How To Convert Your Hard Earned Cash Into Virtual Ethers (How To Buy Ethers)

Baby Steps

Baby steps for #64 Dave.

Originally published 12/03/2016. Updated 29/03/2016 with minor changes.

Where and how can you buy ethers? The easiest way to convert your cash into ethers is to purchase Bitcoins and convert these on an exchange into ethers. This post just provides you with a step-by-step guide to:

  • Purchase bitcoins from a seller via LocalBitcoins
  • Transfer your bitcoins to the Poloniex exchange
  • Convert your bitcoins into ethers on Poloniex
  • Create an Ethereum paper wallet public key (account) / private key pair
  • Send your ethers from Poloniex to your Ethereum public key
  • Check your Ethereum account (public key)
  • Test your Ethereum account
  • An alternative using the Ethereum Mist wallet as suggested by reddit user frrrni is also provided at the end. This requires many less steps, but will involve downloading the 11 Gb (currently) blockchain onto your computer.

This guide does not provide you with advice on investing (gambling) in crypto currencies, and is not an enticement for you to do so. If you do want to invest (gamble) in crypto currencies, start with small amounts first until you are familiar with this process, as you can very easily lose your hard earned cash along the way.

Notes

  • Ethereum has just come out of beta on Pi day (14/03/2016 with the Homestead release. This is not a recommendation or endorsement of the Ethereum network. Do your own research.
  • LocalBitcoins and Poloniex is just one of the many exchanges you can use. This is not a recommendation or endorsement of their services, just an example. Try out with small amounts, get familiar with the process, do your own research and make your own choices.
  • Warning – Crypto currencies have many risks. See Bitcoin Paper Wallet – Warnings for more details.
  • Keep records of all your transfers – you may need this for taxation purposes in the future.
  • Check the regulations on crypto currency in your country, e.g., it is going to become illegal in Russia.
  • The banks you need to deposit money into to convert into bitcoins may be suspicious when you deposit wads cash over the counter instead of using bank transfers, and ask for more details. They have to comply with their Know Your Client (KYC) / Anti-Money Laundering (AML) / Counter Terrorist Funding (CTF) policy imposed by regulations. Don’t get into trouble by providing false information. Smart ATMs will ask for your mobile number or details. You just have to pay your taxes when the time comes. See entry on Tue 12/01/2016 in January 2016 regarding Australian taxation of crypto currencies.
  • You may want to familiarise yourself with Bitcoin addresses in the Bitcoin Paper Wallet page and with Ethereum addresses in the Ethereum Paper Wallet page.
  • I take no responsibility for loss of your hard earned cash, bitcoins or ethers. Start small and do your research.

Table of contents


Resources

See Ethereum Resources.


Purchase Bitcoins On LocalBitcoins

Create A LocalBitcoins Account

  • Go to https://localbitcoins.com/ .
  • Click “Sign up” on the top left of the page. You will have to enter a new unique username, your email address and password.
    LocalBitcoins Sign Up Page

    LocalBitcoins Sign Up Page

  • You may have to re-login with your new credentials. You will be sent an email with a link you have to click on to confirm your email address.

Find A Local Seller And Trade

  • Click on “Buy Bitcoins” on the top of the page.
  • Find a seller with a “Price / BTC” that you are happy with, and will trade with the limits appropriate to the amount of cash you want to convert. Click Buy.
    LocalBitcoins - Buy Bitcoins. Seller details blacked out.

    LocalBitcoins – Buy Bitcoins. Seller details blacked out.

  • Read the seller’s terms and conditions carefully. They may have additional requirements that you may not like, e.g. send selfie holding passport.
  • You normally have up to 180 minutes (3 hours) from sending the trade request to depositing and confirming the deposit into the seller’s bank account.

Deposit Cash Into Seller’s Bank Account

  • In this case, your cash (not a bank account transfer) has to be deposited to the seller’s bank account (provided on the next page after you click “Send trade request”). The deposit can be done over-the-counter in a branch of the specified bank, or through the bank’s Smart ATM that will count your notes and provide you with a receipt of this sum.
  • Double check the account details, and include the reference number if required by the seller.
  • When depositing over-the-counter, you can confirm that the seller’s bank account name is the same as what the seller has stated – if the seller has provided this information.
  • Note that this seller does not accept bank transfers from your bank account in the same bank, or from another bank as these type of transfers take time and/or can be reversed (while the bitcoin transfer cannot be reversed).
  • Keep your receipt from the bank or Smart ATM.

Notify Seller The Cash Has Been Deposited

  • In this case, the seller wants a photo of the cash deposit, with a note “For purchase of Gold currency from {seller}. No refund” written on the cash deposit receipt. Upload a photo of the receipt (can be taken from your smart phone or tablet) using the button on the LocalBitcoin page.
  • Click on “Mark Payment Completed” and wait.

LocalBitcoins Releases Escrowed Bitcoins

  • The seller will check their bank account and will inform LocalBitcoins to release the escrowed bitcoins into your LocalBitcoins account.
  • Your bitcoin balance on the top right of the screen will display your purchased bitcoins instead of zero.
    LocalBitcoins - Top right of screen.

    LocalBitcoins – Top right of screen.


Transfer Your Bitcoins To Poloniex

Create A Poloniex Account

  • Go to https://poloniex.com/ .
  • Click “Create an Account” on the top right of the screen. You will have to enter your first name, last name, country, email and password. Your mobile phone is optional. Poloniex has a daily withdrawal limit of USD 2,000 at this basic level of verification – currently.
    Poloniex - Create An Account

    Poloniex – Create An Account

  • You may have to re-login with your credentials. You will receive an email with a link that you have to click on to verify your email details.

Create A Bitcoin Deposit Address On Poloniex

  • Click on Balances -> “Deposit And Withdrawals” on the top right of the screen. Search for “[BTC] Bitcoin“. You may have to click on the Generate link in this section (not shown in image belowdecks) to create a unique Bitcoin address (public key) for your deposits.
    Poloniex - BTC Deposit Address

    Poloniex – BTC Deposit Address

    Make sure that you have the correct “[BTC] Bitcoin” currency address!

Transfer Your Bitcoins From LocalBitcoins Into Poloniex

  • In LocalBitcoins, click on the non-zero Balance amount on the top right of the screen. You will be take to the “Send Bitcoin” screen:
    LocalBitcoins - Send Bitcoins

    LocalBitcoins – Send Bitcoins

    The balance on your screen should be non-zero.

  • Copy the Poloniex Bitcoin deposit address from the section immediately above titled “Create A Bitcoin Deposit Address On Poloniex” and paste it into the “Receiving bitcoin address” in the LocalBitcoin “Send Bitcoin” screen above.
  • Enter the amount of bitcoins you want to send to Poloniex.
  • Enter your password.
  • Enter a description like “Yiiiiiiiikes”.
  • Click “Send from wallet”.
  • You will be presented with a Bitcoin transaction hash. Copy this transaction hash and paste it into the Bitcoin Blockchain Explorer at https://blockchain.info/ . You should see the transaction entering the unconfirmed transaction pool, then get packaged up into a block. After a sufficient number of new blocks get built above the block your transaction is included in, your balance should be cleared in your Poloniex balance screen.

Convert Bitcoins To Ethers On Poloniex

Trade On The ETH/BTC Exchange Screen

  • On Poloniex, go to the ETH/BTC exchange screen by clicking on Exchange. In the Markets section on the top right, click on the ETH within the BTC section.
Poloniex ETH/BTC Trading Screen

Poloniex ETH/BTC Exchange Screen

  • Make sure that you are on the correct ETH/BTC screen.
  • In the “BUY ETH” section:
    • “You have: ” should have your Bitcoin balance
    • “Lowest ask: ” is the lowest Bitcoin price at that time that a seller is willing to sell 1 ether.
    • “Price: ” is the Bitcoin price you are willing to pay to purchase 1 ether.
    • “Amount: ” is the number of ethers you will be buying.
    • “Total: ” is the total number of bitcoins you will be paying to buy the number of ethers in the “Amount” field.
    • If you click on the BTC balance in the “You have: ” field, the fields “Amount: ” and “Total: ” will be automatically filled in to accommodate your total Bitcoin balance.
    • Click “Buy” to enter your order.
  • You can view the current list of “Sell Orders”, “Buy Orders” and “Market Depth” in the middle section of the Poloniex Exchange screen.
Poloniex - Orders & Market Depth

Poloniex – Orders & Market Depth

Wait For The ETH/BTC Order To Be Filled

  • Your order will be executed when a sellers price and quantity matches your order. This may be immediate if your “Price: ” matches a seller’s price. Or it may take longer if the market moves higher.
  • You will see your order listed in the “My Open Orders” section on the bottom right of the Poloniex trading screen. Once you have successfully executed orders, you will find your trade history in the “My Trades” tab on the left side of the screen below.
Poloniex - Trade History & My Orders

Poloniex – Trade History & My Orders

Or Adjust Your Order If Necessary

  • Your order may not be executed if the market moves higher. Click Cancel in the “My Open Orders” screen to cancel your old order. Your bitcoin balance will then show your available bitcoins. Re-enter your order at a higher rate (that you are happy to pay). Click “Buy” to enter your new order.

And If You Are Really Impatient

  • Cancel any open orders. Click on a line in the “Sell Orders” screen with a rate you are happy to pay. The “Price: ” field will be populated with this rate. Click on your “You have: ” field to fill in the number of ethers and bitcoins. Click “Buy” to enter your new order.

Your Order Is Filled

  • When your order is successfully executed, you will see the number of ethers you have bought in the “Sell ETH” “You have: ” field. The “My Open Orders” will be empty. Your trade(s) can be found in the “Trade History” “My Trade” list.

Create An Ethereum Wallet

MyEtherWallet

MyEtherWallet

  • Enter a password on the top left of the screen. Click on “Generate”.
  • Save the following details in your SECURE password store, e.g. Keepass.
    • “Save Your Address” contains your Ethereum public key, or account.
    • “Your Private Key (encrypted)” contains your Ethereum private key, encrypted with your entered password.
    • “Your Private Key (unencrypted)” contains your Ethereum private key, unencrypted.
  • You can also download text files that can be imported into other Ethereum wallets in encrypted or unencrypted formats using the “Download JSON file (*)” buttons. Back these up in multiple locations.
  • You can click “Print” to generate a paper wallet image that can be printed on your printer:
    MyEtherWallet - Paper Wallet

    MyEtherWallet – Paper Wallet

  • More WARNINGS:
    • Make sure you are using a secure computer, i.e., not compromised with viruses or trojans. Your private keys and therefore your funds can be stolen.
    • If you are using a computer in a corporate environment, your web browser encryption may be intercepted by an SSL inspection proxy. Your overly friendly system network administrator may have access to your private keys – see You Can’t Always Trust SSL [redmondmag.com, 01/01/2009] for more information.
    • Many printers store a copy of information printed on a hard drive in the printer, particularly in an office environment – see What about the Hard Drive in Your Printer? [zdnet.com, 24/08/2010] for more information.
    • You don’t have trust this https://www.myetherwallet.com/ website. You can download the source code for this wallet (and https://ryepdx.github.io/ethaddress.org/) onto your computer, disconnect your computer from the Internet and generate your wallet. You can also transfer the source code to a USB stick onto a permanently Internet-disconnected computer to generate your wallet – if you are really paranoid.

Transfer Your Ethers On Poloniex Into Your Ethereum Wallet

  • In the Poloniex “Balances” -> “Deposits & Withdrawals” screen, find the “[ETH] Ethereum” section. Enter the amount of ethers you want to transfer to your newly created Ethereum wallet address in the “Amount: ” field. Enter your newly generated Ethereum public key (address/account) in the “Address: ” field. Click “Withdraw ETH”. You will be sent an email to confirm this withdrawal. Click on the supplied link and your withdrawal will proceed.
    Poloniex - Send Ethers

    Poloniex – Send Ethers

 


Check Your Ethereum Address

  • Go to https://etherscan.io/. Enter your public key / address / account into the search box on the top right of the screen and press ENTER. Your balance should show in the screen.
Etherscan - Balance

Etherscan – Balance of the third largest account balance currenly


Test Your Wallet

  • Once you have created an Ethereum address and have a small amount in it, create a second address and try sending a small amount from each to the other. This will ensure that your accounts are fully functional. There was a bug, now fixed, in a library that resulted in incorrect addresses being generated for private key, rendering the public key address useless.
MyEtherWallet - Send Transaction

MyEtherWallet – Send Transaction

  • Into the field “Paste / type your private key: “, paste your the private key (encrypted or unencrypted) from your first address, now loaded with a small amount of ethers. Click “Decrypt Private Key”. Enter your password if required.
  • Under “Send Transaction” in the “To Address: “, enter the public key of your second generated address. Enter a small amount in “Amount to Send: “. Click “Generate Transaction”. Check your second address on the Ethereum Blockchain Explorer and confirm that the amount has been sent. If so, your first address is good to go. Test your second address by sending back some ethers to your first address.

Alternative Using Ethereum Mist Suggested By Reddit User frrrni

  • 18:15 12/03/16 frrrni from reddit commented that it would be easier to buy from LocalBitcoin, install the Ethereum Mist wallet, and transfer the bitcoins to the Mist wallet with the “Deposit with Bitcoin” button. (Thanks for the feedback).
  • This is correct if you are happy downloading the 11 Gb (and growing) blockchain data onto your local computer. To do this:
    • Download the appropriate Ethereum Mist software .zip package from https://github.com/ethereum/mist/releases. There are version for the Mac, Windows and Linux. Unzip the wallet into a subdirectory. For the Linux version, you will find the application in ./Ethereum-Wallet-linux64-0-5-1/Ethereum-Wallet . Run this command.
    • The wallet will start a process in the background to install the 11 Gb blockchain data. When this is completed, you will see a screen with tabs in the top. Select the Wallet tab. Click on the “Add Account” button and this will create a new account for you. Enter and save your password.
    • You will see a screen with a “Deposit using Bitcoin” option on the right.
      EthereumWallet - Account Screen

      EthereumWallet – Account Screen

    • Click on the “Deposit using Bitcoin” option on the right and the following screen will open:
      EthereumWallet - Pay Using Bitcoin

      EthereumWallet – Pay Using Bitcoin

      Select Bitcoin in the top middle dropdown box.

    • Click on Submit and the following screen will open:
      Ethereum Wallet - Shifty

      Ethereum Wallet – Shifty

    • From your LocalBitcoins account, send your bitcoins to the specified Bitcoin “Deposit Address” in the screen above. Your ethers will then appear in your wallet after a short wait.
    • This exchange service is provided by https://shapeshift.io/. Note that you could choose to use this exchange service via their website instead of Poloniex as described above.
    • Remember to back up your password entered in your wallet, and your keystore directory (this is ~/.ethereum/keystore in Linux).
    • BTW, you will be running a full non-mining node when running this wallet, further decentralising the Ethereum network.

Sit Back And Enjoy

Watch your gamble/investment go up and down like a rollercoaster on https://coinmarketcap.com/currencies/ethereum/.

Remember not to gamble/invest more on crypto currencies than you can afford to lose.

If this post is helpful to you, you can always send some spare ether change to my Ethereum address 0x917a3086e47ff0d9efc40221f454aa510c507191 . This will encourage me to write more brilliant (huh?) articles, and I always have the need for more currency to rule my kingdom.

 

Enjoy.

Bokky Poo Bah, the ninth King Of The Ether Throne, the Ninth of His Name, the Uncentralized, Sovereign of the Exalted Order of Miners, Emperor of the Blocks beyond the Sidechains, Head of the Great Patricia Tree.

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