Cryptocurrency is rising in popularity among people worldwide. However, for those new to it, figuring out the correct procedure to buy it can be overwhelming. You will be surprised to know that it is actually easy to purchase this currency. When you know how to buy cryptocurrency, you can quickly start investing in them.
But before that, ensure to learn the risks involved in this process. You can buy cryptocurrencies via a conventional investment platform, crypto exchange, mobile payment service, or an alternate platform. This article will give you the entire process of buying cryptocurrency.
The Basic Steps to Buy Cryptocurrency
Go through these steps to understand how to buy cryptocurrency.
1. Use a conventional investment platform or a Crypto exchange.
Conventional investment platforms have many traditional assets. But many are now providing crypto too. These platforms offer streamlined security compared to a crypto exchange.
As an investor, you only need to have a single password and an account instead of various private keys. However, you’ll be unable to withdraw crypto on a traditional investment platform. So, it takes away some of your freedom over your crypto for you because you cannot use it to pay for goods.
a. Using crypto exchange
An alternative is using a crypto exchange. This is a platform where sellers and buyers trade cryptocurrency. Exchanges like Gemini and Coinbase are some prominent examples of offering low fees. However, they can seem intimidating for beginners because of their complex interfaces.
On the other hand, if you are an experienced investor, these are the right choices. But crypto exchanges also charge more to purchase the same crypto amount as you would on the standard trading interface.
If you are a beginner, ensure that your crypto exchange permit fiat currency transfer.
b. Using cryptocurrency brokers
New investors should also take the assistance of cryptocurrency brokers. These offer user-friendly interfaces that engage with the exchanges on your behalf. For example, you should learn how to buy cryptocurrency on Robinhood, a well-known crypto broker.
The only problem you will face with them is that you have limitations on moving off your cryptocurrency holdings.
2. Make an account and verify it
Now that you have gone through the first step of finalizing an exchange or a broker, you can now make your account. At this point, you will need to submit your ID verification.
This includes your driver’s license or passport. Sometimes, you may need to upload your picture to confirm that your appearance corresponds with the details in your verification documents.
This eliminates the chances of fraud. The verification process is essential to start exchanging cryptocurrency.
After creating an account, you can link your bank account and move the funds you want to invest. You will be given the option to enter the market through either a limit or a market order.
Note that you can lose a lot of money in crypto markets as they are volatile. So, move or transfer only that amount of funds which will not affect your financial status.
3. Deposit money in your crypto account
The next step in learning how to buy cryptocurrency is ascertaining that you have sufficient money in your account.
Money can be deposited into the crypto account by authorizing a wire transfer or paying with a debit or credit card.
Wire transfers are ideal if you need to immediately start investing money in crypto. It transfers money between banks via networks like Fedwire Funds Service.
Some brokers demand you wait for a couple of days before using the money you deposit to buy cryptocurrency.
POINT TO NOTE: Depositing money from a credit card is fraught with risk and very costly as credit card companies process your purchases with cash advances. They have more interest rates than regular purchases. They also require you to pay more cash advance fees.
4. Place your order
After having sufficient funds, you can place your first order. There are innumerable cryptocurrencies where you can choose different kinds of cryptos.
After getting clear on a specific cryptocurrency, input its ticker symbol and the number of coins you want to buy. For example, the ticker symbol of Binance Coin is BNB, and Ethereum is ETH. You can buy fractional shares of cryptocurrency, which is a good thing. It lets you purchase a small number of tokens that may otherwise be very costly.
5. Pick a method to store digital assets
There are custodial and non-custodial types of storage. When you are learning how to buy cryptocurrency, paying emphasis on selecting a storage method for them is crucial.
a. Custodial wallet
A third party like Coinbase manages a custodial wallet. The custodian stores your private keys and guarantees their safety. These kinds of storage can be hot or cold. A hot wallet stores your keys and has links to the internet. They are highly vulnerable because they generate public and private keys to access crypto. A cold wallet isn’t linked to the internet and has lesser risk.
b. Non-Custodial Wallet
These wallets store your keys and do not involve the presence of any third party.
POINT TO NOTE – Always ensure to choose a storage option that lets you manage yourself without linking to the internet.
What Are the Alternative Ways to Enter the Crypto Market
There are other ways as well to start investing in cryptocurrency. These include mobile payment services and alternative online platforms.
You can also indirectly invest in a cryptocurrency like Bitcoin by waiting for Crypto Exchange-Traded Funds or ETFs. Apart from that, you can also invest in companies with products that are subject to federal regulations.
1. Mobile payment services
Through mobile payment apps, you can buy crypto by linking a bank account. Although this way is quite convenient, some apps prevent you from withdrawing your digital assets to a cold wallet.
The apps also charge a base fee and a spread on your purchases. They are quite expensive than mobile payment services.
2. Online platforms
Online platforms support the process of buying crypto with credit or debit cards. They are also quick ways to invest in crypto but charge high fees. If you buy crypto with a credit card, it means you are taking on debt to get a very volatile digital asset.
3. Crypto exchange-traded funds (ETFs)
ETFs are very powerful investment tools wherein you can buy specific investments in a single fell swoop. They offer quick diversification and have very less risk.
ETFs are about to come for regular investors.
4. Invest in companies connected with digital assets.
Are you looking to gain exposure to the cryptocurrency market? If so, you can buy cryptocurrency stock from companies that own cryptocurrencies and blockchains.
If you want to know how to buy cryptocurrency stock, you must create an online brokerage account. Visit a broker’s website and complete the account opening process.
After that, fund your account by moving money directly from a bank through a wire transfer. You can buy shares of companies such as Nvidia, PayPal, and Square.
Investing in cryptocurrency is a simple process but needs careful understanding. This is because the digital asset is very volatile. Use these steps to buy digital assets profitably. You can also consider a tradinguidance expert to learn more about the investing process.