Step 1: Select an Exchange
Unlike any other form of investment, cryptocurrency cannot be bought through a bank or an investment firm, though the possibility of this happening in the future has increased. However, for now, you will have to use a crypto trading platform to convert your normal currency into digital currencies. There are several crypto exchanges online, but some prominent names are Kraken, Coinbase, and Gemini. Here are some factors to help ease your search for a proper platform.
● Security
Crypto investments are not supported by a central financial institution. In the case that your account is hacked, or the exchange of your choosing is compromised, you could lose all your investment. If you choose to use an exchange instead of moving your cryptocurrency into a crypto wallet, then ensure that you select a platform that features cold storage, offline, and has solid protections against hacks.
● Fees
Exchange fees differ greatly. They could be applied as a percentage of your investment or a fee upfront. Price volatility could also affect the fees. Fees must be considered and experts also say that more established platforms will charge higher. This is due to better security and other essential features which could be worth higher fees. Ensure you are aware of the fees you will be charged before joining a platform.
● Available Coins
Note that not all platforms offer every cryptocurrency you might be in search of. Popular coins such as Ethereum and Bitcoin are available on all crypto exchanges, but other obscure coins may only be found on specific exchanges. Ensure you do your research before choosing any exchange.
Step 2: Deposit Cash Into Your Account
Depending on the platform of your choice, you may be required to provide certain confidential information, such as your ID, Social Security Number, and your means of income. Many exchanges also allow you to link your debit card or bank account so you can deposit money into the account. You may be charged certain fees depending on how you funded your account; for example, bank transfers are cheaper than using your debit card. Note that funding your exchange account isn’t purchasing a cryptocurrency. After funding your account, you still have to convert that money into cryptocurrency.
Step 3: Place Your Crypto Order
After selecting a payment method, you can now place an actual order for a cryptocurrency. This process varies depending on the platform in use. If you are using an exchange like PayPal or Coinbase, you can just put in the amount you wish to trade for crypto, and purchase at the general rate. If you are using an exchange platform that was created for increased active trading, like Coinbase Pro, then you may be given the alternative to place both limit and market orders. With a limit order, you can set a specific price you wish to pay for a particular cryptocurrency. Once the cryptocurrency gets to that specific point, it will be purchased automatically.
Step 4: Choose a Storage Method
Various exchanges allow crypto traders to save their investments within their accounts. This is easier for many beginners. However, you can safeguard your digital assets better by transferring them into your cryptocurrency wallet. A cryptocurrency wallet is a secure platform to store your digital assets. There are several kinds of crypto wallets out there, and they each have different grades of security. Some exchanges offer a crypto wallet option, so you can simply transfer your investment from your account to a secure wallet. However, if your exchange does not have this option, you could simply opt for third-party software. You could also use cold storage on a hardware device. Note that some exchanges like Venmo and PayPal don’t allow crypto traders to transfer their digital currency into another storage device. Therefore, you need to also consider this before selecting an exchange platform.
Other Ways to Purchase Cryptocurrencies
While buying crypto is a trend now, it’s a highly volatile investment. If investing in cryptocurrency via brokers or through exchanges doesn’t sound right to you, here are other options you could consider.
Wait For Cryptocurrency ETFs
Exchange-traded funds are prominent investment methods that allow you to purchase exposure to numerous individual investments at once. With cryptocurrency ETFs, you could invest in various cryptocurrencies at the same time.
Invest in Cryptocurrency-related Companies
If you would like to invest in a company with actual products or services but with some exposure to the crypto market, you can always purchase stocks at a company that uses or owns cryptocurrencies. To do this, you are required to have a brokerage account online. As with any other form of investment, it’s essential to conduct research first before getting into anything. Ensure your cryptocurrency investments don’t affect your other goals. With these four steps, investing in crypto should be simple.
