Nov 292017

How to buy fractions of Ether
This is a guide to help you on how to buy fractions of Ether. Before starting, let’s get something straight – yes, you can buy fractions of Ether. Like other cryptocurrencies, Ethereum network’s native currency, Ether, is divisible. This is similar to how Bitcoin works, since you can also buy fractions of a Bitcoin. In fact, 1 Ether can be divided into 10^18 units, each unit called a Wei. Wei is the smallest fractional unit of Ether.

To write it out, 1 Wei = 0.000000000000000001 ETH. As you can see, there is ample scope to buy fractions of Ether!

As a quick refresher, the Ethereum network is created similar to Bitcoin, but has a Turing complete smart contract platform. This allows programmers to create decentralized applications that can be arbitrary complex. Bitcoin has a much more limited support for smart contracts. Ether is also fueling a lot of token sales, or ICOs (Initial Coin Offerings). To participate in many of these ICOs, you need to buy Ether first, to send to a smart contract.

In addition, Ethereum has a whole ecosystem of decentralized apps called DApps. These need “gas” to execute. Think of this as equivalent to miner fees in Bitcoin. You pay for compute instead of bytes like Bitcoin. In order to pay for gas, you will need to buy fractions of Ether, or hold some ETH in your wallet.

You’ll need less than 1 ETH if you want to pay for gas for popular DApps like Uniswap, say. In that case, say you want to convert some token into USDC, you don’t need to buy a full Ether. Instead, you can just buy smaller fractions of Ether to pay for the gas fee. Also, as the price of Ether goes up, it may make sense for individuals to buy less than 1 ETH each time and dollar cost average into it instead of a big buy at a single point of time.

Conversion Guide for ETH Denominations

Use this handy Ether denominations conversion guide for the different fractional units of ETH (similar to bits, satoshi, milli Bitcoin, etc. on Bitcoin). We are only listing the major ones:

1 wei = 1 wei = 10^-18 ETH

1 gwei = 10^9 wei = 1,000,000,000 wei

1 shannon = 10^9 wei = 1,000,000,000 wei (1 GWei)

1 szabo = 10^12 wei = 1,000,000,000,000 wei

1 finney = 10^15 wei = 1,000,000,000,000,000 wei

Buy Fractions of Ether on Online Exchanges

Now that we know how Ether fractions work, it’s time to buy some. The simplest way to buy fractions of Ether is via online exchanges. You will need to connect your bank account, so you can purchase Ether directly with fiat (USD, GBP, etc.) Here are your options:

  • Coinbase: Coinbase is the simplest way to buy fractions of Ether. It is perhaps also the most trusted source of buying digital currencies and storing them. It’s a venture backed unicorn (valued over $1 billion). The San Francisco based company started in the US, but is fast expanding in many other countries as well. If Coinbase is available in your country and you’re new to crypto-assets, Coinbase is your best bet. The list of countries that Coinbase supports are: Singapore, Australia, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, Greece, Hungary, Ireland, Italy, Jersey, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Canada, United States, . You can see the full list here.
  • Binance: Binance has emerged as the major competitor to Coinbase for trading different cryptocurrencies including Ether and buying fractional ETH. Binance has lower fees and is available in most countries. For non-US residents, Binance allows a withdraw of up to 2 BTC a day without KYC, which is a major advantage. Binance also lists far more tokens and cryptocurrencies than Coinbase so if you want to diversify your crypto assets, you should have a Coinbase account.
  • Bithumb: This is a Korean exchange, which at the time of this writing, does the most Ether trading volume in the world! Part of the reason for high volume is there’s no fees, so the volumes get inflated. If you’re in Korea, you don’t have access to Coinbase, so Bithumb would be your best bet.
  • Buy ETH with BTC: If you have some Bitcoin already and want to convert that to Ether, then there are other options to follow, such as Bittrex, Poloniex, and Binance. This may be a good strategy even if you’re completely new to crypto-assets. In many places, it is easier to buy Bitcoin with local fiat money, and then convert into Ether, than buying Ether directly with local fiat.

One of the most popular uses of Ether is converting ETH into tokens for projects. These are ERC20 tokens and you can trade them on decentralized exchanges called DEXes. Some examples are Uniswap, Balancer, Sushi, etc. However, you can simply go to 1inch to trade instead which aggregates the best price and routes for best execution among all the DEXes.

Photo Credit: Flickr

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