Crypto investments can be extremely risky. And hence, you should approach these assets like any other technological investment, with a long-term mindset and expecting enough ups and downs along the way. So understand the risks and rewards before you actually put in your money. You can also take a Cryptocurrency Trading for beginners to fully understand the market and know what you are getting yourself into.
Let’s look at where you can buy your crypto and how to find the best one at that.
What is a cryptocurrency exchange?
A crypto exchange is a company where you can make cryptocurrency transactions. Here is where you, a customer, can buy and sell various digital currencies. Here’s what all you can do with an exchange’s platform:
- Exchange one cryptocurrency for another at exchange rates at the time of the transaction.
- Exchange cryptocurrency for fiat currency or for cryptocurrencies that are tied to fiat currencies.
- Buy with cryptocurrencies, using a linked debit card, for example.
- Learn about digital currencies through educational resources.
Most crypto exchanges now have mobile apps offering convenience if you want the option to trade digital assets on the go.
Where to buy cryptocurrency?
There are several options to choose from when it comes to buying cryptocurrencies. There are two best places you can buy cryptocurrency from:
Brokerages facilitate the purchase and sale of investments– stocks, bonds, and mutual funds. Several stock brokers now offer cryptocurrency trading through their platforms; it can be desktop-based, app-based, or both.
A cryptocurrency exchange is where you buy and sell digital currencies. It is different from brokerages since they offer investment vehicles, and cryptocurrency exchanges are limited to Digital Currencies.
Whether you choose a broker or an exchange, make sure it fits all your needs. So, if you are looking to buy cryptocurrency on your mobile, search for a cryptocurrency app. You can also buy cryptocurrencies from other people, and it used to be popular when bitcoin was first launched. However, the process can be complicated.
What do the best cryptocurrency apps and exchanges look like?
The market does not have less cryptocurrency apps, but to choose the best one for you, you will need to decide on the features that are necessary to you. A Cryptocurrency Trading for beginners can explain what will be best for you.
Here are some features for you to consider:
You need your cryptocurrency to be safe so when considering an exchange, look at its security features to see the number of assets kept offline in cold storage, private insurance, and if the exchange is a part of a bug bounty program that encourages ethical hackers to report weaknesses. You can also check if the exchange has ever been hacked before.
If you are just starting out cryptocurrency investing, then you will need 24/7 customer support. You will want faster customer service when you haven’t received the money in your account, not go through tons of FAQs.
The range of currencies offered.
The market now has over 4,000 cryptocurrencies but not every exchange offers all of them; even the biggest ones offer only 50 to 150 coins. Most platforms only offer Bitcoin and other major currencies, and if you are planning to invest in the smaller coins, you will want to look for an exchange that offers variety.
Easy to use
Cryptocurrency apps are evolving with the ever-increasing need to invest. But with fast development comes a lack of user-friendliness. Ensure that the app you choose has the features you want and if you are a beginner, pick one that is easy to use for beginners.
You do not want to pay unnecessary fees anywhere, be it a bank, a brokerage, or a cryptocurrency exchange. Check the deposit fees, withdrawal fees, and deposit options before you go ahead with a broker.
Cryptocurrencies are new. And hence, learn as much as you can before you start investing. There are cryptocurrency learning centers offered on some apps and along with information on coins.
There are many cryptocurrency exchanges that offer different ways to earn interest on your coins. Ensure that you are understanding and you are comfortable with how the interest is generated. The exchange might loan out your money or pay you a staking fee to commit to leaving your coins alone for a certain period. You can take up a Cryptocurrency Trading for beginners to understand their interests better.
There are exchanges that cannot operate in every US state. Make sure that the one you choose covers your state and adheres to US crypto regulations.
Cryptocurrency exchanges vs. brokers
A broker is an intermediate between two parties. Usually, it involves a financial transaction like a real estate broker does between buyers and sellers of real estate.
Technically, cryptocurrency exchanges are brokers. But there are two different kinds of intermediaries through which you can buy and sell cryptocurrencies. While crypto exchanges allow you to buy and sell cryptocurrencies only, brokerages are the ones that allow cryptocurrency trading apart from other investments. They both are brokers but differ in the assets offered.
Where to store cryptocurrency?
Cryptocurrency wallets are a safe place for your digital assets, and you need only one to amass a large number of crypto assets or want to spend your crypto easily. Your cryptocurrencies are protected by public and private keys similar to your PIN and bank account number. Wallets are where you store your encrypted keys and keep them safe.
Types of wallets:
It is a hardware piece that is kept offline and is extremely difficult to hack. They are considered the safest way to store digital currencies.
These wallets work online and hence are not so secure. But they still are a convenient place to keep crypto you want to use.
With the increasing popularity of cryptocurrencies, the need for wallets has become all the more necessary. Several crypto exchanges were hacked, and at that point, if your crypto was stolen, there was no way to get it back. So if you are considering going long, use exchanges only for trading and store the coins in your wallet.
The bottom line
What most Cryptocurrency Trading for beginners will tell you is to plan your goals before you buy your cryptocurrencies. If going long is your goal, entrust your crypto keys to the exchange or brokerage. But if you are going to trade regularly or want to spend your coins, a wallet may prove more feasible.