Because Bitcoin and altcoins are still a new form of money misunderstood by many, buying and investing in digital assets is challenging. There are many important things about crypto that you should know before choosing what is considered to be the best way to buy crypto.
More importantly, crypto is something of a rollercoaster when it comes to its value. Being a highly volatile asset, it can change in price in the blink of an eye, which doesn’t happen with many fiat currencies, for example. However, if you still find decentralized finance appealing – or even just want to buy a souvenir amount of crypto – it wouldn’t hurt to learn about the best ways to buy tokens in this post.
How to Get into Crypto
If you want to access digital assets such as Bitcoin or Ethereum, the good news is that you have several ways to do so. In 2009, when cryptocurrency was first introduced to the world, there weren’t as many options for buying crypto as there are today.
From decentralized crypto exchanges to brokerage websites like J2TX and Bitcoin ATMs, there are plenty of ways for you to buy tokens. What’s more, even some major payment services like PayPal now allow you to buy digital assets, albeit with a rather high fee. So, here are some tried and trusted methods to buy crypto – check them out below:
Cryptocurrency exchanges. Designed for trading crypto, exchanges are also good for buying bitcoins and some altcoins. There are several reasons why you should consider exchanges as the best way to buy Bitcoin with card or other tokens. First of all, they charge pretty low transaction fees, so you won’t incur extra costs buying digital assets. Second, they offer powerful trading tools to profit from asset volatility. Third, they have secure crypto wallets that you can use to store tokens. However, we recommend keeping large amounts in decentralized wallets. Since transaction fees vary from platform to platform, you should do your own research to find the best option in this regard. Note that crypto exchanges adhere to KYC practices, which means you lose your anonymity.
traditional brokerage platforms. There are several major brokers that have decided to tap into the cryptocurrency trend. The advantage of brokerage platforms is that you can trade tokens either directly or buy futures contracts that serve as an intermediate layer. Keep in mind that major brokers are more selective about which cryptocurrencies to work with, so you only get access to the strongest market players such as BTC, ETH, Bitcoin Cash and Litecoin. A wide range of trading tools, support for various traditional assets to trade and competitive transaction fees are additional advantages of brokers that make them worthy of consideration.
Decentralized trading platforms and apps. As known, cryptocurrencies circulate on a decentralized network called a blockchain. And it is because of decentralization that you can enjoy the advantage of your anonymity when making various crypto transactions. Decentralized exchanges provide access to a huge number of digital assets, including promising newcomers to the market. However, they are less secure because there is no central authority regulating the relationship between the decentralized platform and its users. So, if you are interested in how to find new crypto coins with growth potential, then decentralized trading apps are what you need.
Traditional payment services. There are several financial services, including PayPal, that have also started accepting cryptocurrencies. While greatly simplifying the way how to get into cryptocurrency, they charge a fairly high transaction fee. Moreover, you have to pay a fee for storing the tokens in the account allocated to you. However, services like PayPal provide high security for your tokens. Moreover, they are easy to understand and convenient, especially for those who already have their own wallet in PayPal or another service.
Crypto ATMs. If you need a quick and easy way to buy digital assets for fiat money, then a Bitcoin ATM is the way to go. There are ATMs where you can not only buy but also sell digital coins in almost no time at all. However, there are several reasons why crypto ATMs are not the best way to buy cryptocurrency. Firstly, the ATM industry is still underdeveloped, so you’ll have a hard time finding an ATM near you. Secondly, they require your personal details, so you lose the advantage of anonymity. Third, it is the most expensive way to buy crypto as the fee can be 10% of the transaction amount or even more.
However, before you spend your hard-earned money to buy cryptocurrency, there are a few important things to be aware of, and we’ll cover them below.
Crypto Guide – Things to Know Before Investing in Tokens
Investing in crypto may seem complicated. But the truth is, all you need to do is find a place to buy the tokens and a place to store them. In addition, there are alternatives available today to conduct crypto transactions without actually owning the coins (read how to buy Bitcoin with credit card stock). Apart from all that, you will need to create an account and take care of the security of your internet connection to prevent fraudsters from accessing your personal data, as well as the tokens. So, here are some important points to consider before you buy crypto coins:
Volatility. In simple terms, it is the ability of a digital asset to rise or fall in value quickly. Although Bitcoin is called digital gold, unlike the precious metal, it can fluctuate in price dramatically. However, there are many ways that you can profit from both rising and falling asset prices. For example, assuming that the price of the asset is going to fall, you can borrow some coins from a broker and exchange them for fiat money. Then, when the price of the digital asset falls, you could buy the coins again and pay the broker. As for earning from a rising price, it’s simple – you need to buy the coins at the bottom of the market, and then resell them when the price rises significantly.
Costs and the way you interact with the digital asset. When you own Bitcoin or altcoin directly, you will lose money paying a fairly high transaction fee. By owning the token through a futures contract, you will pay a lower fee. However, be aware that futures can lead you to both good profits and rather high losses.
A security issue. When you have an impressive amount of digital money in your hands, you are always a perfect target for cybercriminals. However, one of the mistakes that many novice crypto investors make is storing coins in an exchange account. History remembers many cases of digital assets being stolen from exchange wallets. So, don’t neglect the security of your funds and keep them in a safe place.
Note that you will have to disclose personal information about yourself, especially if you want to buy tokens from traditional brokers or on a centralized crypto exchange. Since crypto is subject to taxation, brokers keep statistics on your profits and losses and provide all the necessary information for tax reporting. But it also means that you will have to disclose your full name, residential address, phone number and even your bank account details, so there is no room for anonymity.
Hot and Cold Wallets to Store Crypto
When it comes to choosing where to store your coins, it all depends on for what purpose – and in what quantity – you bought your digital assets. There are several popular options, including hot, cold and hardware wallets. Being constantly connected to the internet, a hot wallet allows you to easily conduct transactions on your digital assets, including moving and selling them. Here are a few hot wallet options to consider:
Web wallets. These are essentially online services accessible through a web browser, making them the least secure.
Desktop wallets. This is a software you download and install on your desktop device.
Mobile wallets. Available as a mobile app, these are the most secure since you can use the two-factor authentication feature.
As for cold wallets, they are more secure because they do not interact with the network permanently. Cold wallets can be software and hardware, i.e., physical devices connected to a computer via a USB interface. On the one hand, this feature makes them preferable for storing large amounts of coins. On the other hand, they are not convenient for those who do a lot of transactions daily. Although they offer a higher degree of protection for your crypto savings, there are risks of theft and loss, so cold wallets, even hardware USB devices, are not ideal.
Final Words
So, with so many ways to buy crypto available, entering the world of digital assets today is not a challenging task. However, before you spend your hard-earned money, you should think about a few important things such as what purpose you are buying crypto for, how you will work with it and how you will store your coins. Because cryptocurrencies are highly volatile assets that can fluctuate rapidly in value, you should have a high-risk tolerance and be able to make informed investment decisions.