The cryptocurrency wars have begun, but the battle is not for first place. That has been gobbled up by Bitcoin.
However, Bitcoin has become so big that its very size and price seem to be going against it. And the recent forayers into the cryptocurrency market are showing more interest in the other players. Among these, Ethereum is clearly the leader of the pack; search engines are rife with queries like “what is ether currency?” and “how to buy Ethereum currency.”
What is Ether Currency?
Ethereum is a blockchain. Think of a blockchain as a machine that performs a service. The service in question is making a “smart contract,” a contract that is digital and forever indelible. To perform this service, the machine needs some fuel. Ether is that fuel.
On a more technical level, ether is a piece of code without which the computational resources needed to run an application or program can be accessed. In many ways, ether, not Ethereum, is very much like Bitcoin.
If you want to use Ethereum, you need ether. Just like money completes the transaction in a slot machine, ether is enough to process or approve a transaction, without the presence of a third party. But instead of operating as a payment, ether provides “fuel” for the decentralized apps on the network.
This is why ether is often referred to as “digital oil,” or “gas,” and the amount of gas required for a transaction is what determines the transaction fees on Ethereum. So if the transaction is more complex (think of a car going through traffic) or takes more time (the car going a longer distance), the transaction will need more gas. The good news is that while there’s talk about the world running out of gas at some point in the future, the ether supply limit seems to be infinite.
What is the Ethereum Supply Limit?
Whatever may happen or not happen to Bitcoin, one thing is for sure: it has a production cap. Once Bitcoin circulation hits 21 million, that’s it; there will be no more bitcoins. The rules that govern Ethereum are different in that there is no such cap.
As an economic system, the rules for ether’s economy are a bit open-ended. While Bitcoin has a hard cap of 21.0-million bitcoins, ether does not have a similar limit. So the question, “what’s the Ethereum supply limit?” always generates a vague answer.
You see, the rate of issuance of ether was decided by the people in the 2014 presale. During the presale, 72 million ethers were created. Of this, 60 million ethers were created for the contributors of the presale and 12 million were created for the development fund: early contributors, developers, and the Ethereum foundation, which is a group of researchers and developers working on the blockchain technology.
It was agreed by all parties of the 2014 presale that in the subsequent years, the Ethereum supply limit would be capped at 18 million ether, which is exactly 25% of the initial 72 million. So, at the most, 18 million ethers are mined per year. Five ethers are created roughly every 12 seconds, whenever a miner discovers a block or a bundle of transactions. As of this writing, the current total supply is 96,325,587.56 and the current Ethereum market cap is $34,915,542,800 ETH. (Source: “ Total Ether Supply and Market Capitalization,” Etherscan, last accessed November 29, 2017.)
How to Buy and Sell Ether Currency
Though ethers have been around for a long time now and there are more than 96 million of them in circulation, the dilemma many investors still grapple with is how to buy ether on Ethereum exchanges or how to sell Ethereum.
How to Buy Ether Currency
Since the beginning of this year, ether has surged in value, and so has the cryptocurrency market. While the ETH price was around $10.00 at the start of the year, it is a whopping $362.46 as of November 21. It’s little wonder investors are looking to add Ethereum to their crypto-folios, and the best way to do it is follow the six-step process shown here.
1: Get a wallet: There are mobile wallets, desktop wallets, and hardware wallets to store the ether that you buy. You can buy a “Ledger Nano” (hardware wallet) for around $65.00 on which you can store your ether offline. The Ledger Nano S has a small OLED screen which allows you to control your transactions. Also, the security on the Ledger Nanos is so keen, you can even use the device on a hacked computer.
2: Select an exchange to create your account: To start trading ethers, you’ll need to select an exchange to create your account. Like most cryptocurrencies, Ethereum too has to be purchased and sold via an online exchange. There are a number of reputed services that you can choose from. The most popular ones are Gemini, Coinbase, Bitstamp, and Kraken.
3: Go through the verification process: While the verification can turn out to be a painful, long-drawn affair, the simple rule of thumb is that the more the verification, the better the exchange. To ensure your account passes the basic regulatory muster, reputed exchanges will request you to likely upload a number of documents to verify your identity. The entire process of verification might take a day or two, or even longer depending on how busy the exchange you’ve selected is at the time of your account creation.
4: Deposit Regular Currency: This is the easiest step in the whole process, but it could take a few days for your money to be cleared. All you need to do is deposit dollars, euros, or other major currency into your newly created account via wire transfer or through your bank.
5: Begin Trading: Once your account is verified and your money is deposited into your account, you can begin purchasing ethers and other cryptocurrencies. Make sure you confirm your transactions .The processing time will depend on the number of transactions you request.
6: Withdraw ETH Into a Wallet: Once you have purchased ETH through the exchange, it’s best to withdraw your ethers into your own wallet. Exchanges can be hacked and your ethers can be stolen. In order to transfer your ether to your wallet, you can input your account address into the exchange. When you want to sell or trade, you can always transfer the ethers back to the exchange.
How to Buy Ether on Ethereum exchanges
The exact method of buying the ether may be slightly different on each of the exchanges, but they all follow the same principle. Here’s how it’s done on the most popular exchange, Coinbase. In fact, Coinbase is the most convenient and inexpensive way to buy ethers. Coinbase charges you a fee of 1.49%-3.99% to sell Ethereum to you depending on your payment method. The difference in price is because credit cards incur a higher fee than wire transfers.
The process itself is very simple. Once you open a Coinbase account, select your payment method, go to the buy/sell page and enter the amount of ETH you’d like to buy, and click “Buy.” Simple. And it becomes even more simple once you know how to buy Ethereum with credit or debit cards and also how to buy ether with PayPal.
How to Buy Ethereum with Credit or Debit Cards, Bank Accounts
You can buy ETH with Credit or Debit cards on Coinbase, Coinmama and Bitpanda (Austria). The fee is about three percent to five percent of the transacted amount on Coinbase, but it’s higher (up to seven percent) on the other exchanges and you can buy ETH instantly. The advantage of Coinmama over Coinbase is that it supports credit and debit cards from basically any country.
You can also buy ether with a bank account, but the process can be slower (up to seven days) than some of the other methods. However the fee is lesser than with credit cards at about only 1.49%.
If you live in U.S., U.K., Canada, Singapore, or any European country other than Germany, you can use Coinbase to buy ETH with your bank account. The fees will be about 1.49% per purchase.
How to Buy and Sell Ethereum with PayPal
Not very long ago it was nearly impossible to buy ETH with PayPal. This was a huge draw back. A few years later, the process was streamlined but it was so tedious and time consuming, it was not worth the trouble. But today you can buy ETH with PayPal just like you’d make any other online purchase.
U.S. customers planning to buy ether with PayPal should log into Coinbase, set ETH as your currency, enter the amount of ETH you’d like to buy or the amount of local currency you want to invest in ETH, select PayPal as the payment method, confirm the order and click “Buy.” Simple as pie.
How to Sell Ether Currency
Once you deposit funds into your ether account or transfer ether from your wallet to the exchange, you can start selling or trading your ether. Before you start trading, you will have pass the “know your customer” (KYC) criteria.
Most exchanges will require you to open an account first and pass the KYC before allowing you to deposit or withdraw to fiat currency. In addition to the exchanges listed above, you can also use exchanges like Bitfinex, Poloniex and Bittrex to sell your ether.
If, for some reason, you are hesitant to sell on exchanges, you can sell directly to someone in exchange for cash. But in these situations, you must beware of scammers and thieves. You can also do a cryptocurrency swap. This option is quite popular (there is no KYC check) and can be done on ShapeShift.
Process to Sell ETH on Coinbase Exchange
On Coinbase, you can sell your ethers either by using a web browser or using the “iOS” or “Android” apps.
On the web browser, go to the buy/sell page and select “SELL” near the top of the page. Set the currency to Ethereum, enter the amount of ETH you’d like to sell, select you payout method, confirm the order and click “Sell.”
To sell using iOS or Android apps, tap the menu icon to open the Navbar and select “Sell.” Set the currency to Ethereum, enter the amount of ETH you wish to sell, select your desired payout method, and, after reviewing your order, tap on “Sell Ethereum.”
Now that you have a fair idea of how to buy and sell ETH using different methods, the one question most people ask me: “is it safe to buy ether with credit/debit cards?” To be perfectly honest, buying ETH with credit/debit cards has the same risk as buying anything online with one. Though the transaction is pretty fast, there is a small chance of your credit card being compromised. That is why I believe that though it takes a little longer, it’s best to do the transaction with a wire transfer or through a bank account. And remember, with a bank account, you pay only 1.49% per transaction, against anywhere between 3.5% and seven percent with a credit card. And just like with pennies, an ether saved is an ether earned.