Top 5 Best Exchanges to Buy ETH (2017-2018)

Ethereum-ethHow to Buy Ethereum (ETH) Currency?

At the beginning of this year, the price of ether was hovering around the $10 mark. Since then the cryptocurrency market has been on a tear and the price of ether has gone up to a whopping $417.12 * and the Ethereum market cap is $39,564,365,782. It’s little wonder investors are queuing up to learn how to buy Ethereum, and the best places to buy Ethereum. The six-step process shown below is a good place to start.

* 3.17 pm November 23, 3017

  1. Get a wallet – This is the first step to buying any cryptocurrency. And it makes perfect sense as you need a safe place to store the ETH after you buy them. The wallets could either be desktop wallets, mobile wallets or hardware wallets. Of the three hardware wallets are the best as they are offline and therefore are immune to hacking.
  2. Select an exchange to create your account – Like most cryptocurrencies, Ethereum too has to be purchased and sold via an online exchange. Select an exchange that best suits your needs. You can choose from a number of reputed services like Gemini, Coinbase, Bitstamp and Kraken.
  3. Go through the Verification ProcessReputed exchanges will request you to upload some documents to verify your identity. This process of verification can take a day or two, depending on how busy the exchange is at the time of your account creation. But trust me; verification is for your own good and the more the verification, the safer the exchange.
  4. Deposit Regular Currency – Though this is the easiest part of the whole process, 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 – This completes the buying cycle. Once you have purchased ETH through the exchange, withdraw your ethers into your own wallet to prevent them from being stolen online. When it time to sell or trade your ETH you can easily transfer them back to the exchange.

How to Select the Best ETH exchanges

While the above six steps are pretty straightforward there are certain factors you need to consider while selecting an exchange.  To give a new trader give an idea of what to keep in mind here is a list of factors to select best ETH exchange.

Information about the exchange: It’s good to have basic information like the name of the founder, location of the exchange, and the market they focus on. If the owners are anonymous, it’s a bit sketchy, but if the founders are transparent like Mr. D’Agosta of Poloniex, it can build user confidence.

Advertisement

While a majority of the countries don’t have any laws related to digital currency yet, when they do, the laws could affect the trader significantly.

Supported currencies and liquidity: Before choosing an exchange, traders need to make sure it trades in ETH and also supports the trading pairs the traders want. For example, if the trader is interested in trading his ETH for litecoin, the exchange should support the ETH/LTC pairing.

Once the trader narrows down his search based on pairings, he can further narrow down the search based on the exchanges liquidity for that pair. The higher the liquidity (high trading volume0, the faster the trading.

Trading Fees: Trading ETH (and all cryptocurrencies) costs money – that’s where exchanges make their money.  Usually, exchanges charge a small percentage of the amount traded. And this percentage usually decreases if the monthly trading volume rises. Due diligence about the decrease in percentages can save you a lot of money as you start trading more.

Trading Options: Again, this depends on the needs of some users who might want access to certain order types or margin trading. More experienced users are often looking for futures and derivates trading. For traders in it for the long haul, it’s good to keep this factor in mind.

Ease of Use: This is self-explanatory. Chooser exchanges that have friendly user interfaces, quick loading times and yes, support for mobile devices.

Customer Support: Cryptocurrency exchanges are an evolving technology and many of the new traders can be clueless about the simplest of processes. As many things could go wrong a reliable support team can save a lot of time, nerves and money.

User Experience: When selecting an exchange, it’s good idea to check ETH forums to look out for the best Ethereum exchange reviews and to read about complaints about different exchanges.

Security: Because of the nature of the industry crypto-exchanges run a serious risk of hacker’s attacks. Though last in this list of factors, this is certainly not the least.

That’s about it. Traders selecting their exchange based on the above parameters should ideally end up with the best ETH exchanges to suit their needs.

Exchange Categories Based on Mode of Operation

While all cryptocurrency exchanges have the same function, their mode of operation could differ. We’ve categorized the exchanges into three broad groups based on their functioning.

Group A: This group of exchanges allows users to trade cryptocurrencies and fiat currencies (USD, GBP, EUR etc.) on an open market. Typically, these sites offer bank wires and bank transfers. They have limited deposit and withdrawal methods for fiat currencies. This group has the lowest fees of the three groups. Some of the well-known exchanges in this group are Kraken, Gemini, CEX.IO &, GDAX.

Group B: The group operates like an “online cryptocurrency retail stores”. The great news is, in addition to bank wires and transfers, these exchanges allow users to make purchases with credit/debit cards. This group is best for beginners even though the fees are more than the fees of the exchanges in Group A. Some of the more popular exchanges in this group are Coinbase, Coinmama and CEX.IO.

Group C: This group of exchanges operates similarly to the exchanges in Group A, with one major difference – they only trade cryptocurrency for other cryptocurrencies. So if a trader wants to trade fiat currency for crypto or vice-versa, this group will not support it. Bittrex and Poloniex are examples of exchanges in this group.

Best Exchanges & Reviews to Buy & Sell Ethereum

While the choice of Exchanges will depend on individual needs, some exchanges have risen beyond the rest with their ability to adapt to the various factors. Here are the top five exchanges to buy ETH with an easy-to-use Ethereum exchange comparison chart at the bottom.

Coinbase

This is the easily the most popular exchange for buying and selling ETH. Coinbase also features a vault which makes for safe storage as the ETH is offline storage, and requires multiple approvals for withdrawals. It also gives the trader more control of his/her funds.

Pros

  • High transaction limits.
  • Beginner user-friendly.
  • Instant buying possible with debit/credit cards.

Cons

  • Bank transfer purchases may be slow.
  • It may track your purchases.

Poloniex

This exchange lets you trade securely with the advanced trading processes. As the exchange does not operate on fractional reserves like banks, you can always sell or withdraw all of your funds without quantity issues. The good thing about Poloniex is that it monitors all activities round-the-clock and if any suspicious activity is found, then it immediately puts an active block.

Pros

  • High liquidity.
  • Facilitates margin trading

Cons

  • Poor support.
  • May not be easy for new users.
  • Had been hacked once in 2014.

GDAX

This is a professional trading platform started by the Coinbase team. It allows you to trade in a variety of currencies on a regulated US-based exchange. Some of the important features of this exchange are real-time charting tools, trade history, and insurance for ETH stored online. This exchange charges 0% maker fees and their taker fees can go as low as 0.1% based on volume.

Pros

  • Lowest fees.
  • Possible to buy ethers with almost 0% fees.

Cons

  • Not beginner-user-friendly.
  • Track spendings and may block if questionable transfers are made

Kraken

This popular exchange is ideal for professional traders who trade on a daily basis. It offers a fast and fluid trading engine with advanced order types, and allows margin trading so that you can leverage long or short market positions. Kraken stores your ETH in an encrypted cold storage to prevent hacks and thefts by any means.

Pros

  • Low taker and maker fees.
  • High liquidity and security of assets.
  • Regularly posts proof of stored assets.

Cons

  • Hard for new users.
  • It is not private and requires an identity card.

CEX.10

This great advantage of this is that it offers easy and reliable trading at the same time. It has advanced order-matching algorithms backed by a unique trade engine that helps maintain maximum liquidity. The exchange supports cross-platform trading like few others and provides real-time balance, transaction history and more info directly in your dashboard.

Pros

  • Availability in numerous countries.
  • Low 0.2% trading fee.
  • High security

Cons

  • Rigorous and time-consuming
  • Some of its markets have low liquidity.

Ethereum Exchange Comparison Chart

  Usability Privacy Speed Fees Reputation Limits
Coinbase Easy Low Average Average Trusted High
Poloniex Average High Average Low Average High
GDAX Hard Low Average Low Trusted High
Kraken Hard Low Average Low Trusted High
CEX.10 Average Low Average Average Trusted Average

Are Ethereum Exchanges Safe?

To be perfectly honest, there is no yes or no answer to the “Are Ethereum exchanges safe” question. Going purely on past records, they are safe though exchanges like Poloniex have been hacked. This does not make Poloniex any less safe than the others. People who hack exchanges are constantly upgrading their methods, and likewise, the exchanges are trying to stay a step ahead. The best bet is to use offline storage of ETHs once the transaction is complete.

Analyst Take: 

If I were a newcomer I’d stick to Coinbase as it has the best user experience and is one of the least expensive exchanges to operate. For more experienced traders I recommend GDAX (from Coinbase). Yes, it might seem that I’m biased toward the Coinbase team but there is enough reason for my bias. Having said that, I’d still store all my ETH in an offline wallet. After all, it’s better to be safe than sorry.