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In this article, we will refer to the systems by name and the currencies by their stock symbols. How Bitcoin and Ethereum compare Bitcoin and Ethereum are fundamentally different because the former was designed to enable decentralised finance while the latter was designed to also enable apps and contracts.

Both systems use blockchain technology to validate and record transactions, but a change to the way Ethereum works, known as the mergewill mean the way in which they do it is different, with consequences for speed, sustainability and accessibility.

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What is a consensus mechanism? A consensus mechanism is a computer algorithm that makes a blockchain viable. A BTC is a string of computer code, and could be copied infinitely. In theory, this means you could make yourself as rich as you liked by simply making copies of your BTC and spending it over and over again.

This is all recorded on a distributed ledger for the world to see. Bitcoin and Ethereum use different consensus mechanisms.

Bitcoin vs Ethereum

Proof of work This consensus mechanism asks participants to carry out complex computations for the chance to become the user who gets to validate a bunch of transactions and add them to the blockchain — earning a set amount of crypto in the process.

Worldwide, Binance is the leading exchange by trading revenue. In the United States, Coinbase Exchange tops the list. The legality of cryptocurrency trading and trading in related products like crypto CFDs or futures may be limited by country or jurisdiction.

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Create an Account Once you have decided on a trading platform that fits your needs then the next step is to open an account.

This process is similar to opening an account with a brokerage platform. You will need to provide your name, address, social security number, specified forms of identification, and more.

Once you are confident with a site, the account opening process can usually be done pretty quickly. Verifying the account is usually the final step in the account opening process. Most all exchanges will require that you verify your account in one or more ways.

This is where you will likely need to upload documents to verify your identity and ensure that your account passes regulatory muster. Verification can take anywhere from approximately one hour to potentially a day or two depending on the exchange. Deposit Currency You'll next need to deposit currency into your account.

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For fiat currency platforms, this can be relatively easy after verification of your payment information. Simply add money through your bank account or debit card on file.

This innovation has the potential to disrupt industries all over the world. Payments, remittances, lending, gambling, identity management and even gaming are seeing an efflorescence of innovation thanks to this revolutionary new technology. At first glance you might be wondering what all the fuss is about. Blockchain technology seems a lot like a standard database or even an excel sheet. So what?

Most exchanges have fees per trade so it can be best to trade large amounts at once. Depositing currency in C2C exchanges can be slightly more difficult. These exchanges require you to send cryptocurrency by code from one location to another. Ethereum is a popular depositing currency for many C2C platforms so holding large amounts of it can be beneficial.

Code transfers take slightly longer to complete, typically up to an hour.

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When you use an exchange, you are trusting them to custody and take care of your funds on your behalf. This means that if an exchange were to be hacked, your money could be at risk.

While exchanges implement all sorts of security practices to protect your funds some of the work is still on you. Make sure verify your identity, enable two-factor authentication 2-FA and be wary of phishing scams which often work by sending unsolicited emails asking you to log-in to an exchange and sending you to a fake website that steals your data. While this may seem daunting, the reality is that most cryptocurrency users have never lost money due to an exchange hack.

In the event of a hack, exchanges may also opt to cover losses from their own treasury in order to protect user funds. After you buy Once you own ETH you can leave it on the exchange for storage, or move it to a personal wallet for self-custody.

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Self-custody means that no one else can access or move your money on your behalf, giving you true ownership. 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.

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Brokerage apps such as RobinhoodSoFior 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.

Buy an Ether ETF Pro: If you have purchased stocks before this is an easier and more familiar way of investing in ETH that can also be done through a retirement account like an IRA. Con: ETFs are more complex than just buying the asset outright and you need to be wary of management fees.

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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. There are several advantages to investing in ETH through an ETF They can be purchased through traditional trading platforms like eToroWeBull and SoFi. 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.