Ethereum is the second-largest cryptocurrency in terms of market capitalization. Ethereum may be smaller than its rival, Bitcoin, but it has many more use cases. Bitcoin has proven itself to be a valuable store of value to millions of investors; however, it doesn’t have much other functionality. It can be used for payments, but it’s a bit slow, clunky and expensive. Right now, Ethereum is worse than Bitcoin for payments because of its high transaction fees, but it can offer so much more.
A majority of blockchain developers are working on platforms on the Ethereum network. The most popular uses of Ethereum mostly relate to finance in some way. The developers built applications that they knew would attract a large user base with decentralized finance (DeFi) services platforms. It’s how the DeFi ecosystem on Ethereum was born and why it’s rife with constant innovation. New applications and protocols with cutting-edge features and services launch nearly every day. The wide range of useful services gives crypto investors fantastic reasons to use their Ethereum and other tokens on the network.
What Is Ethereum?
Ethereum is the pioneer of general-purpose blockchains. It acts as a foundation for thousands of other applications and tokens. The most innovative part of Ethereum is its support of smart contracts, something that has been copied by many new cryptocurrencies like Binance Smart Chain and Solana. Smart contracts are programmable self-executing contracts written in code in the blockchain. They are the tools that a new class of brilliant software developers use to build complex applications on Ethereum and similar networks. Developers can also create their own tokens on the network, called ERC-20 tokens, and build them into their platforms.
Smart contracts allow for decentralized applications (DApps) like Uniswap, SushiSwap, Aave and Yearn Finance. These platforms provide lending, borrowing, staking for interest and other financial services. If you are used to the interest paid by your bank on a savings account, the figures most of these platforms boast would boggle your mind. Platforms like Sushiswap can earn you anywhere between 5% to 200% APY on your crypto. This activity is often called yield farming and for good reason. Stakers can harvest tremendous yields from their cryptos over time, but it can also be extremely risky. The relatively small possibility exists that they could lose their entire crop of cryptos.
What Can You Do With Ethereum?
Ethereum offers many possibilities for usage because smart contracts enable developers to have nearly endless options for types of applications. However, the platforms with the highest incentives for users have succeeded the most, so DeFi remains the king of Ethereum. In early September 2021, nearly $89 billion worth of cryptocurrency is staked in hundreds of different DeFi protocols. The application with the most funds locked now is Aave, the leading decentralized lending and borrowing platform. Aave lets you deposit cryptocurrency as collateral to borrow a different cryptocurrency. It supports 29 different cryptos and offers some of the lowest borrowing rates in the entire DeFi ecosystem.
Recently, a popular use of the Ethereum network has been to mint, trade and follow the progress of non-fungible tokens (NFTs). The NFT craze must seem absolutely bonkers to most people. It’s hard to wrap your brain around investors buying and selling pictures for millions of dollars that anyone can see or save. Algorithmically generated profile pictures such as CryptoPunks, Bored Apes and Pudgy Penguins can easily sell for prices higher than most people’s houses or cars. Many new investors have made millions of dollars on NFTs in the past few months with tiny starting investments. The profit potential right now seems higher even than most of the opportunities in DeFi. However, because NFTs need to be at least relatively scarce to be so valuable, it may be difficult to sell them during a market crash.
Can You Use Bitcoin On Ethereum?
Because Bitcoin and Ethereum each have their own networks, you can’t directly use Bitcoin on Ethereum or Ethereum on Bitcoin. However, smart contracts on Ethereum allow investors to create Bitcoin substitutes, the most popular of which is Wrapped Bitcoin (WBTC). WBTC is an ERC-20 token pegged 1 to 1 with Bitcoin. The peg is maintained because every time 1 WBTC is minted, 1 BTC is locked away in the hands of custodial smart contracts. When someone wants to get their Bitcoin back, their WBTC is burned and their BTC is returned.
Investors use WBTC for many different purposes. Some just want to hold all their cryptocurrencies in a wallet that only supports tokens on the Ethereum network. The majority actively use the WBTC on DeFi platforms to lend, borrow, stake for interest and more. There are few ways to earn passive income on your Bitcoin, but it’s incredibly easy to earn interest on WBTC. You could deposit your Bitcoin in centralized platforms like BlockFi to earn up to 4% interest, but you could also access many more options in the blossoming DeFi ecosystem on Ethereum. For example, you could deposit WBTC into any of Curve Finance’s pools with the token and earn anywhere from 3.5% to 25% APY at the rates offered in September 2021.
How To Use Ethereum
Are you looking for the easiest way to start using Ethereum today? Follow these 4 easy steps.
- Buy Ether tokens.
Ether is available for trading on a myriad of trading platforms. Nearly all cryptocurrency exchanges offer the token and even some brokerage applications have it too. Some of the best platforms to buy Ether on are Coinbase (NASDAQ: COIN), Gemini, Binance, Webull and Robinhood (NASDAQ: HOOD). After you sign up for an account with the platform you choose, you need to verify your identity before you can start trading. This process generally entails providing your Social Security number, address and a picture of your driver’s license. Once your identity is verified, you can fund your account with fiat currency or another crypto. Set the price and make your purchase.
- Download an Ethereum wallet.
You don’t need an Ethereum wallet to speculate on the token’s price, but you need one to use the network. There are 2 main types of cryptocurrency wallets: software and hardware. Hardware wallets are typically the most secure, but they can be clunky to use with platforms on Ethereum. Software wallets are usually free and incredibly easy to use. One of the best software wallets available is Coinbase Wallet. It is supported by a wide range of applications on Ethereum and has more features than most of its competitors. It has a trade tab where you can trade your cryptos for fiat or other cryptos, a place to store your NFTs and a DApp browser to easily use DeFi platforms in the app.
- Send your Ether to your Ethereum wallet.
If you paid with USD from an instant deposit, you may have to wait a few days to move your Ether. You’ll need to find the Ethereum address of the wallet you want to transfer the Ether to. You can often find it by clicking a button in the app labeled receive, deposit or something similar and then selecting Ethereum. The address should start with “0x” and be quite long. Once you are ready to transfer your tokens, find the withdraw or send button on your trading platform. Enter in the Ether address you found in your personal wallet and hit send.
- Connect your wallet to a Web3 enabled website.
You’ve already done the hard part. Now it’s time to reap the rewards. Navigate to whichever DApp on Ethereum you want to use. Some of the most popular right now are Uniswap and OpenSea. Uniswap is the go-to platform for many crypto investors who want to swap cryptocurrencies or stake theirs for interest. OpenSea is a top NFT marketplace where users trade and keep track of their favorite collections like CryptoPunks and Bored Ape Yacht Club. If you are looking for a good place to start yield farming, check out our list of the top DApps for that. You may want to check the useful website Eth Gas Station to see what the transaction fees are going to cost you. Once you find the platform you want to use, click Connect Wallet and sign in; you should be all set.
Where to Buy Ethereum
As previously mentioned, there are plenty of cryptocurrency exchanges that support Ethereum. Robinhood is a great choice if you simply want to speculate on the token’s price, but you won’t be able to send your Ether to a crypto wallet to use DeFi applications. If you want full access to your crypto, then Crypto.com, Coinbase and Gemini are all great options.
Commissions
Account Min
$0
1 Minute Review
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
Best For
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
Pros
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
Cons
- Higher fees than competitors
Commissions
. 25% or less
Account Min
0.00001 BTC
1 Minute Review
Gemini is a cryptocurrency exchange and custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
Best For
- New investors looking for a simple mobile and web app
- Experienced investors who need a more advanced platform with more tools
- Users looking for a 1-stop-shop to buy, sell and store all of their coins
Pros
- Easy and quick signups — can get started in as little as a few minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
Cons
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
Commissions
FREE
Account Min
$10.00 USD
1 Minute Review
Voyager is a leading name in the sphere of cryptocurrency investing, giving you access to over 50 tokens and coins. Buy, sell and swap assets using Voyager Crypto’s simple mobile platform available as a free download for iOS and Android users.
When you invest through Voyager, you’ll pay nothing in commissions, which is a major benefit when compared to other cryptocurrency brokers. Voyager is also one of the only brokers we’ve seen that allows users to earn interest on their crypto investments.
Though the broker could do more to improve its customer service, it’s an excellent option for beginner investors and seasoned professionals alike.
Best For
- Cryptocurrency investors looking for a wide selection of supported projects.
- Investors who prefer mobile trading.
- Anyone interested in earning interest on their crypto investments.
Pros
- Simple, straightforward and intuitive mobile platform
- Wealth of investment opportunities
- Allows users to earn interest on select crypto investments
Cons
- Only available for mobile users — no desktop platform
- Limited routes to contact customer service team
1 Minute Review
Robinhood is the broker for traders who want a simple, easy-to-understand layout without all the bells and whistles other brokers offer. Though its trading options and account types are limited, even an absolute beginner can quickly master Robinhood’s intuitive and streamlined platform. On the other hand, more advanced traders might be frustrated by Robinhood’s lack of technical analysis tools, a feature that’s now nearly universal across other platforms.
Best For
- Beginner traders
- Mobile traders
Pros
- Streamlined, easy-to-understand interface
- Mobile app with full capabilities
- Can buy and sell cryptocurrency
Cons
- Almost no trading analysis tools available
- Only taxable brokerage accounts available
- No option to open a retirement account
- No access to mutual funds, forex or futures trading
- Limited customer service
Earn Interest on ETH With BlockFi
If you want to earn passive crypto interest and forgo the transaction fees and general trouble of using a DeFi staking protocol, BlockFi is perfect for you. You can earn up to 4% APY on your Ethereum when you deposit it into a BlockFi interest-bearing account. Unfortunately, the rate decreases to 1.5% for deposits more than 5 Ether. One of the best parts about earning interest with BlockFi is its security. You’ll run no risk of smart contracts failing or anonymous application developers taking all the users’ funds. It’s also incredibly easy to open an interest-bearing account and start earning. Anyone whohas some Ether just sitting in their wallets should consider opening an account with BlockFi today.
Holding Ether vs. Using Ethereum
Many crypto investors hold Ether, but they don’t actually use the network. Some are scared off by the high transaction fees and relatively slow transaction speed. There are good reasons to use the network, however, especially if you own any Ether or ERC-20 tokens. With only a few transactions, you can stake your cryptos on reliable platforms like Curve Finance or BlockFi to passively earn significant interest. Staking your cryptos with any DeFi platform isn’t risk-free. Even though most of the top DeFi protocols are heavily audited and secure, losing deposited funds is still possible due to smart contract failure, hacks or other protocol-specific risks. Transaction costs can also make many DeFi transactions too expensive to be worth it.
Is Ethereum a Good Investment?
Historically, Ethereum has been one of the best investments of the decade. Although its strong performance is a fantastic sign for the future, investors have no guarantee that it will be a profitable investment in the next decade and beyond. Ethereum, like nearly any other cryptocurrency, is a risky investment because it experiences drastic price swings regularly. If history repeats itself with Ethereum, it will have been an amazing investment, but we can’t be sure until it happens.
Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.
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