How to Buy Ethereum (ETH) in India
Is there much more to cryptocurrency than just being an alternate to digital money? If you’ve pondered on that question, then chances are you may have stumbled on the term – Ethereum, aka the World Computer.
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Since you’re here, you must be examining different aspects of Ethereum, including “what is Ethereum?” and “should I add Ethereum to my portfolio?”
As one of the early crypto adopters in India, you can’t help but ask those questions.
Well, in this guide, I’ll tell you all about Ethereum, its features, what role it plays in the crypto market, and help you figure out how to purchase Ether in India.
By the end of this Ethereum review, you’ll have a comprehensive understanding of Ethereum – and will be able to decide which buying options suit your needs.
What is Ethereum
In terms of popularity and market cap, Ethereum is second only to Bitcoin. So, what makes Ethereum so interesting?
Ethereum is an open-source, blockchain-based operating platform with which you can build applications and send payments. You can think of Ethereum as a marketplace and as a digital money.
To understand how Ethereum works, we need to get under the hood and examine its key features.
The Ethereum blockchain structure is similar to that of Bitcoin’s blockchain, where all the transaction records are shared with a network of nodes.
In contrast to the Bitcoin blockchain, the Ethereum blockchain is programmable. This means developers can build different applications on the Ethereum blockchain.
You can view the blocks and transaction data on the Ethereum blockchain explorer, Etherscan.
A consensus protocol is a mechanism by which all the nodes in the network reach an agreement. This ensures everyone on the network adheres to the rules.
Similar to Bitcoin, Ethereum adopts the proof-of-work consensus model. However, with the ETH2.0 upgrade, Ethereum is switching to a proof of stake model.
Ether is Ethereum’s native cryptocurrency. Ether serves both as a unit of currency for digital payments and as a fuel to run smart contracts on the Ethereum blockchain.
A smart contract is essentially an agreement that lives on the Ethereum blockchain. As these contracts are made up of data and functions, they self-execute once both parties agree.
And the details will be recorded on the Ethereum blockchain, where it can’t be altered, hacked or manipulated.
Since smart contracts run exactly as programmed, you can create decentralized applications (dapps) on the Ethereum blockchain. Dapps are similar to the apps we use today, except there are no intermediaries and are hosted on a decentralized peer-to-peer network.
Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is the module that executes the rules of a submitted transaction or smart contract.
EVMs are embedded within every Ethereum node in the network and are instrumental to the network’s consensus mechanism.
The current price of Ethereum is at $1,213 and has a circulating supply of 110 million ETH coins. This puts Ethereum #2 in the crypto market, with a coin market capitalization of over $140 billion.
Ethereum Market Cap = Current Ethereum Price x Current ETH Circulating Supply
If you want a better insight into Ethereum price and its tokenomics, CoinGecko has some noteworthy stats such as user sentiment and ecosystem ratings. These factors play a vital role in shaping the value of Ether price.
|Market Cap Rank||#2|
|Current Monero Price||1 ETH in INR: ₹88,729
1 ETH in USD: $1,213
Ethereum Vs. Bitcoin
Bitcoin and Ethereum are both open-source cryptocurrency projects that are not controlled by any individual entity or organization. However, there are some fundamental differences between these two cryptocurrency behemoths.
Although Ethereum builds on Bitcoin’s innovation, it differs in purpose and capability. While Bitcoin acts as a store of value, Ethereum opens doors for new applications to emerge.
You can think of Bitcoin as the “internet of money” and Ethereum as the “internet of value.”
|Purpose||Digital Payments: Used for purchasing good and services (and as a store of value)||Smart Contract Platform: Used for making dapps|
|Coin Supply||21 million BTC (in total)||18 million ETH (per year)|
|Consensus Mechanism||Proof-of-work||Proof-of-stake (migration in progress)|
Why Buy Ethereum?
In the ever-expanding crypto market, Ethereum has been a host for innovation.
Here are four reasons why you should invest in Ethereum.
Ethereum’s ability to run smart contracts makes it a perfect platform to build applications with real-world utility.
Due to its distributed nature, information (dapps, smart contracts) stored on the Ethereum blockchain cannot be censored or shut down by any government or individual entity.
Ethereum has also given rise to the rapidly growing decentralized finance (DeFi) industry. DeFi dapps have been capturing enormous value over the past two years. To see the potential of these dapps, all you have to do is look at the amount of ETH locked in DeFi.
Ethereum Enterprise Alliance
One of the strongest indicators of Ethereum’s long term prospects is its adoption and popularity among major companies. The Ethereum Enterprise Alliance (EEA) enables organizations like Intel, Microsoft and JPMorgan to develop new business opportunities on the Ethereum network.
This network effect of adoption and collaboration has increased the value of Ethereum, as ETH is the fuel used to generate economic activity in the Ethereum blockchain.
While Bitcoin is an easy and good first investment to get into the crypto space, it is not wise to put all your money on it.
Ethereum offers numerous advantages in terms of investment diversification. Its technology has many use cases and also acts as the gateway to other crypto categories such as decentralized finance, stable coin and decentralized exchange, to name a few.
ETH 2.0 Upgrade
The Ethereum 2.0 upgrade (“Serenity”) brings two fundamental improvements to the Ethereum blockchain: proof-of-stake (PoS) and shard chains.
The PoS consensus model enables improved security and energy efficiency, and the shard chains mechanism improves the overall throughput of the Ethereum blockchain.
The ETH 2.0 upgrade not only bolsters Ethereum’s position as the large-scale competitor to Bitcoin but also has the potential to dethrone it as the top digital asset.
Different Ways to Buy Ethereum Online
You can purchase ETH from centralized exchanges, decentralized exchanges (DEX) or using wallets. These options vary depending on where you live.
In India, many find it the easiest to buy Ethereum through a cryptocurrency exchange, like ZebPay.
Before you choose an exchange, you need to assess the following factors.
- Payment Method: You can either use fiat currency or cryptocurrency to buy Ether. In India, there are only limited exchanges that support INR deposits. However, this will change in the near future.
- Trading Fee: Trading fee is the primary revenue source for most exchanges. Crypto exchanges might charge trading fees for fiat-crypto trades and crypto-crypto trades. You want to choose an exchange with relatively low trading fees.
- Deposit/Withdrawal Fee: Most exchanges won’t charge any fee to deposit funds into their wallet. But almost every exchange charges a flat withdrawal fee if you plan to move your crypto or fiat funds out of their wallet.
Once you pick a crypto exchange that suits your requirements, head over to the exchange’s website and create an account. You might have to complete KYC verification depending on the exchange.
Then add your preferred payment method – this could be bank transfer, UPI payments or debit card. Some exchanges even let you buy ethereum with PayPal or credit card. And finally, deposit funds into your exchange wallet.
And that’s it – you are ready to purchase ETH coins!
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What is Ethereum Mining
Mining is the process by which nodes (or miners) verify and confirm transactions on the network. And this concept applies to all cryptocurrencies that have a proof-of-work (PoW) consensus mechanism.
Ethereum mining is simply a process of solving complex mathematical problems to verify ETH transactions. And miners who solve the problem successfully receive block rewards and mining fees in ETH.
So, if you can earn ETH by mining, why isn’t everyone jumping on this act? Well, that’s because miners have to spend time and computing resources to solve those math problems – and this isn’t particularly cheap.
Whether Ethereum mining is profitable depends on the cost of electricity and the processing power of the miner. You can use the Ethereum mining calculator to see if mining is a good investment for you.
How to Mine Ethereum
An alternate way to earn Ethereum is by mining them.
There are two ways you can mine Ethereum.
- Mining Pools
- Mining Alone
A mining pool is a group of miners who combine their computing resources to increase their chance of successfully verifying the transactions. When a member from a pool solves the math equation, the reward is split between its members.
On the other hand, if you decide to mine alone, you don’t have to share the rewards with others. But that means you need to have a lot of computing resources as you’ll be competing with mining pools with over 100 members.
Of the two approaches, joining a mining pool is the easiest and fastest way to get started in Ethereum mining.
Before you can start mining, you need to set up your mining equipment. Here are the three tools you need to be an Ethereum miner.
- Ethereum Wallet: Setting up your wallet is the first step in Ethereum mining. The mining rewards are provided in ETH, so you need a wallet that accepts Ether. You can either use a digital wallet like MetaMask or a hardware wallet like Trezor Model T.
- Mining Hardware: Although you could use a gaming laptop to mine Ethereum, you might need a dedicated unit (that only mines Ethereum) to improve efficiency. You can either purchase these dedicated Ethereum mining rigs or build one yourself. Good mining equipment is one that has the maximum possible hash rate (to maximize your earnings), efficient energy consumption (to minimize electricity usage) and a fair purchase price of the unit.
- Mining Software: Mining software is an application that uses your GPUs (mining hardware) to solve complex mathematical problems.
Since you will be mining ETH, you need Ethereum mining software. The choice of your mining software depends on the operating system you use. Claymore Ethereum Miner is one of the most popular Ethereum mining software out there. It is available for Windows and Linux systems.
Note: Once the ETH 2.0 upgrade is complete, Ethereum will move from mining to staking.
Is Ethereum Legal in India?
Ethereum, including other cryptocurrencies, is yet to receive a valid status in India. This is mainly due to the pending regulatory frameworks for cryptocurrency trading.
Nonetheless, it is safe for Indian users to buy/sell ETH in India, especially after the Indian Supreme Court reversed the RBI ban on cryptocurrency trading.
It’s the perfect opportunity for you to dip your toes in the crypto industry!
|Knowledge Base||Ethereum Website
Ethereum Source Code
|Community||Reddit, Discord, Youtube, Twitter|