Cryptocurrencies are digital assets that are traded globally. There are many cryptocurrencies that you can buy and invest in. These decentralized virtual currencies are used to buy goods or services. For beginners, learning how to buy cryptocurrency can seem intimidating. There are various ways to buy them. You can use a cryptocurrency exchange, traditional investment platform, or any other platform. However, you should be aware of the security considerations for everyone before buying.
In this article, we will describe the entire process of investing in digital assets.
5 Steps to Buying Cryptocurrency
Follow this stepwise process to easily buy and start trading in cryptocurrencies.
1. Select a broker or an exchange
The first step in learning how to buy cryptocurrency stock is selecting a platform or a cryptocurrency exchange to start trading. Some of the best-known exchanges include Binance.us, Gemini, and Coinbase. They offer user-friendly purchasing options.
There’s also the option of choosing a cryptocurrency broker. Some traditional brokers offer many ways to exchange cryptocurrency. They have lesser trading costs. However, they don’t have as many crypto features as exchanges.
Some points to consider while choosing a platform are:
- The digital assets it supports.
- How robust its security is.
- Trading fees
- Options to withdraw the currency
- Educational resources.
2. When to choose a broker
If you want to trade many kinds of digital assets under a single head, you may choose a broker. Some brokers offer cryptocurrencies apart from ETFs, stocks, and mutual funds. They also offer accounts like 529 college savings plans, trusts, and IRAs.
One of the most famous brokers is Robinhood. You can easily learn how to buy cryptocurrency on Robinhood on Android, the web, and iOS. Go to its detail page, choose your order type, confirm the order, and submit it.
3. Make an account and fund it
After deciding on an exchange or a broker, open your account. When making your account, you will require to verify your identity. This is essential to completing the verification process. Documents such as a driver’s license, passport, and pictures are needed to verify your account.
Fund the account to start trading. A majority of crypto exchanges let you purchase crypto through the US dollar or the Euro. To make purchases, you can use Visa or Mastercard as well.
Note that some crypto purchases with credit cards are very risky. Another option that some exchange platforms accept is ACH transfers. However, the payment method and the amount of time needed for deposits and withdrawals are not the same on every platform.
Look out for fees while funding your account. You may need to pay more deposit or withdrawal fees apart from the trading fees.
4. Make an order
Placing an order is the next step in the process of learning how to buy cryptocurrency.
- Go to your broker’s mobile or web platform.
- Choose the ‘Buy’ option to buy cryptocurrency.
- Select the order type.
- Input the amount of cryptocurrency you desire to buy.
- Finally, confirm the order.
In cryptocurrency transactions, there are three kinds of orders. These include stock orders, limit orders, and market orders. In global exchanges, margin, spot, and futures trading orders are used.
- In spot trading, users put buy or sell orders on the market to get filled when the price meets their particular targets.
- Margin trading allows users to trade in larger quantities.
- Futures trading is when two parties agree on a particular price at a definite future date on a particular cryptocurrency.
5. Store your assets
The next part is choosing a storage method for your cryptocurrency. It is critical to choose the right method to safeguard your currency from theft. Cryptocurrency wallets help you in this regard.
It is either online software or a physical device that stores the private keys to your cryptocurrencies. Note that your broker may not offer you a wallet service. However, there are many exchanges that provide this service.
The following are two kinds of custody options.
- Cold wallet storage or hardware wallets – These function on offline physical devices to store the private keys to your cryptocurrencies.
- Hot wallet storage – It uses online software to safeguard the private keys to your cryptocurrency.
Some Points to Know Before Buying Cryptocurrency
The prices of most established cryptocurrencies are a lot more volatile than the prices of stocks. So, you must be prepared for any kind of risk that may arise during this process. Here are some points to keep in mind before engaging in cryptocurrency trading.
- Cryptocurrency prices are affected by regulatory changes. A worst-case consequence of this can be that the digital asset can become birthless.
- Research deeply about any digital coin before deciding to buy it. Pay due attention to the transaction fees.
- Keep yourself updated about the new developments in the cryptocurrency domain as they impact crypto holdings.
- The Internal Revenue Service or IRS regards cryptocurrencies as convertible virtual currencies. It means they can be substituted for real money. Thus, it implies that your profit from the digital asset is taxable.
- Do not invest an amount of money that you cannot afford to lose in cryptocurrency. This is because of the volatile nature of this asset class.
Are There Any Benefits to Using Cryptocurrency?
Beginner investors often wonder if there are any benefits to using cryptocurrency compared to local currency. Indeed, there are many advantages to using and investing in cryptocurrencies.
- High transaction speed – With cryptocurrency, you can send money to someone in the United States in a matter of minutes. This is way faster than the transactions at most financial institutions and wire transfers.
- Low transaction cost – Transacting in cryptocurrency is very cost-effective. The median transaction fee is way lower than a domestic wire transfer.
- Greater accessibility – You only need a device with an internet connection to start using cryptocurrency. There’s no background or credit check to make online transactions.
- Robust security – Crypto wallets that store cryptocurrency is highly secure. They have a private key that keeps your digital assets entirely safe.
- Opportunity for diversification – Investors wanting to diversify their assets can use cryptocurrency. If the stock portfolio goes down, your digital asset may go up.
By now, you must have a fair idea of the process of buying cryptocurrencies. Understand the different steps involved in this process and research a specific digital asset properly before making the purchase. You can also consult a Cryptocashapp expert to learn more about this process.
Frequently Asked Questions
The best way to buy cryptocurrency is through a reliable cryptocurrency exchange. So, if you are planning to purchase it, ensure to get it from exchanges such as Coinbase, Binance, Uphold, and Kraken. Besides them, other popular platforms to invest in crypto include Gemini, Bitstamp, Bitcoin IRA, and Crypto.com.
The best crypto wallets include the Coinbase wallet, which is good for beginners. Another great hardware crypto wallet is Ledger Nano S +. BlueWallet is another great mobile Bitcoin wallet, while Crypto.com is the best DeFi wallet. MetaMask wallet is a great option for Ethereum users.
The three most stable cryptocurrencies are Bitcoin, Binance coin, and Ethereum. Bitcoin is the earliest cryptocurrency and the most widely used. It has a market capitalization of more than $100 billion, making it quite stable. Binance coin is also one of the biggest cryptocurrencies that run on a safe Binance SmartChain. Finally, Ethereum is widely used by developers and is the second-largest cryptocurrency.
Yes, you can use a traditional investment platform, a mobile payment service, or a crypto exchange to buy cryptocurrency. But before buying a specific digital asset, note its fees and security considerations. This process is quite complex, and even a single mistake can lead to a loss of investments.
You must consider some factors before choosing crypto. Firstly, assess the team behind the creation of the crypto. They must have a good record of success. Then examine the technology. It should be robust and secure. After that, find out if there’s a strong community around that crypto.