What is ETH?
Ethereum is a new(ish) block-chain technology, that if some are to believed, is set to over-take Bitcoin as the next big technology.
The attraction of these cryptocurrencies is allowing instant international payments while retaining full control over your coins. Identities are anonymous and outside the realm of organisations and institutions.
Ethereum is a platform, from which “dapps” can be created. These decentralised applications use smart contracts, which automate tasks such as sending money. Unlike Bitcoin, Ethereum has them in-built to the technology, making it easy for developers to use and build on natively.
Transactions are kept on a publicly visible ledger / record using blockchain, again like Bitcoin. These transactions can be seen using a service like Etherscan.
For example, two individuals may wish to send money to each other. This transaction would be publically visible, however the identity of the two individuals would only be known if their respective ID numbers were also publically available.
Each Dapp node acts as a server and as a client, meaning to disrupt transactions of the network, every node would need to be taken out. This is why they are decentralised – no one server has all of the data / info, and makes the whole system very robust.
Bitcoin vs Ethereum
Both technologies have currency elements and smart contracts, however there are a few key differences:
- Bitcoin has a hard issue limit (14m coins), Ether does not
- Ethereum is “active” and allows applications built on it to automate daily tasks in the real world. Bitcoin is passive and cannot be automated or used in apps in the same way
- Ethereum uses distributed nodes to guarantee trust
There is no fixed limit on how much Ether can exist. While new coins are mined, it requires far less computational power than Bitcoin and in theory, will never lead to an arms race of ever more powerful chips to do so. Bitcoin has a limit of around 21 million coins, which we are at 15.2 million.
Bitcoin on the other hand, is mined using computer power and thus has a finite supply. Due to its deeper integration with applications, Ethereum has more functional value to developers on a whole and has moved away from being simply a currency.
It is this which has given so many people the confidence that it will eventually surpass Bitcoin, as it has far more practical applications.
In the future, Ethereum is likely to move to a non-mining based system, instead issuing coins based on the “stake” that people have in the network. This will reward users of the network based on “earning” via transactions and apps, rather than simply those with the hardware to waste mining new blocks.
What is Ether (ETH)
Ether is the currency (or crypto-asset) that Ethereum uses. It is what is used in transactions within the network. “Gas” is the “fuel” that is used to perform actions within the network.
When you purchase Ether, you don’t hold the currency itself. Instead, you create two keys – the wallet which is a public address for people to send you currency – and a secret key that lets you access Ether within the blockchain at large.
How Buying Ether Works
So, to buy Ether you need to use an exchange. Some exchanges store your keys privately and make it far easier to buy and sell, but are ultimately less secure. If the site gets hacked, so do your keys and you lose access to your currency.
The alternative is to store your keys yourself offline or through hardware, which is the most secure but also most difficult – it would mean not losing the bits of paper your keys are printed onto.
It also seems a little ironic that the safest way to store these complicated crypto currencies is through old-fashioned paper.
If only there was a way to use this paper as a currency directly…
What is an ICO
How to Buy Ether
So now you know what it is, how do you get your hands on some?
Easy – Pay By Card
If you are new to Crypto, then the easiest method is via Coinbase.
This lets you buy and sell BTC or ETH with a credit card, and removes the need to work with exchanges.
If you’re looking to buy other currencies, it is easiest to buy with Coinbase and transfer your funds to an exchange to them.
I’ve listed a few other exchanges, as some users have reported issues with registering delays on Coinbase due to volume of sign ups.
Coinbase is widely seen as the most respected, easy to use and trustworthy way to buy Bitcoin, Litecoin and Ethereum.
With an excellent mobile app and online interface, it is easy to use and friendly to those new looking to invest small or large amounts in the newer currencies.
You can buy any amount of a currency, investing either £10, £100 or £1000 in a given coin.
The main benefit is ease of use, with an excellent app and website design.
However, due to increases in demand Coinbase has experienced difficulty registering new users and keeping up with demand during peak times. Hopefully these issues will be addressed soon.
Cex.io is a full exchange which allows the purchase of Bitcoin or Ether via credit card in GBP, USD and EUR.
Tthe interface is easy to use and well designed, and the friendliest of the main exchanges.
I would recommend opening an account with Cex.io as well as Coinbase, as it should give you access during times of peak demand if Coinbase goes down.
BitPanda is an european focused service from Austria, allowing you to buy Ether and Bitcoin with Visa, Skrill and SEPA payments.
It’s a friendly interface with the ability to transfer bitcoins into Amazon DE vouchers!
If you are based in Germany or Austria, I would recommend BitPanda.
Coinmama has currently only sells BTC but should expand to ETH soon.
They only supports USD and EUR, but major debit / credit cards are accepted.
The main benefit to Coinmama is coins, once purchased, are sent directly to your wallet. No faff exchanging them – you’re in complete control. You can direct them straight to your exchange address to change into altcoin or ETH.
However, no GBP support.
Slightly Harder – Exchanges
Exchanges listed below may require a bit more time to understand the interface and how they work, but will often offer lower fees and far more features in return. If you’re looking to get into Ether more seriously, consider the below.
Withdrawing and depositing to these exchanges is usually much easier. It’s important to withdraw anything you hold to a wallet just in case one exchange or another is hit by service outages.
Equally If you hold Bitcoin already, it’s simple to exchange for Ether.
The downside is they may not accept GBP / USD / EUR quite so easily, and incur high bank fees to do so. This is cost effective if buying in bulk (e.g. £200+) but even then it’s worth checking as you cannot always pay by card.
I would recommend registering with several exchanges now, even if you don’t deposit. It may take several days for your account to be verified, so best to have them ready to go in case you suddenly need access.
These also allow you to buy Alt-coins so if you’re wanting to buy the more unusual coins, register with these and see what they offer.
Altcoin availability varies between exchanges.
Popular Full Exchanges
eToro is a social trading platform, designed to make decisions based on “social investment”. It bases your investment on collating the actions of the many, offering simple interfaces to invest in new currencies or stocks.
The idea of eToro is to copy those experts who are on the network showing successful performance, and gaining through this knowledge.
You can trade ether on a ETH/USD exchange on eToro, which is likely the easiest way to gain exposure to the currency without needing much technical set up. eToro is regulated by the UK FCA and is widely viewed as a safe method of trading in a wide range of markets.
They have recently introduce a “Copy Fund” which allows you to gain exposure to digital currencies easily – allowing a mainstream investment method without having to constantly monitor and manage coins yourself.
It’s important to state that you don’t actually own the coins, but are investing in a fund that tracks the prices. Only invest what you can afford to lose.
Bitbond – (Bitcoin Only)
Bitbond is an innovative and new take on funding loans for small businesses.
Rather than cash, loans are given in Bitcoin. This is for both small businesses as well as individuals, and users can request or invest in loads respectively.
The key appeal is you can invest your Bitcoin and gain returns as if it were a “normal” investment.
The downside is Bitcoin is converted to USD, so any crazy price increases may be missed out on. However, it is a more stable and interesting take on Bitcoin technology and how to take advantage of the decentralisation.
Sadly only Bitcoin for now, but expect Ether to be supported soon.
So you now own Ether! Congratulations.
Now what? Leave it in the exchange and wait for it to rocket in value?
Buy leaving it in your exchange then you can only access it when the exchange is up and running properly.
So you have restricted access:
- If he service goes down due to high demand / server issues (This is a frequent problem with Coinbase)
- Or the exchange is hacked and you lose it all
For this reason, it is best to keep any crypto you have in wallets.
These come in a few forms:
- Digital – Stored on your PC / Phone
- Paper – High quality archived print with your details on
- Hardware – Fancy USB sticks that keep keys on it, accessed via code. The most secure
There are many arguments for and against each of these types, with benefits on each side.
What is important is that you maintain proper security, as with either feature if you lose information or it is compromised, you will also lose your money.
Not all wallets can store Ether, but below are some of the most commonly used.
ImportantNever, ever lose your password. As a lot of the services do not transmit your data, there is no reset or recovery system in place for security reasons.
If you ever lose your password, you’re basically fucked.
Jaxx can run on desktops, mobiles and browsers alike, and supports a wide range of coins including Ether, Bitcoin, Litecoin, Dash and many more.
The main benefit
It’s easy to use, easy to set up, and uses clean, simple language.
Mist is a wallet linked to directly on Ethereum’s site itself.
However, it can be a bit technical for new users and is also a bit slow.
My Ether Wallet (MEW)
The most popular option, MEW gives a wide variety of options to store Ether, Bitcoin and more.
No sign up required and set up is well documented, with lots of help for both new and advanced users.
It’s based on local storage with your password being the most important bit of info you have. Multiple reminders throughout for this.
It also supports sending using hardware wallets, or you can use it to generate codes to keep safely offline on paper. E.g. print it out on archival paper and lock in a safe, and then recover it in a few years.
Hardware wallets are high tech, secure and long-term storage.
They start at around 80 euros so if you’re holding less than this, it’s not really worth considering them.
There are two popular brands:
At time of writing, both have 3 – 4 month waiting lists, so for now stick to the above and be patient!
They are pretty easy to use and have extensive support – so if you have the cash it’s well worth the investment.
Coins Using ETH
There are an increasing amount of coins that use Ether as a base currency.
For example, ICN is built on the ETH platform, so you can store ICN tokens in the same wallet address as ETH.
Below are a list of the commonly used ETH coins which you may see or wish to investigate.
Iconomi is a platform that raised funding via an ICO.
It is a assets management platform that combines 15+ currencies and coins, all into one place.
This means you can invest money into these coins in one place, using USD, BTC or ETH.