How to Buy Bitcoin and Other Cryptocurrencies: A Guide for New Crypto Investors
It can be difficult to figure out how to acquire Bitcoin, Dogecoin, Ethereum, and other cryptocurrencies if you’re new to the crypto world. Thankfully, learning the ropes is rather simple. Following these five simple steps, you can begin investing in cryptocurrencies.
Pick a broker or a cryptocurrency exchange.
To purchase cryptocurrency, you must first choose a broker or a crypto exchange. While both allow you to buy cryptocurrency, there are a few major differences to be aware of.
How Does a Cryptocurrency Exchange Work?
A cryptocurrency exchange is a marketplace for buyers and sellers to trade digital currencies. Exchanges typically offer lower costs, but they can have more complicated interfaces with many transaction kinds and advanced performance charts, which can be intimidating to beginning crypto investors.
Coinbase, Gemini, and Binance are three of the most well-known cryptocurrency exchanges.
While the conventional trading interfaces of these organizations may be intimidating to newcomers, especially those with no prior experience trading stocks, they also provide user-friendly easy buy options.
The convenience 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 money, you should learn how to use traditional trading platforms before making your first crypto purchase—or soon after.
Important note: If you’re new to crypto, check sure your preferred exchange or brokerage supports fiat money transfers and purchases in US dollars.
Some exchanges only allow you to buy cryptocurrency with another cryptocurrency, which means you’d have to go to a separate exchange to purchase the tokens your preferred exchange allows before utilizing it.
What Is the Definition of a Cryptocurrency Broker?
Cryptocurrency brokers simplify the process of buying cryptocurrency by providing simple interfaces that connect with exchanges on your behalf. Some levy costs that are higher than those charged by exchanges. Others claim to be “free” while profiting by selling information about what you and other traders are buying and selling to huge brokerages or funds, or by not completing your trade at the best available market price. Two of the most well-known cryptocurrency brokers are Robinhood and SoFi.
While brokers are unquestionably convenient, you should be aware that you may be restricted from moving your bitcoin holdings off the platform if you utilize them. You can’t transfer your crypto holdings out of your account at Robinhood or SoFi, for example. Although this may not appear to be a big concern, sophisticated crypto investors prefer to keep their money in crypto wallets for further security. For even greater security, some people opt for hardware crypto wallets that are not connected to the internet.
Register for an account and verify it.
You can open an account with a cryptocurrency broker or exchange once you’ve decided on one. You may be required to prove your identification depending on the platform and the amount you intend to purchase. This is a necessary step in preventing fraud and complying with federal regulations.
You might not be able to buy or trade cryptocurrencies until the verification process is completed. You may be required to produce a copy of your driver’s license or passport, as well as a selfie to verify that your appearance matches the documentation you submit.
Make a cash deposit to invest.
To purchase cryptocurrency, you must first ensure that you have funds in your account. You can fund your cryptocurrency account by linking your bank account, allowing a wire transfer, or even making a debit or credit card payment. You may have to wait a few days before you can utilize the money you deposit to acquire cryptocurrencies, depending on the exchange or broker and your funding method.
Here’s one thing to keep in mind as a potential buyer: While some exchanges or brokers allow you to deposit funds with a credit card, this is a very risky—and expensive—option. Purchases of cryptocurrencies with credit cards are treated as cash advances by credit card companies. This implies you’ll have to pay greater interest rates than you would on regular purchases, as well as additional cash advance fees. When you take out a cash advance, you may be required to pay 5% 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%, implying that you may lose 10% of your cryptocurrency purchase to fees.
Make a Cryptocurrency Purchase
You’re ready to place your first cryptocurrency order after you have money in your account. There are hundreds of cryptocurrencies to select from, including well-known names like Bitcoin and Ethereum as well as lesser-known coins like Theta Fuel and Holo.
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 buy 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 7 cryptocurrencies by market capitalization*:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- Cardana (ADA)
- Dogecoin (DOGE)
- XRP (XRP)
As of late June 2021, based on market capitalisation
Decide on a storage strategy
Cryptocurrency exchanges are not insured by the Federal Deposit Insurance Corporation (FDIC), therefore they are vulnerable to theft and hacking. If you forget or lose the codes to access your account, you risk losing your entire investment, as millions of dollars in Bitcoin have already been lost. That is why having a secure storage location for your cryptocurrency is critical.
If you buy bitcoin through a broker, you may have little to no control over how your cryptocurrency is stored, as previously stated. You have more possibilities if you buy cryptocurrency through an exchange:
- Keep your cryptocurrency on the exchange. When you purchase bitcoin, it is usually stored in a crypto wallet linked to the exchange. You can take your cryptocurrency off of the exchange to a separate hot or cold wallet if you don’t like the provider your exchange works with or want to relocate it to a more secure location. You may have to pay a small fee depending on the currency rate and the size of your transfer.
- Hot Wallets. These are online crypto wallets that run on internet-connected devices including tablets, PCs, and phones. Hot wallets are convenient, but because they’re still connected to the internet, they’re more vulnerable to theft.
- Cold Wallets. Because cold crypto wallets aren’t connected to the internet, they’re the safest way to store cryptocurrency. External devices, such as a USB drive or a hard drive, are used. Cold wallets, on the other hand, must be used with caution: if you lose the keycode connected with them, or if the device breaks or fails, you may never be able to recover your bitcoin. While this could happen with certain hot wallets, some are maintained by custodians who can assist you in regaining access to your account if you become locked out.
Alternatives to Purchase Cryptocurrency
While purchasing cryptocurrencies is currently a popular trend, it is an unpredictable and risky investment. If investing in cryptocurrency on an exchange or through a broker isn’t for you, there are a few additional ways to indirectly invest in Bitcoin and other cryptocurrencies:
1. Wait for Cryptocurrency Exchange-Traded Funds to become available (ETFs)
ETFs are popular financial vehicles that allow you to get exposure to hundreds of different investments in one go. As a result, they offer immediate diversification and are less hazardous than individual investments.
Cryptocurrency ETFs, which allow you to invest in many cryptocurrencies at once, are in high demand. There are currently no cryptocurrency ETFs available for regular investors, but this may change in the near future. The Securities and Exchange Commission (SEC) is currently considering three cryptocurrency ETF proposals from Kryptcoin, VanEck, and WisdomTree as of June 2021.
2. Invest in Cryptocurrency-Related Businesses
You can buy stocks of firms that utilize or own cryptocurrencies and the blockchain that enables them if you’d rather invest in companies that have actual products or services and are subject to regulatory control, but still want exposure to the cryptocurrency industry. To purchase shares of publicly traded firms, you’ll need an online brokerage account.
- Nvidia (NVDA). This technological company designs and sells processing graphical units that are crucial to most of the crypto-monetary mining systems.
- PayPal (PYPL). This payments technology, which is already popular for individuals buying things online and sending money to family and friends, has just expanded to allow clients to purchase and sell chosen cryptocurrencies using their PayPal and Venmo accounts.
- Square (SQ). Since October 2020, this payment services company for small businesses has purchased approximately $220 million in Bitcoin. In February 2021, the company revealed that Bitcoin accounted for almost 5% of its cash on hand. Square’s Cash App also allows users to purchase, sell, and store cryptocurrencies.
Before investing in cryptocurrencies or specific companies with a large interest in it, as with any investment, make sure you analyze your investment goals and present financial circumstances. Cryptocurrency values are extremely volatile—a single tweet may send them crashing—and it’s still a high-risk investment. This means you should invest with caution and caution.
How to buy Bitcoin:
Bitcoin is the most coveted and also the largest cryptocurrency. This is a digital currency that promises lower transaction fees than traditional online payment mechanisms. Unlike fiat currencies (such as US Dollar, Euro, etc.), Bitcoin is decentralized in nature. When you trade cryptos, it is neither issued nor controlled by any government or central authority (like central banks).
To buy Bitcoin follow the explanation steps above and specifically target Bitcoin tokens or Bitcoin.
Here is our specific guide on how to buy Bitcoin.
How to buy Ethereum :
Ethereum (ETH) is the second-largest cryptocurrency in terms of market capitalization. Its market cap is US$302,535,654,310 (as of April 28, 2021), which is around a 15% market share of the total global crypto market cap of US$2.05 trillion. Its price has increased by over 50% in the last 30-days with a YTD (year-to-date) growth of 250% in 2021, which makes it one of the most traded cryptos.
Increased market interest in decentralized finance (DeFi) and cryptocurrencies have made the ETH price increase from near the US$1,000 level to above US$2,500 level in the first 4-months of 2021.
To buy Ethereum follow the explanation steps above and specifically target Ethereum tokens or ETH.
Here is our specific guide on how to buy Ethereum.
How to buy Binance Coin:
Binance Coin (BNB) has witnessed meteoric growth since its ICO, when Binance allowed for the first time to buy BNB. It was in July 2017, when Binance started raising funds for the operations of its cryptocurrency exchange. As part of the ICO, a token called Binance Coin (BNB) was launched and can be traded on different trading platforms. At that time the price was set at US$0.1 per BNB. The price of the coin increased considerably since then, making it one of the most successful ICOs of all time.
To buy Binance Coin follow the explanation steps above and specifically target Binance Coin tokens or BNB.
Here is our specific guide on how to buy Binance Coins.
How to buy Ripple:
Ripple (XRP) is a semi-decentralized payment protocol that has been created for usage by major banking institutions. It operates on a real-time gross settlement system called RippleNet. This system of payments network helps in making monetary transfers instantly. Buy Ripple is one of the greatest ideas in crypto investment.
To buy Ripple follow the explanation steps above and specifically target Ripple tokens or XRP.
Here is our specific guide on how to buy Ripple.
How to buy Cardano:
Cardano (denoted by ADA) is a cryptocurrency network and open-source platform. It uses the Ouroboros proof of stake technology for providing a blockchain that is less prone to any kind of tampering and therefore provides more security.
To buy Cardano follow the explanation steps above and specifically target Cardano tokens or ADA.
Here is our specific guide on how to buy Cardano
How to buy Polkadot:
Polkadot (DOT) is an open-source multi-chain network that operates on the Ethereum network. It utilizes oracle technology for connecting blockchains together. It helps in information sharing among multiple networks and projects. By allowing blockchains to communicate with each other, the Polkadot network wants to create a truly decentralized web.
To buy Polkadot follow the explanation steps above and specifically target Polkadot tokens or DOT.
Here is our specific guide on how to buy Polkadot
How to buy Litecoin:
You can buy Litecoin (LTC) easily through a cryptocurrency exchange. To start trading this crypto, you can buy it by using your fiat currency, PayPal, bank transfer, or a credit card on any leading exchanges such as Coinbase and BitPanda.
To buy Litecoin follow the explanation steps above and specifically target Litecoin tokens or LTC.
Here is our specific guide on how to buy Litecoin
How to buy Chainlink:
Chainlink (LINK) solves an inherent problem of blockchain technology. It connects smart contracts on blockchain networks. This helps the networks to include everything from data providers, payments systems, IoT devices, cloud services, enterprise systems, web APIs, and other blockchains.
To buy Chainlink follow the explanation steps above and specifically target Chainlink tokens or LINK.
Here is our specific guide on how to buy Chainlink
If you still need assistance, you can refer to the following step-by-step purchasing guides for the various payment methods: