It can be difficult at first to figure out how to purchase Bitcoin, Dogecoin, Ethereum, and other cryptocurrencies if you’re new to the world of cryptocurrencies. Thankfully, picking up the basics is not too difficult. To begin investing in cryptocurrencies, simply follow these five simple steps.
- Choose a Broker or Crypto Exchange:
Selecting a broker or cryptocurrency exchange is the first step in purchasing cryptocurrency. They both allow you to purchase cryptocurrency, but there are some important distinctions between them to be aware of.
What Is a Cryptocurrency Exchange?
An exchange for cryptocurrencies is a platform where cryptocurrency traders and buyers come together to trade. Although exchanges sometimes have relatively cheap costs, inexperienced investors may find them scary because to their complicated interfaces, many trading kinds, and advanced performance charts. The most well-known exchanges for cryptocurrencies are Binance, Gemini, and Coinbase.US. Although novices, especially those with little experience trading stocks, may find these organizations’ regular trading interfaces overwhelming, they also provide simple and easy-to-use buying choices.
What Is a Cryptocurrency Broker?
Cryptocurrency brokers simplify the process of buying cryptocurrency by providing user-friendly interfaces that handle exchange interactions on your behalf. Some have costs that are greater than exchanges. Some people make money by offering big brokerages or funds information on what you and other traders purchase and sell, or by not executing your trade at the best price available in the market. These people go by the name “free.” Two of the most well-known cryptocurrency brokers are Robinhood and SoFi.
- Create and Verify Your Account;
You can register to create an account after selecting a bitcoin broker or exchange. The platform and the amount you intend to purchase may need you to provide identification. In order to avoid fraud and comply with federal regulations, this is a crucial step. Until you successfully complete the verification process, you might not be able to purchase or sell cryptocurrencies. To verify that your picture matches the papers you give, the platform may require you to upload a selfie in addition to requesting copies of your passport or driver’s license.
- Deposit Cash to Invest;
Make sure you have money in your account before you purchase any cryptocurrency. You can link your bank account, authorize a wire transfer, or even use a debit or credit card to make a payment to fund your cryptocurrency account. Before using the money you deposit to purchase cryptocurrencies, you might need to wait a few days, depending on the exchange or broker and your payment method.
Here’s a major warning to buyers: Even while you can deposit money with a credit card with some exchanges or brokers, doing so is quite costly and unsafe. Credit card issuers treat purchases made with credit cards for cryptocurrencies as cash advances. This implies that you will have to pay extra cash advance fees in addition to interest rates that are greater than those on ordinary purchases. For instance, if you make a cash advance, you might be required to pay 5% of the whole transaction amount. This is in addition to any fees that your brokerage or cryptocurrency exchange may levy; they might total up to 5%, which means you could lose 10% of the cryptocurrency you bought due to fees.
- Place Your Cryptocurrency Order:
You are prepared to place your first bitcoin order as soon as funds are available in your account. There are hundreds of different cryptocurrencies available, ranging from well-known ones like Ethereum and Bitcoin to less well-known ones like Theta Fuel or Holo. You can input the cryptocurrency’s ticker symbol (Bitcoin is BTC, for example) and the quantity of coins you wish to buy once you’ve chosen which one to buy. You may buy fractional shares of cryptocurrency with the majority of exchanges and brokers, which enables you to purchase a small portion of expensive tokens like Bitcoin or Ethereum that would otherwise require thousands of dollars to hold.
- Select a Storage Method:
Cryptocurrency exchanges are vulnerable to theft and hacking since they are not protected by the Federal Deposit Insurance Corp. (FDIC). If you misplace or forget the codes to access your account, as millions of dollars’ worth of Bitcoin have already been lost, you might potentially lose your investment. Having a safe location to store your cryptocurrency is crucial for this reason.
As mentioned above, you might not have much control over how your bitcoin is kept if you purchase it through a broker.