This guide will explain to you the safest way to buy Ethereum by using a hardware wallet in three simple steps.
Cryptocurrencies like Ethereum are quite new and witnessed a bumpy ride during the past decade. Also, this very young asset class is loved and hated by many crypto investors at the same time. For instance, the first ICO on its platform(2016) which was called the DAO ended up in tears for most of the investors. Despite this false start, this decentralized blockchain network continued to grow at a very fast pace. As a result, the Ethereum project is the second-largest blockchain project in the world estimated at 19 Billion USD(Coinmarketcap) at the time of writing.
In the first place, if you are a starting investor or trader in this industry it is good to know that buying Ethereum comes with risk. In addition, the entire industry is full of growth and innovation, however, lack of regulation and being in its infancy could easily turn a freshly started project into failure. So far, the Ethereum project did very well and many insiders compare this project to an already flying plane that is being improved at the same time.
A quick summary: What is Ethereum
Before getting into details about how and where to buy Ethereum safe, first I want to refresh our minds and explain Ethereum more. So how did it all get started?
Back in 2015, a very young developer called Vitalik Buterin launched the first version of its software into production. Additionally, Ethereum is based upon open-source software and the place to check this software is Github.
Bitcoin, being the first blockchain project in the world, has its main use case focused upon digital currency. Moreover, with Ethereum being introduced a few years later, this project aims to be a programmable blockchain project and introduced smart contracts. In other words, where Bitcoin is ‘just’ an online digital currency Ethereum uses smart contracts to solve many digital problems in a decentralized way. A good example of a smart contract or Dapp on Ethereum is BetBox. Moreover, this decentralized online gambling application uses smart-contracts to handle disputes and removes the need for an expensive third party.
Ethereum Video: Ethereums Blockchain
Why does Ethereum need a currency?
Like other blockchains, Ethereum has a native cryptocurrency called Ether(ETH). Moreover, ETH is called digital money just like Bitcoin(BTC). Ethereum and Bitcoin are typical decentralized networks, that use miners to validate transactions that are being stored in a public ledger(blockchain). In addition, for validating the transactions the miners are rewarded in cryptocurrency(ETH). Furthermore, all participants on this network whether miners, Dapps, or end-users need cryptocurrency to make transactions happen. Besides, when there is no central authority to settle transactions, the miners use a hashing algorithm(PoW) to create blocks. In general, every miner who creates a new block in the blockchain is rewarded in cryptocurrency(ETH).
Safest way to buy Ethereum in Three Steps
To purchase Ethereum cryptocurrency which is called ETH you can do it several cryptocurrency exchanges all over the world nowadays. However, as explained above, the industry still in its infancy and that also goes for several cryptocurrency exchanges out there. A good example is the sudden death of the owner of a Canadian exchange called Quadriga. Additionally, more than 100,000 cryptocurrency investors lost all their funds overnight because they didn’t own their private keys.
In fact, the Quadriga example is no exception. Similarly, in the past 10 years, almost 100 centralized cryptocurrency exchanges suffered from hacks leaving their clients in the dust. Is there a way to avoid this risk? The answer is yes. Next in this article, I’ll show you the steps to take to be as safe as possible and still don’t have to miss out on possible double-digit gains of Ethereum(ETH) cryptocurrency.
Step 1: Purchase a hardware wallet
Before starting to buy Ethereum(ETH) at a cryptocurrency exchange, you have to take a step back. If you really want to own your cryptocurrency then you need to have full control over your private keys. Meaning, if you buy a cryptocurrency at an exchange and leave it there you don’t really own it, because the exchange will control your private keys. Also, one of the main reasons cryptocurrencies came into existence is the fact that you are in full control over your digital money. For example, a famous slogan Bitcoin fanatics use is ‘be your own bank’ and refers to be in full control over your money.
Cryptocurrency wallet, private key, and public keys
How to be in full control over your private keys? The answer is very simple. You can use a cryptocurrency wallet which is very easy to setup. In fact, setting up a wallet is no different from getting a new e-mail address and requires no extra identification. Also, sending and receiving crypto is very straightforward and one can use a public key for that. In general, a public key is a long string of characters that cryptocurrency users share with each other to send cryptocurrency.
Finally, it is very important to know that your private keys should be kept secret and you should never share it online! Additionally, you only share your public key to send or receive cryptocurrency.
|If you don’t know the concept of a private key yet, I’ll advise you to read our article we wrote about Bitcoin seed phrase. Additionally, it will go into further detail about the concept of the private key and why it is important.|
What is a hardware wallet?
The safest way to buy Ethereum is to store your crypto on a hardware wallet. So why do you need a hardware wallet? First, let me explain what a hardware wallet exactly is. To keep your private key safe, there are currently two options: software wallets and hardware wallets. The definition of a hardware wallet :
A hardware wallet is a special type of cryptocurrency wallet which stores the user’s private keys in a secure hardware device. They have major advantages over standard software wallets: private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext.
In other words, a hardware wallet stores your private keys offline on a device that is disconnected from the internet.
To keep your Ethereum private keys safe I’ll advise you to use the Ledger Nano hardware devices. Below an example of Ledger Nano X.
Step 2: Buy Ethereum at Coinbase
The safest way to purchase Ethereum is at Coinbase. Why Coinbase? Coinbase is one of the biggest and most popular exchanges in the world based upon daily trading volumes which makes them very reliable. Furthermore, it’s a US-based cryptocurrency exchange but they deliver services to anybody in the world. They also support buying of Ethereum(ETH) via Visa/MasterCard credit and debit card or with Bitcoin.
For buying Ethereum instantly, your credit/debit card should support ‘3D Secure’. To find out if your card supports this, you can just try adding your card to Coinbase and it will give you an error if it doesn’t.
Furthermore, you can instantly buy Ethereum through Coinbase, provided that they serve your country. At present, they serve more than 100 countries, but unfortunately, not all countries are able to buy and sell.
You can check if their service is available in your country here.
How does it all work?
Signing up at Coinbase is pretty straightforward. First, you give your e-mail account and password and confirm the sign-up in your e-mail account. After that, you have to do an ID verification which requires a valid ID document and a recent photo. Also, you can add a credit card during this sign-up process, but that totally depends on you.
Steps to Buy Ethereum at Coinbase
- Go to the dashboard/home page
- Hit the blue trade button on the upper right
- Select Ethereum as cryptocurrency
- Select buy/sell tab and enter the requested amount
- Select your credit card which is available as buy method
- Hit preview purchase and confirm
Step 3: Transfer your Ethereum to your hardware wallet
The final step in purchasing Ethereum safe is to withdraw the newly bought Ethereum(ETH) from your Coinbase account. Also, this is a very straightforward thing to do.
- Login to your Coinbase account
- On the Dashboard page, scroll down until you see ‘Your Portfolio’
- Click on Ethereum in your Portfolio
- A new screen opens and you choose to click the blue ‘Send button’ at the upper right
- Now connect to your Ledger Nano-device (USB port/Bluetooth)
- Select your public key from the Nano Device and put it in the Recipient field
- Give the amount and write in the memo field if needed(optional message)
- Continue and confirm the withdrawal from Coinbase
If everything went well, within a few minutes you will receive the newly acquired ETH on your hardware wallet and you are the proud owner of some real ETH tokens!
Finally, I want to mention that the entire procedure in this article seems a little bit overdone. However, it’s always better to ‘be safe than sorry’, especially in this wild west which is the cryptocurrency industry at this time.
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