Bitcoin (BTC) is the biggest and most popular cryptocurrency token that many people lean towards, especially if it is their first time buying a cryptocurrency token. Today, purchasing is as simple as opening an account at any brokerage, even outside the cryptocurrency industry. This article will teach you everything that you need to know to make an educated decision.
Best Bitcoin Brokers in 2021
We have created a list of the best cryptocurrency brokerages out there based on several factors. These include the level of Bitcoin availability, plus fees and liquidity. Below, you’ll find the entire table.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.48% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
A cryptocurrency brokerage is a firm that serves the role of an intermediary between the cryptocurrency markets. It is intended to facilitate the purchasing and sales of cryptocurrency tokens. This is the middleman between you and the cryptocurrency exchange, and at times, the broker even buys up large amounts of cryptocurrencies and offers them on their own platform.
How do Bitcoin brokers work?
A brokerage takes the opposite side of the trade. They can be a lot more flexible with the settlement of assets as a result. They allow traders to lock in a trade at a specific price point even if they cannot pay for the assets at that time. This can be handy for traders that want to trade an asset instantly. Liquidity is determined by the brokerage and not the traders on the market. As long as the brokerage accepts an order, the trader can execute the transaction. A brokerage then sets its own asset price, influenced by the asset’s price in other markets. The brokerage itself makes money by charging a spread which means that the price they are willing to sell is higher than the price they want to buy Bitcoin.
What’s the Difference Between a Broker and an Exchange?
These are the main differences between a cryptocurrency brokerage and a cryptocurrency exchange.
When you decide to purchase cryptocurrency at a broker, you are not required to have any prior knowledge of how to do so as the process is simplified.
At a broker, you will be provided with the opportunity to pay with easy payment methods such as credit cards, debit cards, PayPal, and others.
Cryptocurrency brokerages will typically also provide you with a high level of support in the form of email support, phone support, and live chat support.
When it comes to the exchange:
On a cryptocurrency exchange, the asset price is determined by the market and not by the brokerage.
Exchanges are matching traders, and as such, there have to be at least two traders willing to take opposite sides of the same deal to execute an order.
The exchange makes money by charging a fee to the traders once they are matched, and the order executes.
What Are CFD Brokers?
Contract for difference (CFD) trading is where you agree to exchange the difference in the price of a cryptocurrency from when you first opened the position to when you closed it. You are speculating on the price of the market rather than taking ownership of the cryptocurrency itself. CFDs for Bitcoin, as well as other cryptocurrencies, are derivative financial products. They enable traders to speculate on the rise and the fall in the price of the digital currency in question without needing to own it directly. Moreover, there are cryptocurrency brokerages out there that have this as a feature.
Advantages and Disadvantages of Bitcoin Brokers
There are several reasons why some specific traders might jump into cryptocurrency trading on a brokerage, though some drawbacks also exist. Let’s look at both sides.
Advantages of Bitcoin Brokers
An easy setup process and a simple user-interface
A high level of technical support in the case something goes wrong
A higher level of regulations when it comes to who can create an account and use the brokerage
Quicker trading of cryptocurrencies
Disadvantages of Bitcoin Brokers
You are required to complete know-your-customer (KYC) verification and hand in your documents in most cases.
Higher fees when compared to exchanges where you are trading directly with other parties.
How Do I Get Started with a Bitcoin Broker?
When it comes to getting started with a Bitcoin brokerage, things are a lot simpler than you might think. While this process will be a bit different, depending on the brokerage you decide to sign up for, you should have an easy time just about anywhere. This process will be similar just about everywhere when it comes to the few main steps that you need to take, and as such, let’s dive in and see what you have to do.
Step 1: Open a Bitcoin Brokerage Account
The first step you need to take to purchase Bitcoin at an online brokerage is to go to the brokerage website that you want to sign up for and try to find a “Sign Up” or “Join Now” button that you can activate or click on. Once you visit the account creation screen, you will be asked various questions about your information, such as your contact details, email address, password, and things of that nature. However, while you will initially only need to enter some basic information, you will have to go through a know-your-customer (KYC) procedure if you want to withdraw large amounts. Brokerages have strict security measures and will request documentation from your end.
Step 2: Open the WebApp or Download the Mobile Application
Once the account creation process is completed, there are two ways through which you can navigate the brokerage in question. For one, you can easily open up the web application through your web browser such as Chrome, Firefox, Opera, Microsoft Edge, Safari, or others, type in the URL, log into your account and start using the brokerage like that. Additionally, some brokerages even have their own native applications available on Google Play Store or the App Store. Keep in mind that some of these pages are available on mobile web browsers as well, but most of the time, the native applications will provide you with much better functionality in that regard.
Step 3: Make your Initial Deposit
Once you have created an account and downloaded the application or have decided to go through the web-based route, the next thing you need to do is fund your account. Now, the beauty with most cryptocurrency brokerages is that they provide you with multiple ways of funding your account. If you already have cryptocurrencies, you can connect your crypto wallet and sign a transaction to the brokerage’s address. Additionally, if you do not have any cryptocurrencies and this is your first time buying Bitcoin, you can use a credit card or a debit card, or even PayPal if that is your preferred payment method.
Remember that many cryptocurrency brokerages will have a minimum amount of money that you need to deposit.
Step 4: Buy Bitcoin
Once you have successfully funded your account, the next thing you need to do is purchase the Bitcoin (BTC) cryptocurrency on the brokerage.
Typically, you will need to find an option on the brokerage itself that will allow you to buy or trade the token, so try finding a search bar on the page or click on some button that says “Trade” located on the page.
Once you do so, you need to ensure that the leverage is set to X1 and enter the amount of cryptocurrency you would like to buy in the currency you will be used to buy it with. Typically, you will get an on-the-spot calculation as to exactly how much BTC you can buy with your entered USD based on the price at the time of your deposit and purchase. Click on buy, and you will see the Bitcoin (BTC) cryptocurrency be added to your wallet.
The Best Bitcoin Trading Platforms
There are multiple Bitcoin trading platforms out there; in fact, just about any brokerage or exchange will allow you to trade Bitcoin as it is one of the largest and most popular cryptocurrency tokens out there. However, some are better than others, and Today we will be exploring your best options.
There are specific brokerages that have been developed to live up to the expectations of beginner traders. They do this by providing a simple user interface, where a new user can quickly adapt to the world of trading and purchase and sell cryptocurrencies with ease.
Coinbase is one of the largest U.S.-based cryptocurrency brokerages, allowing users to trade many cryptocurrency tokens. Its fees are a bit hard to get into and are higher when compared to other brokerages. However, it does have fascinating features, such as Coinbase Pro. There is a low minimum for funding your account, and your cryptocurrency is insured in the event of a hack.
Robinhood provides free cryptocurrency trades, and the account minimum is $0. There are no fees, and the interface is streamlined as well. The web platform is simple. However, it meets the standards when it comes to basic investor needs.
For Day Traders (eToro, Kraken, Bittrex)
There are also cryptocurrency brokerages that are specifically tailored towards day traders. These are the best options out there if you are looking towards getting into day trading.
eToro allows users to engage in cryptocurrency trades starting at $50, and it has an innovative feature that lets investors mirror specific trades of traders with successful track records. The fees range from 0.75% to 2.9%. However, cryptocurrency choices are limited.
Kraken is a cryptocurrency brokerage that supports a wide range of cryptocurrency tokens. It has a customizable ordering platform and a dedicated mobile application. Additionally, it offers a variable maker-taker fee structure.
Bittrex is known for its fast sign-up and verification process and its better support and security compared to other cryptocurrency brokerages. In terms of day trading, it offers advanced financial chart comparison tools and research-backed analysis on financial markets and investments from top analysts.
Best for Earning Interest
There are specific brokerages that allow you to earn interest on your cryptocurrency, and one such option is BlockFi.
BlockFi offers trades that are commission-free but include low spread rates, it has no minimum account size requirement, it provides instant trades and a recurring trades feature, and it is available in many countries. Users can earn up to 7.5% in interest by simply storing certain cryptocurrency assets with interest accounts. This account pays you monthly compounding interest, where BlockFi distributes these payments on the first business day of the month.
What to Look for in a Bitcoin Broker?
When it comes to picking the perfect Bitcoin broker, what you need to know right out of the way is that each of them has its own set of advantages and disadvantages. If you want to pick the best one on the list, here are some things you need to look out for.
Design and ease of use – Ideally, you want to ensure that the cryptocurrency brokerage in question will provide you with an easy navigational experience, as the last thing you want to experience is getting lost in all of it.
Fees & commissions – Brokerages by default have higher prices when compared to exchanges. However, some have lower fees than others, and you need to ensure that you find the right brokerages that charge you fair fees.
Reputation – Reputation can go a long way, and you need to ensure that the cryptocurrency brokerage that you end up choosing has a long history and reputation towards its security, or in other words, has never been compromised.
Cryptocurrency pairs available – You will get to a point in time when you will want to trade a bit more than just Bitcoin. You need to ensure that the cryptocurrency brokerage in question is prepared to provide you with many trading pairs.
Trading options – When it comes to the trading options, these need to be varied. While you might initially be okay with just buying Bitcoin, this may change over time—and you need to ensure that the cryptocurrency brokerage will provide you with what you need.
Customer Support – Things rarely go wrong in a cryptocurrency brokerage. However, when they do, you need to ensure that there is a solid support team that has your back and can assist you if an issue ever occurs.
Should I Use Brokers to Buy and Sell Bitcoin?
The main benefit of a cryptocurrency brokerage is that it sets the price of Bitcoin and always has a trading option available for you, as it does not have to wait for another party that is selling the token for you to have the ability to buy it. However, there are additional options out there, as you have exchanges, CFD brokers, peer-to-peer (P2P) marketplaces, and so on.
Final Thoughts on Bitcoin Brokers
When it comes to picking the best Bitcoin broker out there, it all boils down to what kind of person you are and your expectations from the broker in question. If you are a newcomer, you should seek a broker that will give you simplistic tools and even guides or a copy feature that lets you at least see what other traders are doing so you can get a more in-depth look at how all of it works. If you are a day trader, you want a brokerage that will provide you with valuable tools, charts, low fees or no fees at all and a low barrier of entry. Ultimately, the best cryptocurrency brokerage is the one you feel comfortable using and the one that gives you the features you need.
Do I have to verify my identity?
You have to complete a know-your-customer (KYC) verification process in most licensed and verified cryptocurrency brokerages.
Can I buy cryptocurrencies other than Bitcoin?
Most cryptocurrency brokerages will let you purchase other cryptocurrencies alongside Bitcoin.
Do I need a wallet to use a Bitcoin broker?
Many cryptocurrency brokerages will have their own built-in wallet; however, this is not the case with every brokerage out there, and as such, you might need to create one in some cases.
How do you safely store Bitcoin?
You can safely store Bitcoin in a cryptocurrency wallet where you control the private key and access the passphrase. This is a wallet that is not connected to a cryptocurrency brokerage but is your own personal wallet. Then there are also cold storage devices that have no connection to the internet, which give you an even higher level of protection.
Are Bitcoin brokers anonymous?
The transfers on Bitcoin brokers implement some form of KYC to continue to operate safely in specific jurisdictions, which means that some are, but many of them aren’t.
Can I deposit and withdraw money to PayPal using a Bitcoin broker?
You have the freedom to use PayPal to deposit and withdraw money from and to PayPal with specific cryptocurrency brokerages; however, this depends on the brokerage in question.
Are Bitcoin tokens available 24/7?
Because Bitcoin runs on a blockchain, it is indeed available 24/7.
Can I use multiple Bitcoin brokers?
You have the complete freedom to use as many Bitcoin brokers as you want to; however, keep in mind that there are fees involved when transferring cryptocurrency tokens from a brokerage to your wallet and the other way around.
Are Bitcoin brokers legal?
This is dependent on your location. Bitcoin is legal in a lot of countries. However, many of them operate in a grey area — and some don’t allow it whatsoever. Make sure you do your research before buying.
Are Bitcoin brokers regulated?
This depends on the brokerage in question, but many of the best cryptocurrency brokerages out there are fully regulated. This is why they require you to submit KYC documentation.