Best way to buy and hold ethereum

This is different to a bank, which manages your money on your behalf and in can even prevent you from accessing it. Some cryptocurrency users believe that self-custody is a fundamental cornerstone of owning and using cryptocurrencies, but for everyday investors, this may not be the case and is totally up to you.

If you decide to keep your ETH on an exchange, then consider using one that allows you to earn an annual percentage yield APY on your investment. This typically works by lending your ETH to the exchange who lend it out to borrowers. Borrowers pay interest on the loan which is then awarded to you as a regular yield payment, paid in ETH.

Check out our list of best crypto savings accounts for exchanges that let you both purchase and earn yield on ETH. Buy ETH through a brokerage app Pro: If convenience is your priority, then a brokerage app is typically the easiest way to invest in ETH and only takes a few minutes.

Con: Brokerage apps are less feature-rich than exchanges and limit what you can do with your ETH once you own it. Brokerage apps such as Robinhood , SoFi , or Webull provide the most simple and straightforward way to invest in Ethereum. They are similar to using an exchange, however, they typically offer far fewer features and just focus on buying and selling.

If all you want to do is buy ETH and hold onto it without any fuss, then a broker or app could be the right choice for you. They can be downloaded to your smartphone and set up within minutes. Just keep in mind that you will need photo ID ready to complete the account verification process. Con: ETFs are more complex than just buying the asset outright and you need to be wary of management fees.

Exchange-traded funds ETFs offer a more traditional way to invest in ETH without needing to use a cryptocurrency exchange since ETFs are available through traditional brokerage and investment platforms. ETFs and brokerages are subject to federal regulations, unlike cryptocurrency exchanges which are still largely unregulated. Assets are managed by the ETF manager. You can invest in cryptocurrency ETFs through a retirement account like an RIA which are otherwise prevented from investing directly into cryptocurrencies.

Cryptocurrency ETFs are complicated though. They vary in their exact composition and fees, which means that no two ETFs are identical. Investing is just as much about growing capital you already have, as it is about acquiring new assets. You can earn a yield on any ETH you already own through a number of methods, such as lending, staking and DeFi.

The easiest method, which can be done through an exchange, is via lending, also known as crypto savings accounts. Returns are generated by lending out your ETH to other users who pay interest on the loan, which is paid out to you as yield.

Borrowers must deposit capital in order to take out a loan, which is used to protect your funds in the event of the borrower defaulting on the loan. Buy ETH peer-to-peer P2P from others Pro: Greater privacy than using an exchange or broker with a nearly unlimited variety of payment options. Con: Relatively higher risk of fraud than other methods with little legal protection. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Buying Ethereum involves converting your U. People who own Ethereum can use it as payment for goods and services, or to cover fees for the processing power used to carry out complex transactions in fields such as finance, art and computer science. Many owners of Ethereum have also used it as an investment vehicle in recent years amid a rush of interest in the crypto space.

Ethereum hit an all-time high late in , and it has been gaining on Bitcoin in terms of global market capitalization. But before you make any decisions, remember that cryptocurrency can be a risky asset whose market value can fluctuate significantly.

Here are some pointers on how to buy Ethereum — and some factors to consider before you do. How to buy Ethereum There are three major steps that most people take in buying Ethereum: Choose a cryptocurrency exchange. Store your Ethereum. Choose a cryptocurrency exchange Because Ethereum is one of the most widely-circulated cryptocurrencies, you have many options in selecting where to buy it. This decision will affect the choices available to you for payment and storage, however, so you should do your homework.

There are several types of exchanges and marketplaces you can consider. Online stock brokers: Buying cryptocurrency from an online brokerage that offers it is one of the easiest ways, but it can come with serious drawbacks. While online brokers have made it easy and cheap to turn your cash into crypto and vice versa, check the fine print to see if the brokerage lets you move cryptocurrency in and out of the account — some brokers don't.

In the eyes of crypto purists, this essentially nullifies the entire point of owning a digital currency. Centralized crypto exchanges: These are a common way for people to buy cryptocurrency. Centralized exchanges such as Coinbase act as middlemen in the buying and selling of cryptocurrencies, and tend to have larger selections than platforms that primarily deal in conventional assets such as stock.

These can be a good choice if you're somewhat familiar with cryptocurrency, but are looking for a user-friendly experience. Some people, on the other hand, might feel that a centralized broker is contrary to the spirit of blockchain technology, which is supposed to be decentralized. Decentralized exchanges: In a sense, a decentralized exchange, or DEX is the truest way to trade cryptocurrencies in that there is no third party whatsoever.

Centralized exchanges require you to deposit the coins or dollars you want to trade on the market into a trading account. But with DEXs, you retain full control over your funds and trade directly with a buyer or seller. However, DEXs can be confusing to navigate and are mostly used for trading one cryptocurrency for another, rather than buying ETH with cash.

Best cryptocurrency exchanges Decide how to pay Depending on whether you already own cryptocurrency and are willing to part with it, you can decide to either pay with U. Fiat currency: Like most things in the world, you can buy cryptocurrency with traditional fiat currency such as U. On some exchanges, this is your only option. And if you don't already own cryptocurrency, you're going to have to use cash at some point.

If you're using a centralized exchange, you will likely have to fund your account using a bank transfer, a credit card or a debit card, and these transactions can incur fees on some platforms. Cryptocurrency: Some marketplaces allow crypto-to-crypto trading, which can be an advantage if you want to buy Ethereum without sinking more of your savings into the crypto space in general. This can also be a helpful strategy if you own another cryptocurrency, such as Bitcoin, that has increased in value and you want to diversify your holdings.

Be aware, however, that the relative values of cryptocurrencies are constantly changing. It can be a good idea to look at historic price trends as you decide when to buy. One more thing to keep in mind: Trading crypto is subject to certain tax rules. Store your Ethereum Even though Ethereum is a digital asset, you still need a way to securely store it.

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To buy crypto, you have to first create an account on a crypto exchange. A couple of key points: When choosing an exchange, make sure it offers a crypto wallet to store your investments. Using one of these simplified platforms will mean your crypto can only be traded within the platform you buy it on.

Fund Your Account Before you can buy Ethereum through a crypto exchange, you have to fund your account. You can also generally complete wire transfers, use a debit card or deposit money from PayPal. For example, wire transfers are free on Gemini, but the platform charges a 3. One warning: Some platforms allow you to buy cryptocurrency using a credit card. All you need is a debit or credit card or just a bank account that facilitates international transfers.

I will discuss how to store your Ether safely below. The verification process that you have to go through in order to buy Ethereum takes now much quicker that it used to and the purchasing process is slowly becoming hassle-free. Just two years ago, you had to take extreme measures to buy Ether. All these conversions would have costed you dearly in transaction and exchange fees and of course time! Now, all you have to do is just open an account on one of these recommended exchange platforms to purchase your ETH: The most popular choice is Coinbase as it allows to use your credit card to buy Ethereum directly on the website.

Coinbase is a major crypto-currency exchange that offers other services as well. Apart from Ether, you can purchase Bitcoin and Litecoin — you can also sell your crypto-currency directly on their website and convert your coins into fiat money. You should definitely give it a go. Pros: easy to use, minimalist layout, accepts credit cards Cons: often down due to maintenance, slow customer support I would also advise to visit CEX.

It offers pretty much exactly the same services as Coinbase, but also features margin trading.

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