How to buy cryptocurrency And What Cryptocurrency To Buy.
If you’re new to the world of crypto, figuring out how to buy Bitcoin, Dogecoin, Ethereum and other cryptocurrencies can be confusing at first. Thankfully, it’s pretty simple to learn the ropes. You can start investing in cryptocurrency by following these five easy steps.
1. Choose a Broker or Crypto Exchange
To buy cryptocurrency, first, you need to pick a broker or a crypto exchange. While either let you buy crypto, there are a few key differences between them to keep in mind.
What Is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, all of which can make them intimidating for new crypto investors.
Some of the most well-known cryptocurrency exchanges are Coinbase, Gemini, and Binance. The US. While these companies’ standard trading interfaces may overwhelm beginners, particularly those without a background in trading stocks, they also offer user-friendly easy purchase options.
Related: Best online brokers (trading platform) for buying and selling cryptocurrencies.
The convenience comes at a cost, still, as the freshman-friendly options charge mainly further than it would cost to buy the same crypto via each platform’s standard trading interface. To save on costs, you might aim to learn enough to use the standard trading platforms before you make your first crypto purchase — or not long later.
An important note As someone new to crypto, you’ll want to make sure your exchange or brokerage of choice allows fiat currency transfers and purchases made withU.S. dollars. Some exchanges only allow you to buy crypto using another crypto, meaning you’d have to find another exchange to buy the tokens your preferred exchange accepts before you could commence trading crypto on that platform.
Cryptocurrency Broker
Cryptocurrency brokers take the complexity out of purchasing crypto, offering easy-to-use interfaces that interact with exchanges for you. Some charge advanced freights than exchanges. Others claim to be “ free ” while making plutocrats by dealing information about what you and other dealers are buying and dealing with large brokerages or finances or not executing your trade at the stylish possible market price. Robinhood and SoFi are two of the most well-known crypto brokers.
While they ’re incontrovertibly accessible, you have to be careful with brokers because you may face restrictions on moving your cryptocurrency effects off the platform. At Robinhood and SoFi, for case, you can not transfer your crypto effects out of your account. This may not feel like a huge deal, but advanced crypto investors prefer to hold their coins in crypto wallets for redundant security. Some indeed choose tackle crypto holdalls
that aren’t connected to the internet for indeed further security.
2. Create and Verify Your Account
Once you decide on a cryptocurrency broker or exchange, you can sign up to open an account. Depending on the platform and the quantum you plan to buy, you may have to corroborate your identity. This is an essential step to help fraud and meet civil nonsupervisory conditions.
You may not be suitable to buy or vend cryptocurrency until you complete the verification process. The platform may ask you to submit a dupe of your motorist’s license or passport, and you may indeed be asked to upload a selfie to prove your appearance matches the documents you submit.
3. Deposit Cash to Invest
To buy crypto, you’ll need to make sure you have funds in your account. You might deposit money into your crypto account by linking your bank account, authorizing a wire transfer or even making a payment with a debit or credit card. Depending on the exchange or broker and your funding method, you may have to wait a few days before you can use the money you deposit to buy cryptocurrency.
Here’s one big buyer beware: While some exchanges or brokers allow you to deposit money from a credit card, doing so is extremely risky—and expensive. Credit card companies process cryptocurrency purchases with credit cards as cash advances. This means they’re subject to higher interest rates than regular purchases, and you’ll also have to pay additional cash advance fees. For example, you may have to pay 5% of the transaction amount when you make a cash advance. This is on top of any fees that your crypto exchange or brokerage may charge; these can run up to 5% themselves, meaning you might lose 10% of your crypto purchase to fees.
low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, all of which can make them intimidating for new crypto investors.
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4. Place Your Cryptocurrency Order
Once there is money in your account, you’re ready to place your first crypto currency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.
When you decide on which cryptocurrency to purchase, you can enter its ticker symbol—Bitcoin, for instance, is BTC—and how many coins you’d like to purchase. With most exchanges and brokers, you can purchase fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that otherwise take thousands to own.
The symbols for the 10 biggest cryptocurrencies based on market capitalization* are as follows:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- Cardano (ADA)
- Dogecoin (DOGE)
- XRP (XRP)
- USD Coin (USDC)
- Polkadot (DOT)
- Uniswap (UNI)
*Based on market capitalization as of June 28, 2021
5. Select a Storage Method
Cryptocurrency exchanges are not backed by protections like the Federal Deposit Insurance Corp. (FDIC), and they’re at risk of theft or hacking. You could even lose your investment if you forget or lose the codes to access your account, as millions of dollars of Bitcoin already have been. That’s why it’s so important to have a secure storage place for your cryptocurrencies.
As noted above, if you’re buying cryptocurrency via a broker, you may have little to no choice in how your cryptocurrency is stored. If you purchase cryptocurrency through an exchange, you have more options:
- Leave the crypto on the exchange. When you buy cryptocurrency, it’s typically stored in a so-called crypto wallet attached to the exchange. If you don’t like the provider your exchange partners with or you want to move it to a more secure location, you might transfer it off of the exchange to a separate hot or cold wallet. Depending on the exchange and the size of your transfer, you may have to pay a small fee to do this.
- Hot wallets. These are crypto wallets that are stored online and run on internet-connected devices, such as tablets, computers, or phones. Hot wallets are convenient, but there’s a higher risk of theft since they’re still connected to the internet.
- Cold wallets. Cold crypto wallets aren’t connected to the internet, making them your most secure option for holding cryptocurrency. They take the form of external devices, like a USB drive or a hard drive. You have to be careful with cold wallets, though—if you lose the keycode associated with them or the device breaks or fails, you may never be able to get your cryptocurrency back. While the same could happen with certain hot wallets, some are run by custodians who can help you get back into your account if you get locked out.
Alternatives Ways to Buy Cryptocurrency
While buying cryptocurrency is a major trend right now, it’s a volatile and risky investment choice. If investing in crypto on an exchange or via a broker doesn’t feel like the right choice for you, here’s are a few options to indirectly invest in Bitcoin and other cryptocurrencies:
1. Wait for Crypto Exchange-Traded Funds (ETFs)
ETFs are extremely popular investment tools that let you buy exposure to hundreds of individual investments in one fell swoop. This means they provide immediate diversification and are less risky than investing in individual investments.
There’s a huge appetite for cryptocurrency ETFs, which would allow you to invest in numerous cryptocurrencies at formerly. No cryptocurrency ETFs are available for everyday investors relatively yet, but there may be some soon. As of June 2021, theU.S. Securities and Exchange Commission( SEC) is reviewing three cryptocurrency ETF applications from Kryptcoin, VanEck, and WisdomTree.
2. Invest in Companies Connected to Cryptocurrency
If you’d rather invest in companies with tangible products or services that are subject to regulatory oversight—but still want exposure to the cryptocurrency market—you can buy stocks of companies that use or own cryptocurrencies and the blockchain that powers them. You’ll need an online brokerage account to buy shares of public companies like:
- Nvidia (NVDA). This technology company designs and sells graphics processing units, which are at the heart of the systems used to mine cryptocurrency.
- PayPal (PYPL). Already a popular choice for people buying items online or transferring money to family and friends, this payments platform recently expanded to allow customers to buy and sell select cryptocurrencies with their PayPal and Venmo accounts.
- Square (SQ). This payment services provider for small businesses has purchased over $220 million in Bitcoin since October 2020. In February 2021, the firm disclosed that Bitcoin made up around 5% of the cash on its balance sheet. In addition, Square’s Cash App allows people to buy, sell and store cryptocurrency.
As with any investment, make sure you consider your investment pretensions and current fiscal situation before investing in cryptocurrency or individual companies that have a heavy stake in it. Cryptocurrency can be extremely unpredictable — a single tweet can make its price dip — and it’s still a veritably academic investment. This means you should invest precisely and with caution.
Cryptolifedigital is a cryptocurrency blogger and analyst known for providing insightful analysis and commentary on the ever-changing digital currency landscape. With a keen eye for market trends and a deep understanding of blockchain technology, Cryptolifedigital helps readers navigate the complexities of the crypto world, making informed investment decisions. Whether you’re a seasoned investor or just starting out, Cryptolifedigital’s analysis offers valuable insights into the world of cryptocurrency.
