This post describes how to buy Ether in United States Dollars. This process works even if you live in New York. That’s not as easy as it sounds.
IMPORTANT UPDATE, MARCH 2017!
Shapeshift.io became unavailable in New York State since I wrote the original post. I’m a bit confused because I wrote the original post after Shapeshift announced they were leaving New York.
I’m a curious person by nature and decided to look into this further. Less than 5 minutes of research revealed a solution. I’ve updated this post to include the workaround. See step 3B for the update.
Update #2 — Coinbase is now approved to trade Ether, even in New York State.Now anyone can establish an account on Coinbase and buy Ether with USD.
I should say here that I wrote this article as an academic exploration of how to but Ether with USD. It’s not intended, at all, to be an offer of investment advice, tax advice or anything else remotely related to using Ether as a financial vehicle.
I’m simply a blockchain enthusiast. I enjoy challenges and enjoy experimenting with new technologies. I only work with very small amounts of Bitcoin and Ether during my experiments.
I live in Brooklyn, New York. A blockchain sticker on a mailbox in Williamsburg, Brooklyn, sparked my interest in blockchain. You can read more about how that happened here.
This interest lead me to Ethereum and now Golem. I’m planning to participate in Golem’s crowdfunding process tomorrow. You can read more about how I plan to do that here.
First I need Ether. This post describes the steps I used to buy Ether in USD. It’s not a straightforward process right now.
Living in New York makes it even more complicated. We have this thing called the Bitlicense here. It’s meant to protect us from devious exchange operators. Apparently the Winkelvoss Twins aren’t devious, since their exchange was the first to receive a Bitlicense. (It’s true, you can look it up!)
Oh well, moving on…
Disclaimer! This post is not intended to convince you to buy Ether with USD. It’s simply to provide information, e.g. if you’re interested in Ethereum and/or have already decided to buy Ether with USD. It is NOT a recommendation or offer of investment advice IN ANY WAY!
How Long Does it Take to Buy Ether with USD?
The process took me about a month of on-again-off-again trial-and-error to figure out. It should take you about a week following these steps.
Two factors contribute to the delay —
- ID verification when you create an exchange account
- Purchase account, i.e. credit card or bank account, verification in your exchange account
You may not experience this delay if you live outside of New York. The exchange operators here have to comply with the Bitlicense, remember (SMH)?
To be on the safe side, I’d still suggest giving yourself a week to establish the process.
How to Buy Ether in USD
Step 1 — Create an Exchange Account
The first step is to create an exchange account. You’ll use this account to buy Bitcoin or Ether with a USD-denominated credit card or bank account.
I did a lot of research and decided to use Coinbase. I didn’t want to give my money to the Winkelvoss Twins. That ruled out their exchange.
Coinbase was one of the small number of exchanges operating with a Bitlicense. Union Square Ventures has invested in Coinbase too. I admire Fred Wilson from Union Square Ventures. The fact he’s trusting Coinbase made me comfortable doing the same.
The initial ID verification process on Coinbase was frustrating. It seems to be fixed now.
Step 2 — Add a Purchase Method to your Exchange Account
I chose to add a credit card to my account. I’m still experimenting with Ether. This means I’m buying very small amounts of Ether. Using a credit card felt like the easiest and safest way to do this.
I wasn’t comfortable linking a bank account to my Coinbase account. I figured if Coinbase ever got hacked, I’d have the credit card fraud department to back me up on any fraudulent transactions. My bank would do the same, however I might be out the cash during the resolution period.
Step 3 — Buy Ether Using your USD Account
If you DON’T live in New York, you can buy Ether on Coinbase using the account you added in Step 2. The Coinbase site makes it pretty easy.
If you DO live in New York, you have to buy Bitcoin (NOT Ether) with the account you added in Step 2.
Let me repeat this —
If you DO live in New York, you have to buy Bitcoin (NOT Ether) with the account you added in Step 2.
The Coinbase UI/UX could use an update here. You can actually get to a point in the transaction where it looks like you can buy Ether with the account you added in Step 2.
You’ll add the USD amount, then the corresponding Ether amount WON’T APPEAR.
That’s the only indication you’ll receive the purchase of Ether won’t work. I confirmed with Coinbase support that New York residents can only purchase Bitcoin.
Congratulations if you don’t live in New York, you’re done!
You now have Ether in your Coinbase wallet.
(Note that some Ether transactions require you to use a wallet your control, rather than an exchange wallet, like Coinbase. If that’s the case, you’ll have to setup an Ether wallet.
I’ve tested the Ethereum Mist wallet, Parity and myetherwallet.
myetherwallet is the way to go for me.
It creates an Ether wallet for you in a single step. myetherwallet doesn’t have to download the entire blockchain either. This will save you hours if not days, since downloading the entire blockchain takes that long.)
Congratulations if you DO live in New York! We love it here for a lot of reasons, don’t we? Ok, well the Bitlicense may not be one of them.
Because of the Bitlicense, we have some more work to do here.
[For New York Residents Only] Step 3A — Convert Bitcoin to to Ether
March 2017 Update — The workaround mentioned above is to install a VPN on your computer. I like to use VPN’s for many reasons.
It turns out I had the Cloak VPN running on my laptop when I tried to access Shapeshift.io from New York. Magically, Shapeshift appeared, without the New York and North Korea notice :) I was able to exchange Bitcoin from my Coinbase wallet into Ether. The Ether was deposited into my Ether wallet.
So install a VPN like Cloak, then follow the remaining steps.
Use Shapeshift.io to convert your Bitcoin to Ether. To do this —
- Setup your myetherwallet
- Initiate a Bitcoin to Ether transaction on Shapeshift.io, following Shapeshift’s instructions. Do this by sending Bitcoin from your Coinbase Bitcoin wallet to the address Shapeshift.io generates for you
- Confirm receipt of your Ether in your myetherwallet
Ok, now you’re done, even if you do live in New York! Go out and enjoy everything else New York has to offer :)
P.S. If this post was helpful, please consider sending a small Ether contribution to me. I invest a lot of time researching and writing these posts. Your contribution makes more posts like this possible.
My Ethereum address is -
0x88f78b27b0eab9cb2f9108808070c7aa1e6a88b8
Or, simply recommend this post to others. That won’t cost you a thing!