Where And How To Buy Cryptocurrency: Learn 4 Best Ways To Buy Crypto
If you haven’t sure where and how to buy cryptocurrency, then it is high time to read this article. Moreover, the market is worth a few hundred billion dollars, where more than 2500 cryptos exist.
If you look at the benefits, the digital currencies offer that fiat currency cannot. Other than being used as a medium of exchange, cryptos offer anonymity, privacy, transparency, speed, and convenience.
Investing in crypto is as easy as online shopping. However, beginners investors face a lot of problems to find out the right source to buy crypto. So, this article will present you the 4 different ways and places, from where you can buy cryptocurrency.
Brief Introduction To Cryptocurrencies
When we open the historical chapter of cryptocurrency, Bitcoin was the first virtual coin. Satoshi Nakamoto was the brainchild behind bitcoin and the underlying blockchain technology.
The goal behind this invention was to solve the inefficiencies in the existing fiat system. It was private, secure, transparent, fast, low cost, cross-border, decentralized, and digital.
Furthermore, Bitcoin was just the beginning of the crypto revolution. The revolution truly changes the way we look at money.
From a few cents to nearly $20000 in 8 years made Bitcoin’s popularity soar through the roof.
Other prominent cryptos after bitcoin are Ethereum, Litecoin, Ripple, EOS, Stellar, Cardano, etc. Besides, many other cryptocurrencies aimed to serve different purposes.
Compared to bitcoin, other cryptocurrencies are faster, incur lower fees, and offer more privacy and anonymity. That doesn’t mean Bitcoin has become obsolete. It is still king when it comes to value and market cap. It has a 67.5% share in the market cap of all cryptocurrencies.
Therefore, we recommend you to buy bitcoin along with other cryptos to diversify your portfolio.
Why Should You Buy Cryptocurrency?
There are countless reasons to buy cryptocurrencies. We will list down the main reasons why you must invest in cryptocurrencies:
1. Easy And Fast Transactions:
Crypto transactions don’t have to go through the hassle of a middleman. They are done on a peer-to-peer network and there is no human activity involved.
It is quite easy to transfer funds and the transfer takes a few seconds making it lightning fast. In fact, it is faster than other modes of fund transactions.
2. Convenient Payment Mode:
Crypto is slowly gaining adoption. Many retail stores and shops now accept bitcoin and other cryptos as a form of payment.
All it takes is a QR-scan on your phone to complete the payment. Also, credit/debit card offers a similar cashless experience. But that happens through your bank. However, transaction through crypto will occur without any mediator.
3. Privacy:
As cryptocurrency is decentralized and not governed by any central authority such as a bank or a financial institute, there is no way they can monitor and control your activity.
You are free to use crypto as you please and exercise full control of your money.
4. Fees:
Compared to traditional transactional methods, crypto transactions incur only a fraction of their fees.
For a bank transfer that charges $40-$50 in fees, you will only pay a few cents as transactional fees with crypto.
5. Security:
Crypto transactions cannot be reversed, tracked down, or stopped. The strong encryption employed on the blockchain makes crypto very secure and protects your funds from fraud and attacks.
6. Use-Cases:
As mentioned above, there are over 2500 cryptos in the market, and each one offers something useful that benefits everyday life of consumers.
Starting from medical science, they use for cross-border payments, insurance, smart appliances, smartphones, music, sports, etc. The versatility should be one of the reasons to buy crypto.
Steps To Take Before Buying Cryptocurrency
Buying cryptocurrency is a piece of cake. There are many different methods that you can use to purchase cryptocurrency. We will list the most popular ones in the next section.
Before that, there are some things you need to decide before you invest in crypto.
1. Decide if you want to invest or trade:
The difference between investing and trading is that with investing, you buy the crypto and hold on to it. You think about the long-term price movement and sell it when the profitability will high.
On the other hand, trading crypto involves frequently buying and selling crypto. Trading aims to earn consistent small profits. Depending on your choice, you will decide on the method of buying cryptocurrencies.
2. Risk level:
The difference between investing and trading is that with investing, you buy the crypto and hold on to it. You think about the long-term price movement and sell it when the profitability will high.
On the other hand, trading crypto involves frequently buying and selling crypto. Trading aims to earn consistent small profits. Depending on your choice, you will decide on the method of buying cryptocurrencies.
3. Buy crypto or its derivatives:
You can either buy crypto as it is or buy its derivatives. Derivatives are contracts formed between parties that ‘derives’ its value of the underlying asset.
So, when you purchase these contracts, you are speculating on price movement without owning them. Example of derivatives include CFDs, futures, options, etc.
4. Allot percentage of portfolio:
You need to decide how much of your portfolio is going to fill with crypto. Suppose your total portfolio is worth $100,000.
To allocate 25% of it to crypto, you’d buy $25,000 worth of crypto. Among this 25%, you need to decide the crypto types, and that brings us to our next point.
5. Decide which crypto to purchase:
With thousands of crypto to choose from, it can get quite confusing. We suggest sticking to ones that have been on the market for years.
Also, it is wise to select one that has a high volume of transactions along with solid use-case.
Where And How To Buy Cryptocurrency
There are different methods of purchasing cryptocurrencies, and we will describe them in this section. Depending on your location, and preference, you can make up choice.
Other factors such as fees, convenience, ease-of-use will also influence your choice. The most common and obvious way of buying cryptocurrency is via a crypto exchange. So, let’s start with that.
1. Buying Cryptocurrency Via A Crypto Exchange
A cryptocurrency exchange is a digital marketplace where you can buy and sell cryptocurrencies.
They remain to be the most popular way of buying cryptos. The popular exchanges such as Binance, Coinbase, Kraken, Poloniex, etc. are well reputed and have a large customer base.
You need to compare various exchanges in terms of fees and commissions to go for the lowest one. Other things you need to make sure are whether they offer services in your country or not. Even if they do, are they restricting any features or not. Exchanges offer proprietary wallets with a trading platform.
Some exchanges offer fiat-to-crypto purchases while others only offer crypto-to-crypto. Most are centralized while some exchanges are decentralized.
So, considering all these factors, you need to make up your choice. Once you have chosen your exchange, it is time for you to open an account.
Different exchanges have different sign-up, verification, and payment options. So, we are not going to describe the buying process of any particular exchange; instead, we will describe the most common way of buying crypto from an exchange.
Step 1- Register/Sign-up with the exchange:
You need to create an account with the exchange before you can access their platform and start buying.
To open an account, platform requires a valid email address, full name, contact number, and an account password.
Step 2 – Verify your identity:
Almost all exchanges need an identity verification to let you trade on their exchange. You can easily do this by providing your ID card, valid driving license, or your passport.
Also, you have to set up a 2FA on your phone for added security.
Step 3 – Deposit money into account:
Roughly, all exchanges need an identity verification to let you trade on their exchange. You can easily do this by providing your ID card, valid driving license, or your passport.
Also, you have to set up a 2FA on your phone for added security.
Step 4 – Buy cryptocurrency:
You are all set now and can start purchasing the cryptocurrencies you wish to buy.
2. Buying Crypto Online With Cash - P2P
Buying bitcoin with cash is a great option as it is quick and private. With exchanges, you need to provide documents of identity. If you wish to keep your identity secret, follow this method. There are a few decentralized marketplaces where you can exchange cash for bitcoin and vice-versa.
One example is LocalBitcoins, a website that allows a peer-to-peer exchange of bitcoin via local payment methods allowing convenience and ease. You don’t have to pay any fees when dealing with such p2p exchanges.
Another advantage of using these p2p marketplaces is it serves as a perfect gateway for those who new to crypto or learning to buy crypto.
Few things to keep in mind when using these platforms is that there are scam platforms out there acting as a p2p platform. You need to verify and research before you decide to purchase crypto from them. Moreover, the exchange rates are higher and set by the seller.
If you are looking to purchase crypto in bulk, these might not be the best choice for you as the quantity is limited due to limited sellers when compared with centralized exchanges. As such, the liquidity is low too in these platforms.
Buying Process Via Peer To Peer Exchange:
Here is a general step-by-step procedure of buying crypto from a peer-to-peer exchange:
- Register for an account on their website.
- Select your geographical location
- Find a list of sellers that are willing to sell crypto. Compare rates and go for a reputed seller with a low rate.
- Select the amount of crypto and place your order.
- Deposit cash into the seller’s account using any local payment method.
- You will receive your crypto in your wallet.
3. Buying Cryptocurrency With Cash – Bitcoin ATM
This method is only for purchasing Bitcoins. If you are interested in purchasing bitcoin using cash discretely, then find a bitcoin ATM near your residence and exchange cash for Bitcoin. It is as simple as that.
You can also do the opposite; withdraw fiat by selling bitcoin. The limitation with bitcoin ATM is that there not many ATMs worldwide.
So, only a fraction of bitcoin users can benefit from this. So far, there are around 4500 bitcoin ATMs around the world, but this number is expected to go up as adoption and demand for bitcoin increases.
For ease and privacy, bitcoin ATM is a great option. However, the fees are high as there is a 5%-10% markup. Here is a step-by-step process of buying bitcoin with the help of a bitcoin ATM:
- Find a Bitcoin ATM near you. Use this map to find one.
- Enter your phone number for verification if required.
- Enter your wallet address.
- Insert your cash into the ATM
- ATM transfers bitcoin equivalent to the cash amount into your wallet.
- Lastly, ATM prints your receipt.
4. Buying Crypto Via Crypto Brokers
Cryptocurrency brokers act as a middleman between the buyers and sellers and matching them via their trading platform. The main difference between crypto brokers and exchange is brokers don’t offer crypto ownership. Instead, you trade crypto as derivatives such as CFDs.
CFDs (Contracts for Differences) that are formed between the buyer and the seller where they speculate on the price movement of the underlying crypto asset. When a trader purchases these contracts, they don’t own crypto, they are merely betting on its price. This is key to understanding crypto brokers.
So, if you are looking to own crypto, then a broker is not the right choice for you. We have still kept them in this list as they are a great option for crypto trading.
Final Words
Cryptocurrency is a great investment, and it is high time that you owned some crypto in your portfolio. Not only does it provide great value, but it also diversifies your portfolio by providing many real-life applications.
Bitcoin is a great first cryptocurrency to buy if you are starting. It has the highest value, adoption, market cap, and trading volume. Also, it accepts globally as a payment method.
Other cryptocurrencies such as Ethereum, Ripple, Stellar, Cardano, Monero, Tron, etc. are great options as well.
There are many methods to buy cryptocurrencies with exchanges being the most obvious and common one. It is easy to get started. Besides, they offer an easy-to-use and intuitive platform.
You can also purchase crypto via peer-to-peer exchanges and ATMs. Brokers allow you to trade crypto without owning them if you purchase derivatives or contracts of the underlying asset.
Keep in mind that there is no ‘best’ method to buy cryptocurrencies. It completely depends on person to person as per convenience and requirements.
At the end of the day, the goal is to accumulate as much as possible. Who knows, crypto might even replace fiat and become integrated into our daily lives forever.
