To safely invest in a cryptocurrency, you need to find yourself a trustworthy broker who has years of experience in the crypto space and can trust your money. You can report crypto scam if you find something fishy.
What Is a Cryptocurrency Exchange?
A cryptocurrency exchange is where buyers and sellers can trade crypto with low charges and high returns. Businesses can have low fees and several benefits, such as added security. However, they are likely to possess several layers of investment procedures that can be tiresome to new investors.
Coinbase, Gemini, Paxful, Binance are some of the well-known cryptocurrency exchanges. These companies have non-intuitive user interfaces, which can be bothersome for new investors but have added investment opportunities and user-friendly perks, which make them good investment tools.
The ease of use comes at a price, as the beginner-friendly options are significantly more expensive than buying the same cryptocurrency through each platform’s conventional trading interface. To save on such costs, a newbie like yourself must learn the intricacies of investing in such currencies so that you aren’t charged more for the ease of access options these companies tend to provide.
It is essential to pick a trading platform that lets you buy cryptocurrencies with fiat currencies such as the U.S. Dollar or the British Pound. Some exchanges only allow the sale of cryptocurrencies with other cryptocurrencies, which means that you have to buy the other cryptocurrencies from different exchanges, which is a redundant task altogether.
What Is a Cryptocurrency Broker?
Cryptocurrency brokers are agents or websites that help you buy and or trade cryptocurrencies without using conventional methods by offering their services for a fee. Some might charge more fees than others, while some may do it ‘free of cost’. However, these brokers make money off you by selling your information to the highest bidders, and you must be wary of such brokers. Two of the most well-known cryptocurrency brokers are Robinhood and SoFi.
While they are convenient, there’s no denying that such brokers may also impose certain restrictions on you, which may lead you to lose some money. For example, Robinhood does not allow its users to transfer their crypto to another wallet, and all crypto bought off the platform should stay within the platform’s wallets. At the same time, this may not seem like a big deal to new users; this may be a red flag for advanced users. Some users may prefer to keep their crypto in their wallets. Some may even like devices that are off the internet for added security.
2. Create and Verify Your Account
Once you are geared up and ready to invest, you will have to open up your account and sign in to verify your credentials. Depending upon your plan, you may be charged accordingly. KYC is an essential aspect of the verification process which prevents fraud and scams such as money laundering etc.
You may be required to upload a selfie during the verification process. Legal documents such as passport and driver’s license may be required to be uploaded. These processes are necessary for your safety.
3. Deposit Cash to Invest
To purchase cryptocurrency, you must first ensure that you have funds in your account. You may have to wait a few days before utilising the money you deposit to acquire cryptocurrencies, depending on the exchange or broker and your funding method.
You can fund your cryptocurrency account by linking your bank account, allowing a wire transfer, or even making a debit or credit card payment.
It would help if you looked for a potential risk while buying cryptocurrency with a credit card. Credit card companies process crypto bought with credit cards as cash advances. This means you have to pay a higher tax than regular purchases. You may also be charged an advance fee. When you take out a cash advance, you may be required to pay 10% of the transaction amount. This is in addition to any fees imposed by your crypto exchange or brokerage; they can be as high as 5%, so that you may lose 15% of your cryptocurrency purchase to fees.
4. Place Your Cryptocurrency Order
Once you have deposited the fiat currency in your account, you now are ready to purchase your cryptocurrency! You can choose from many cryptocurrencies, such as the well-known Bitcoin and Ethereum, to the lesser-known coins such as Theta Fuel and Polka Dot.
When you’ve decided which cryptocurrency to buy, type in its ticker symbol (Bitcoin’s is BTC) and the number of coins you want to buy. You can purchase fractional shares of cryptocurrency on most exchanges and brokers, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that would otherwise cost thousands of dollars.
The following are the symbols for the top ten cryptocurrencies by market capitalisation*:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- Cardano (ADA)
- Dogecoin (DOGE)
- XRP (XRP)
- USD Coin (USDC)
- Polkadot (DOT)
- Uniswap (UNI)
5. Select a Storage Method
Cryptocurrency accounts are not protected and secured by the FCIC, which means you need to be careful with your wallets or else lose your investment. Losing access to your account wallets is the primary reason for losing millions of worth of cryptocurrencies. That’s why having a safe place to store your cryptocurrencies is critical. You can also hire a cryptocurrency recovery expert.
Buying crypto via a broker leaves you with way fewer options for storage than it would if you buy it through an exchange.
Cryptocurrency investing isn’t for the faint of heart. If you’re worried about investing in digital currency, remember that there are techniques to make it less frightening.
However, if you decide you’re not ready to take the plunge, don’t feel you’re losing out. While it’s true that some investors have done well in the bitcoin market, there are lots of other methods to amass significant riches. And if sticking to assets like stocks and bonds better fits your strategy and risk tolerance, nothing stops you from doing so and seeing where it leads.