How to Buy Ethereum in the UK
Updated March 5, 2024
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How to Buy Ethereum in Five Simple Steps:
- Determine the acceptable level of risk
- Choose a crypto exchange
- Fund the account
- Buy Ethereum
- Storage of cryptocurrency
In the ever-expanding industry of cryptocurrency, Ethereum is a big player.
If you are considering investing in this Bitcoin alternative, researching the topic is very important.
From how to buy Ethereum stock to how to store it once purchased, our guide will tell you all you need to know before you invest.
What Is Ethereum?
Launched in 2015, Ether – or Ethereum – was created as a currency leaning on Ethereum technology.
It is very similar to Bitcoin, being a block chain-based system. However, unlike Bitcoin, which was created for the sole purpose of serving as an alternative currency, Ethereum can be used in a variety of decentralised applications.
Ethereum’s native cryptocurrency is Ether and provides a means of exchange on the network.
When the digital currency was launched, the price was valued at around $2.8. It has seen a steady increase, with a high of $21.5.
Buying Ethereum is different from buying stocks and shares: instead of dividends, you are exchanging your money for Ether tokens.
Ethereum can power a number of applications that offer a wide range of functions, including currency, smart contracts, decentralised apps, non-fungible tokens, and decentralised finance.
Ethereum also differs from other crypto such as Bitcoin or Litecoin in that it is being used not just as currency.
In the 2014 Ethereum white paper, the network stated that it ‘moves far beyond currency’, aiming to be ‘a foundational layer for a very large number of both financial and non-financial protocols in the years to come’.
Home to digital money, global payments and applications, the Ethereum community is a big contributor to the digital economy.
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Should I Buy Ethereum?
Ethereum is very popular, with more than 116 billion coins bought by investors.
However, that doesn’t mean that it is the right cryptocurrency or investment for an individual. In this section, you will explore the questions you should ask yourself while looking into how to buy Ethereum in the UK.
Before making a purchase, investors will want to do some research, ensure they have enough funds to make a purchase, know the risks and understand the market.
Buying Ethereum can be an excellent long-term investment, but there are no guarantees when it comes to cryptocurrency.
To protect your money as an investor, you should really have a diverse portfolio with a range of assets. Only a portion of your investments should be on Ethereum or other cryptocurrencies.
1. eToro
Pros
- Wide range of cryptocurrencies
- Social trading
- Regulated platform
- Multiple payment options
Cons
- Higher fees
- Limited wallet control
eToro is a social trading platform that allows users to trade cryptocurrencies, including Ethereum.
It offers a unique feature called CopyTrading, which allows users to automatically copy the trades of successful traders.
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2. Coinbase
Pros
- Stellar customer service
- Many different funding methods
- Diverse and ever-changing choice of coin
- High security system
- Easy to trade in the US
- Good for beginners
Cons
- Not available in all countries
- Some lesser-known currencies are not supported
- Lower number of cryptocurrencies accepted than other platforms
- Higher fees
Coinbase is one of the most well-known and user-friendly cryptocurrency exchanges. It supports the buying and selling of Ethereum and offers a straightforward interface suitable for beginners.
Coinbase: 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 two mins to learn more.
3. Binance
Pros
- Low trading fees
- Large range of cryptocurrencies and altcoins
- Comprehensive user interface
- The maximum trading amount is unlimited
- Low trading fees at 0.1%
- Easy sign-up process
Cons
- High withdrawal fees for some options
- No built-in wallet feature
- Medium levels of security
Binance is a leading global cryptocurrency exchange that provides a wide range of trading options, including Ethereum.
It offers advanced features for experienced traders and a user-friendly interface for beginners.
4. IG
Pros
- Highly regulated
- MetaTrader 4 (MT4)
- Over 10,000 instruments
- Available in the UK and US
- 24/7 customer support
Cons
- High fees
- No deposit compensation scheme for US accounts
- No copy trading
- Inactivity fees
IG is a great share trading platform for beginners thanks to its user-friendly interface and extensive educational resources.
Pros of IG include a wide range of trading instruments and markets, as well as the ability to access multiple account types and trading platforms. The platform also offers a demo account for beginners to practise trading strategies before investing real money.
However, IG isn’t the cheapest share trading platform, with relatively high trading fees and a minimum deposit requirement of £250 when paying by credit/debit card or PayPal.
In terms of additional fees, IG charges a commission fee for share trading, starting from £8 per trade. There’s also a custody fee of 0.25% per year for holdings of £250 or more.
Overall, IG is a solid choice for beginners looking for a user-friendly platform with extensive educational resources, but investors should be aware of its fees and minimum deposit requirements.
What to Know Before You Buy Ethereum
So when you’re deliberating over ‘should I buy Ethereum?’, it is a good idea to think about certain factors such as:
- Your investment goals – How much do you want to invest? What are your expectations from the assets you buy?
- Your financial situation – Can you easily invest a chunk of money and remain comfortable without it? The crypto market can change quickly and making a profit is not guaranteed.
- Market conditions – Is this a good time to invest? Would it be more beneficial to wait for a better market?
The cryptocurrency market comes with risks, just like any other investment option. One of the main risks you should be aware of is the potential for significant market price fluctuations.
Cryptocurrencies are notoriously volatile, and the market can change very quickly. When it comes to buying currencies such as Ethereum, you should only invest what you can afford to lose.
As well as doing your own research, you may wish to consult a financial advisor if you are thinking about making larger investments in Ethereum.
What Are the Benefits of Buying Ethereum?
You can think of Ethereum as a ‘smart computer’, in that it allows computer programs to run ‘smart contracts’ – a special agreement between two parties.
Smart contracts self-execute when their terms are met and automatically cancel when their terms are not met. This innovative feature removes the need for a third party to perform the transaction and streamlines the process.
Some of the pros of investing in Ethereum are:
It Allows You to Send Money across the World
With no need for an intermediary, Ethereum allows for global transactions. This is an efficient, low-cost way of making transactions that are quick and secure.
Using Ethereum to transfer money or value is also cheaper than sending it through banks.
Ethereum Is Easier to Mine than Bitcoin
If you are deliberating between buying Ethereum and bitcoin, bear in mind that as a younger coin, Ethereum is easier to mine.
This has attracted more miners, meaning there is a higher chance of reward when mining Ethereum.
The more miners there are, the higher the value of Ethereum. This increases demand and price, making it a more sought-after asset.
Ethereum Has the Support of Larger Companies
Big names such as Microsoft and JP Morgan support Ethereum with their products.
By using Ethereum’s blockchain, these companies increase the value of Ethereum and keep its price high.
What Are the Downsides?
While there are numerous advantages to buying Ethereum, there are some downsides. Cons of investing include:
There Can Be Delays at Busy Times
If there are a lot of people making transactions at the same time, you may need to wait for your transaction to be processed.
It could take anywhere from a couple of hours to a few days to complete transactions.
There Is a Transaction Fee
When you make a transaction with Ethereum, you are required to pay a mining fee to the network.
Due to this, you must ensure that your Ethereum is worth more than the money you are about to spend on mining it.
Note that this cost only applies if you wish to use Ethereum for transactions and not if you only want to invest in it.
The Price of Ethereum Can Be Volatile
Many investors use Ethereum as an investment and not just a currency, which can drive up the price. It is important that you understand the price of Ethereum is not stable and can change from one hour to the next.
By weighing up the pros and cons of buying Ethereum, you can make an informed decision on whether it is right for you.
How to Buy Ethereum in the UK
If you are ready to take the next step, and have decided that you should buy Ethereum, there are five key steps in the process.
They are as follows:
Step 1. Determine the Acceptable Level of Risk
It is easy for investors to think that buying into any cryptocurrency is safe, but there is always the potential for risk.
There can be significant price fluctuations brought about by external factors.
For example, when Elon Musk announced that Tesla would stop accepting bitcoin, the value of that currency dropped by 15%.
Think about the level of risk you are willing to take before buying Ethereum.
Due to the fluctuating market, Ethereum has had exciting returns but has also seen huge crashes. Market crashes can devalue the portfolio of an investor and lose them significant wealth.
Therefore, an Ethereum investment should include a risk tolerance assessment. Remember, only invest in the amount that you afford to lose.
Step 2. Choose a Crypto Exchange
If you have determined the acceptable level of risk and decided that you should buy Ethereum, the next step is to choose a cryptocurrency exchange to trade with.
Buying Ether is generally more complex than investing in shares and collective investment funds. They differ in that they are not traded on the major exchanges, like New York or London.
In addition, many brokerages do not offer cryptocurrency investing.
To buy cryptocurrency, investors need an account on a cryptocurrency exchange. This is similar to a brokerage and allows for the exchange of normal currencies for cryptocurrencies.
If you do not already have an account with a crypto exchange, you need to find and open one with the appropriate exchange.
At this stage in your investment journey, you should ensure that you check for a few things when opening an account:
- The exchange offers cryptocurrency exchange
- They have reasonable fees
- They offer good customer support
- The exchange has a digital wallet
- Restrictions placed on activities – for instance, Cash App or Robinhood don’t allow investors to put investments in a third-party wallet. They also do not allow the use of Ether to pay for online purchases
- Minimum deposit
When opening an account, you may be required to provide some personal information such as your name, address, tax details and personal identification.
Step 3. Fund Your Crypto Account
Before you purchase Ethereum through the exchange, you will need to fund your investment account.
Most brokers accept a minimum deposit of a set amount.
For your convenience, payments into an exchange can be made from a bank account, like a current account.
Investors can also use a debit, credit card or payments provider.
It is important to note that not all credit cards will allow you to use their funds to make a purchase for cryptocurrencies. Some financial services like Virgin Money, TSB and Tesco Bank will block these transactions.
Other credit card companies might allow you to use cards to purchase Ethereum but will add on transaction fees.
Step 4. Buy Ethereum
Now that you have a crypto exchange account, it is time to make an investment and purchase some Ethereum.
Unlike shares, funds or exchange traded funds, the investor is not limited to the time of the day they can buy.
Cryptocurrencies can be traded at any time, as you are not bound by the opening and closing of stock exchanges.
To purchase Ethereum, you simply click on the ETH in the exchange and click on the ‘Buy’ field. You can then enter the amount you want to buy.
With Ethereum, investors can buy a fraction of one.
Step 5. Storage of Cryptocurrency
Once you have purchased Ethereum, you will have to store it. Upon purchase, you are given two keys: one public, and one private.
The public key is for encrypting information and creating your wallet address.
You will use the private key for decrypting the information and accessing your Ethereum. As the private key is the one that lets you get to your cryptocurrency, this is the one you will need to store and safeguard.
One option is to use a platform that will store your Ethereum for you. Third party exchanges such as Coinbase can manage a custodial wallet containing your cryptocurrency.
In this case, the third party stores your private keys and guarantees their safety.
Coinbase in particular is easy to use and also allows you to invest in other types of crypto, including Bitcoin.
One of the major concerns when using an exchange to store Ethereum is the risk of a hack. However, most exchanges do have insurance for their holdings.
They also store the majority of assets offline to prevent theft. Historically, most exchanges that have been hacked have also reimbursed losses.
There are also other options, including self-storage. While no cryptocurrency storage method is 100% secure, storing it yourself can provide peace of mind.
Self-storage with a non-custodial wallet is a great way to protect from loss of the cryptocurrency.
There are two types of self-storage: hot wallet and cold wallet.
Hot Wallet
Hot wallets are software that store your keys while connected to the internet. They are easily accessed from a computer or smartphone, meaning you can check your Ethereum whenever you like.
However, hot wallets are vulnerable, as they contain both the public and private keys and can be hacked.
Cold Wallet
Unlike hot wallets, cold wallets are not connected to the internet. Also called offline wallets or hardware wallets, they are less likely to be hacked. Cold wallets can be between £30 and £150.
As they are offline, cold wallets can be less convenient, but they are more secure.
One of the best trading platforms to buy Ethereum is eToro as it is easy to use, especially for beginners.
It is hard to define a good time to buy Ethereum, as the market can change quickly. You should decide whether the cost of Ethereum is acceptable to you at the time.
You can buy Ethereum with PayPal by selecting ‘Crypto’ on the PayPal dashboard.
You can use Ethereum like any other cryptocurrency and buy products such as gadgets, vehicles, homeware and even real estate.
The buying and selling price of Ethereum fluctuates, so there is not a set cost to provide.
It is possible to buy Ethereum with no fees with a small number of cryptocurrency platforms. One of these platforms is eToro.
Ethereum is a good investment as it is a valuable asset. It is regarded as a solid investment but one that comes with risks.
You must be at least 18 years old to buy any cryptocurrency, including Ethereum.
Experts predict that it is not too late to invest in Ethereum, as it is still a profitable asset.
Before investing in Ethereum, you should weigh up the pros and cons of purchasing the cryptocurrency.
You should also consider your investment goals, your financial situation and the current market conditions.
Final Thoughts
Ethereum is a digital currency with a high potential. Like all investments, it carries risk that needs to be weighed up before purchase.
Investment in Ethereum from the UK is relatively simple, as the guide above has shown.
WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
76% of eToro retail CFD accounts lose money. 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 two mins to learn more.
