If you’re looking to get into the cryptocurrency game, Ethereum is a great option. Many people believe that Ethereum has the potential to overtake Bitcoin as the world’s leading cryptocurrency. This is due to Ethereum’s advantages over Bitcoin, including its lower transaction fees and faster transaction times. A recent study showed that Ethereum is the most popular cryptocurrency among developers. If you’re considering buying Ethereum, you should know a few things first. Here, we’ll walk you through the tips & process of purchasing Ethereum, including how to set up a wallet and where to buy ETH.
1. Determine Your Level of Risk
Before buying any cryptocurrency, it’s essential to understand your level of risk. Are you investing for the long-term, or are you looking to make a quick profit? If you’re investing for the long-term, you can afford to be more patient and ride out the volatility that comes with cryptocurrencies. However, if you’re looking to make a quick profit, you’ll need to be more active in your trading and be prepared to take on more risk. A recent study showed that 66% of Ethereum investors are in it for the long haul, so if you’re considering ETH, chances are you’re in it for the long run.
2. Set Up a Wallet
Before you can buy Ethereum, you’ll need to set up a digital wallet to store your ETH. Many different types of wallets are available, but we recommend using a software wallet like Exodus, Jaxx, or MyEtherWallet. These wallets allow you to store your ETH on your computer or mobile device. Once you have a wallet set up, you’ll need to generate a unique address that will be used to send and receive ETH. Many wallets will allow you to do this by clicking on the “Generate Address” button. In addition, some exchanges will require you to set up a wallet before buying ETH from them.
3. Choose a Crypto Exchange
Another step to buy Ethereum is to choose a cryptocurrency exchange. There are many different exchanges available, so it’s essential to do your research before selecting one. You should look for security features, fees, and ease of use. Once you’ve found an exchange that meets your needs, create an account and verify your identity. Exchanges require different amounts of information from you, but most will ask for your name, email address, and phone number. Some exchanges may require you to provide additional identification documents, such as a passport or driver’s license. Once your account is verified, you’ll be able to deposit money into it using various methods, including bank transfer, credit/debit card, or wire transfer. The exchange will then hold your money in their account until you’re ready to make a purchase.
4. Understand the Tax Consequences
Before you buy any Ethereum, it’s essential to understand the tax consequences. In the United States, the IRS has classified cryptocurrencies as property, which means they are subject to capital gains taxes. If you purchase ETH for $1,000 and then sell it later for $10,000, you will owe capital gains taxes on the $9,000 profit. The tax rate you’ll pay will depend on your marginal tax bracket. For example, if you’re in the 25% tax bracket, you’ll owe $2,250 in taxes on that $9,000 profit. So, before you buy ETH, make sure you have a plan for handling the taxes.
5. Place Your Order
Once you’ve selected exchange and set up your account, you’ll be ready to place your order. When placing an order on an exchange, you’ll need to specify the amount of ETH you want to buy and the price you’re willing to pay. Some exchanges will allow you to place a “market order,” which will buy ETH at the current market price. Alternatively, you can place a “limit order,” which will only buy ETH if available at or below your specified price. Once you’ve placed your order, you must wait for it to be filled. Depending on the exchange and the current market conditions, this can take a few minutes or hours.
These are just a few things you need to know before buying Ethereum. Be sure to research and consult a financial advisor to make sure Ethereum is right for you. Also, remember to keep your ETH in a secure wallet and don’t store it on an exchange. By following these tips, you’ll be well on becoming an Ethereum investor.
