing cryptocurrencies of all time – but of any asset class. To illustrate Ethereum’s unprecedented growth, we need to go right back to the beginning.

Before the Ethereum network was launched in 2015, it held an initial coin offering (ICO). ICOs enable investors to buy a new cryptocurrency before it launches. According to CoinCodex, Ethereum’s ICO raised $18.3 million. Each ETH token was sold for just $0.31. After the ICO, Ethereum was then launched on crypto exchanges. This enables investors to buy and sell Ethereum in the open market.

Although Ethereum went through many ups and downs, its value increased exponentially over time. Ethereum hit an all-time high of $4,891.70 in November 2021, as per CoinMarketCap data. When compared to its ICO price of $0.31 – that’s an increase of 15,779x. So, if you invested just $100 in Ethereum’s ICO, your investment would have been worth $1,577,900 at its peak.

Ethereum Trades at a 65% Discount From Its All-Time High

Since hitting an all-time high of $4,891.70 in November 2021, Ethereum has entered a bear market. Not just Ethereum, but the majority of the cryptocurrency industry. In simple terms, bear markets occur when cryptocurrency prices decline for extended periods of time. They can last more than a year, just like stock bear markets.

However, bear markets also present new buying opportunities. This is because you can build a portfolio of leading cheap cryptocurrencies. For example, Ethereum is now trading at approximately $1,600. When compared to its all-time high, this represents a 65% discount.

Another way to look at bear market discounts is that you’ll be getting more Ethereum tokens for your money. For example, suppose you invested $5,000 in Ethereum at its peak – you would have got just over 1 ETH token. Investing $5,000 at current prices will get you about 3.1 ETH. In other words, you’re getting three times as many ETH tokens at current prices.

Superb Utility Creates Constant Demand for ETH

Ethereum is one of the best cryptocurrency projects for utility. This is because ERC20 tokens operating on Ethereum must pay transaction fees in ETH.  According to BitPay, more than 450,000 ERC20 tokens have been created. However, only a small fraction of these are established, well-known projects.

Nonetheless, each new project that builds on Ethereum increases demand for ETH tokens. Depending on the project, this can generate a significant amount of demand. Take Uniswap as a prime example. Uniswap is a decentralized exchange built on the Ethereum blockchain.

It enables users to swap ERC20 tokens without using a centralized platform. Instead, Uniswap uses Ethereum smart contracts. Now, every time a user swaps a token – this generates a new smart contract agreement. In turn, the user must pay fees in ETH. This is the case even though Uniswap has its own native token, UNI.

Uniswap is just one example of a project that runs on the Ethereum network. In addition to decentralized exchanges, Ethereum also handles play-to-earn games, metaverses, trading platforms, stablecoins, meme coins, and much more. Irrespective of the project, all require ETH tokens to function.

De-Facto Network for NFT Minting and Ownership

Not only is the Ethereum blockchain popular with dApps – but NFT projects too. Non-fungible tokens, or NFTs, are a huge growth market. According to the Vanderbilt Business School, the number of unique NFT traders increased from 8,000 in 2019 to 1.15 million in 2021. That’s an increase of 14,275% in just two years. Moreover, total NFT sales in 2022 were over $11.8 billion.

Crucially, the overwhelming majority of NFTs are minted and stored on the Ethereum blockchain. Just like smart contracts, each NFT mint requires a transaction fee – payable in ETH. Although NFT sales have dropped in 2023, this aligns with the broader bear market. Therefore, as interest in NFTs returns in the near future, this will create further demand for ETH tokens.

There Isn’t a Requirement to Buy an Ethereum Token in Full

Like all cryptocurrencies, Ethereum can be fractionized into small units. This is ideal for beginners, as there isn’t a requirement to purchase a full token. After all, this will currently set you back over $1,600. At its peak, a full Ethereum token would have cost almost $5,000.

Here’s how it works:

• Suppose that you invest $100 in Ethereum.
• Based on a current price of $1,600, this means you own 0.0625 ETH.
• Let’s say that over the next few years, Ethereum will increase to $9,000.
• Based on your 0.0625 ETH ownership, your investment is now worth $562.50.

Crucially, investment growth works the same whether you own a full ETH token or just a small fraction. Your total investment is simply multiplied by Ethereum’s percentage growth.

What is the Cheapest Way to Buy Ethereum?

If you’re looking for the cheapest way to buy Ethereum, you’ll need to use a crypto exchange that offers low fees. Not only low trading commissions but payment fees too. The majority of first-time investors will use a standard payment method – such as a debit card.

Based on the five exchanges we reviewed earlier, here’s what each charges when using a debit card:

• eToro: 0% on USD deposits—conversion fees may apply to deposits in other currencies.
• Binance: Fees vary depending on the currency. GBP and EUR payments cost 1.8%. AUD costs 2%.

As per the above exchanges, debit card payments can range from 0% to 4%.

Next, you’ll need to consider the trading commission. Once again, this can vary widely from one exchange to the next. For example, eToro charges 1%.

Binance charges 0.1% per transaction. Overall, when factoring in deposit fees and commissions, eToro comes out as the least expensive option. For example, suppose you deposit $2,000. No fees apply to USD payments—but conversion fees may apply to deposits in other currencies. Then, you use that $2,000 to buy Ethereum. You pay a 1% commission, so that’s $20.

Is Investing in Ethereum Safe & Legal?

It’s wise to consider the safety and legality of investing in Ethereum before proceeding.

Put simply, Ethereum is legal in the majority of jurisdictions – just like other cryptocurrencies. There are a few exceptions, such as China, Morocco, and Bangladesh – but this is a wider ban on cryptocurrencies rather than Ethereum.

However, there are additional regulatory risks to consider. For example, if the SEC defines Ethereum as a security, this could have major implications. This is because crypto exchanges would need to register with the SEC as security broker-dealers – which isn’t an overnight process.

That said, many believe that Ethereum’s decentralization protects it from being viewed as a security. In terms of safety, Ethereum is one of the more volatile assets, so you’ll need to consider the risk of financial loss. If the price of Ethereum drops below what you paid – and you sell, you’ll get back less than you originally invested.

You’ll also need to ensure your Ethereum tokens are being stored safely. If you keep them with an exchange, make sure it’s regulated and has robust security controls. If you’re using a private wallet, make sure you understand the risks of remote hacking attempts.

Which is the Best Ethereum Wallet?

Choosing the right Ethereum wallet is very important. You’ll need to strike the ideal balance between user-friendliness, security, and convenience. The best Ethereum wallet for you will depend on your experience, investment goals, and the amount of ETH you’re holding.

For example, if you’re buying a large amount of Ethereum,  a hardware wallet might be the best option. Providers like Trezor and Ledger Nano offer hardware wallets that always remain offline. This prevents your ETH tokens from being hacked remotely. Moreover, hardware wallets require a PIN when transferring funds.

This needs to be entered on the wallet device itself. This means you’re protected even if the hardware wallet is stolen. However, hardware wallets aren’t suitable for active traders. This is because you’ll need to have access to your wallet to make a transfer.

If you’re investing smaller amounts – or you plan to trade frequently, eToro’s web wallet is a good option. You can access your Ethereum tokens simply by logging into your eToro account. You can do this on a desktop or mobile device for added convenience.

Keeping your Ethereum tokens in eToro’s web wallet also makes it faster to cash out. Simply create a sell order to instantly convert ETH to cash. eToro’s web wallet is also safe, as the majority of client-owned cryptocurrencies are kept in cold storage – meaning they’re not prone to hacking attempts.

How to Buy Ethereum – Detailed Tutorial

Still, wondering what’s the safest way to buy Ethereum? Read on to find out how to buy Ethereum on Kraken in less than five minutes:

Step 1: Open a Kraken Account

You’ll first need to open a Kraken account. Visit the Kraken website and click on the ‘Sign up’ button. Provide your email and use a unique password.

Step 2: Upload KYC Documents

Kraken will require you to complete the KYC procedure. This means you’ll need to verify your identity. Kraken accepts passports and driver’s licenses for the proof of identity. State ID cards are also accepted.

Step 3: Deposit Funds 

You’ll now be asked to make a deposit. Kraken accepts USD, EUR, and GBP deposits via bank transfers.

Those who want to instantly buy ETH, can use a direct purchase with a card.

Step 4: Buy Ethereum 

To buy ETH instantly with a card, go to the “Explore” tab in your account and search “Ethereum”. Select the buy button.

Enter the amount you wish to spend and the order type: buy now, buy at a select price, or make recurring purchases.

Add your card as a payment method. Review the order and confirm the order.

If you want to make a bank deposit, which comes with lower fees overall, deposit the funds by going to the “Transfer” tab and using the information provided by Kraken.

Select the same buy option when your funds clear. When the same pop up appears, select the “Convert” tab and swap your fiat currency for ETH.

Step 6: Sell Ethereum 

Use the same section to sell your ETH. Select “Sell” and enter the amount you wish to sell. Review and confirm the order.

Conclusion

In conclusion, it’s evident that knowing how to buy Ethereum (ETH) is essential for investors who are looking to tap into its potential. By comparing different platforms for purchasing ETH, you can easily decide what works for you and begin your Ethereum investment process.

Kraken is our top pick as the best place to invest in ETH tokens. Kraken accepts many convenient payment methods; the signup and investment process takes minutes.

References

• https://asic.gov.au/regulatory-resources/financial-services/complying-with-the-asic-client-money-reporting-rules-2017/
• https://www.finra.org/rules-guidance/key-topics/aml
• https://www.swift.com/your-needs/financial-crime-cyber-security/know-your-customer-kyc/kyc-process
• https://www.sec.gov/news/press-release/2023-25
• https://www.theguardian.com/business/2023/jun/05/binance-sued-sec-cryptocurrency-accused-mishandling-funds
• https://www.nytimes.com/2022/10/07/business/binance-hack.html
• https://www.cnbc.com/2022/11/09/binances-rescue-of-ftx-shows-no-crypto-company-is-too-big-to-fail.html
• https://ethereum.org/en/developers/docs/standards/tokens/erc-20/
• https://techcrunch.com/2022/09/15/ethereum-switches-to-proof-of-stake-consensus-after-completing-the-merge/
• https://www.ibm.com/topics/smart-contracts
• https://coinmarketcap.com/currencies/ethereum/
• https://business.vanderbilt.edu/news/2022/09/28/is-media-hype-behind-the-nft-market-growth
• https://www.statista.com/statistics/1299636/sales-value-art-and-collectibles-nfts-worldwide/
• https://www.sec.gov/about/reports-publications/investor-publications/guide-broker-dealer-registration
• https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-ethereum-price-prediction-118k-by-2030/ethereum-price-prediction-118k-by-2030.pdf

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Kane Pepi

Editor

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Kane Pepi

Editor

Kane Pepi is an accomplished financial and cryptocurrency writer who has an extensive portfolio of over 2,000 articles, guides, and market insights. With his expertise in specialized subjects such as asset valuation and analysis, portfolio management, and financial crime prevention, Kane has built a reputation for providing clear explanations of complex financial topics. He holds a Bachelor's Degree in Finance and a Master's Degree in Financial Crime, and is currently pursuing his Doctorate degree, which focuses on investigating the complexities of money laundering in the cryptocurrency and blockchain technology sectors. Kane's wealth of knowledge and experience in the field make…

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