Ethereum is one of the most valuable coins in the crypto markets. It ranks second by market capitalization, only surpassed by Bitcoin. And it has the third-largest daily transaction volume, behind BTC and USDT. Moreover, Ethereum introduced the concept of smart contracts, and the most popular DeFi protocols run on its blockchain. Any investor who’s not sure about whether to buy ETH or not should know it’s constantly improving its network and growing its community.
It has had issues in the past, when its infrastructure wasn’t able to handle numerous transactions. But, since the implementation of The Merge, which switched Ethereum from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism, the network has had a higher throughput. This has fostered the development of plenty of DApps, attracting new investors.
What Are the Challenges of Investing in Ethereum?
Despite being one of the most transacted coins, it is far from being the only option in the market. There are some challenges it faces, that every investor should look out for before putting their money into ETH.
- Competition: Ever since Ethereum’s limitations arose, developers started working on possible solutions. Some included escalating Ethereum’s own network. But others proposed alternative chains. One of these competitors, Ethereum Classic, was created long before, but still managed to pose itself as a solution to ETH’s issues.
- High volatility: Similar to other cryptocurrencies, the price of ETH is very volatile. This could be beneficial when the price is growing. But it can take a downward turn at any moment and cause losses for investors.
- Regulatory concerns: ETH was scrutinized in the past by the US Security and Exchanges Commission (SEC). While this investigation is now closed, future regulatory pressures could have a negative impact on the price.
How to Buy Ethereum Safely: 3 Tips
Every asset can be a challenging investment, but it does not mean it can’t be profitable. Before buying Ethereum, there are some key aspects that need to be checked to avoid being hacked or scammed.
1. Prioritize Hardware Wallets
Hardware wallets are the safest options to store ETH, as well as any other cryptocurrency. These physical devices aren’t constantly online, so the risk of cyberattacks is minimized. Newer technologies never connect to the Internet and support a wide range of assets. Some also offer multi-signature features that require more than one private key to make transactions.
However, it’s important to purchase hardware wallets from official sources and never share the private keys. Anyone who owns them can access the account from anywhere and could potentially steal the funds. While they offer increased security, they must be used properly to really enjoy the safety benefits.
2. Use Reputable Exchanges With Advanced Security Measures
Blockchain technology is unregulated in most places, so the ecosystem is abounded with scams. Cybercriminals could offer to sell coins outside trusted platforms or create fraudulent applications. The best way to avoid this is by trading only on reputable exchanges that have been audited by independent analysts.
After choosing the right platform, it’s necessary to activate two-factor authentication (2FA), using a phone number and email. Some exchanges will require users to activate 2FA and verify their identity before giving full access to the markets. This way, they make sure that users have a safe experience while trading cryptocurrencies.
3. Stay Vigilant Against Phishing and Social Engineering Attacks
Even if you take all measures, thieves will still try to scam crypto traders. For this reason, users must learn to identify phishing and social engineering attacks. It’s important to remember that exchanges will never ask for the user’s password and data.
To avoid phishing attacks, we have to double-check the URL when logging in, even if the site has a valid SSL certificate. When in doubt, it’s better to ask for a support ticket through the official channels of the exchange. These threats are more dangerous because attackers usually study their victims before and know what’s the best way to deceive them.
Top Platforms for Buying Ethereum
There are plenty of reputable platforms to buy Ethereum. The best choice is to go for exchanges that have a long history in the ecosystem and have been proven by other users.
- Coinbase: It is one of the largest exchanges in the world, and it has been active for over a decade. It used to be so strict in its asset policy that whenever a new crypto was added, its price immediately boomed. This US-registered company is one of the safest options in the ecosystem.
- Binance: This exchange currently holds the role of the most used platform, with over $12 billion daily volume. It takes security measures seriously and requires users to activate 2FA and use it for every transaction.
- Paybis: This exchange was launched in 2016 and has grown enormously over the last few years. The most notorious feature is the ease of use. Customers can buy ETH or any other crypto using credit or debit cards. It is registered with the Financial Crime Enforcement Network (FinCEN), so it has been approved by US regulators to operate in its area.
- Gemini: This exchange has been around since 2014, and it was founded by the Winklevoss twins, investors with a long history in crypto and tech. Gemini is also fully regulated by US regulators, so users anywhere can trade on this platform.
Conclusion
As one of the largest cryptocurrencies in the ecosystem, ETH can attract a lot of new investors. Especially if we take into account DeFi investors who use DApps developed on the Ethereum blockchain. Before making an investment, it’s vital to understand the risks and challenges it poses. Once you made your decision, all that’s left to do is find a safe wallet and exchange.
