Cryptocurrency brokerages are the go-to way for engaging in cryptocurrency purchases or trading for the very first time. There are several reasons for this, all of which will be explored in this article.
If you are just getting started with cryptocurrency trading, knowing which brokerage to pick can be an essential part of your overall experience within the industry.
Best Cryptocurrency Brokers in 2021
There are several factors to consider when picking a cryptocurrency brokerage so to make things a bit easier on you, we’ve hand-picked some of the best exchanges that you can get started with.
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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 broker otherwise referred to as a cryptocurrency brokerage, is a company that connects you with the cryptocurrency market. Brokerages are essentially middlemen standing between you and the cryptocurrency exchange. The broker buys up a large number of specific cryptocurrency tokens and offers them on its platform.
How Do Cryptocurrency Brokerages Work?
You can think of brokerages as intermediaries that are on the opposite side of any trade. The brokerages can be a lot more flexible with regards to the settlement of assets, a possible reason why they might be preferred over exchanges. They allow traders to lock in a trade at a specific price point, even if they are unable to pay for the asset at that point in time. This would appeal to traders who want to trade an asset instantly. Unlike in exchanges, liquidity is determined by the brokerage and not the traders within the market, meaning that as long as a brokerage accepts an order, the trader can execute a transaction.
What’s the Difference Between a Broker and an Exchange?
There are several key differences between cryptocurrency brokerages and cryptocurrency exchanges.
Here’s what you need to know about brokerages:
To purchase a cryptocurrency token from a brokerage, you will not require back-end knowledge of how the blockchain actually works, as the process is simple.
In a cryptocurrency brokerage, you can pay through convenient payment methods, including credit cards, debit cards, and PayPal.
Brokerages can also provide you with a higher level of customer support relative to exchanges.
Here’s what you need to know about exchanges:
The market determines the price of the cryptocurrency assets on exchanges.
Exchanges match orders, meaning there has to be at least two traders to execute a trade.
The exchange makes money by charging fees for the traders once they are matched.
What Are CFD Brokers?
CFD trading or a CFD contract is where you agree to exchange the difference in the price of a cryptocurrency. This price is calculated from when you first open the position to when you close it. You are speculating on the price of the market rather than buying the cryptocurrency token outright.
Advantages and Disadvantages of Cryptocurrency Brokers
When you compare cryptocurrency brokers with exchanges or other platforms, you will notice certain other characteristics.
Advantages of Cryptocurrency Brokers
Cryptocurrency brokerages provide a simple service to purchase cryptocurrencies.
These brokerages typically have a dedicated mobile application that you can download and install on any smartphone.
You get access to a wide range of cryptocurrency tokens that can be traded extremely quickly.
Disadvantages of Cryptocurrency broker
Brokerages typically require you to complete know-your-customer (KYC) verification and hand over personal documentation.
They feature higher fees when compared to exchanges.
How Do I Get Started with a Cryptocurrency Broker?
Getting started with a cryptocurrency brokerage is a straightforward process.
Step 1: Open a Cryptocurrency Brokerage Account
The first thing you need to do is select the cryptocurrency brokerage that you will be using based on your own research. In order to create an account, you will usually have to find a button on the official homepage that prompts you to “Sign Up” or “Join Now.” This will forward you to the account creation screen. Here, you will be required to enter some general information, such as an email, password, and username. Additionally, many regulated cryptocurrency brokerages out there will also require you to complete a know-your-customer (KYC) verification process, which will require relevant documents on your end.
Step 2: Open the WebApp or Download the Mobile Application
Once you have completed the account creation process, the next thing you will need to do is check all of the ways through which you can access the cryptocurrency brokerage where you have created the account. Keep in mind that certain cryptocurrency brokerages will provide you a multitude of ways to access them, be it through a web app or through a mobile client.
Step 3: Make your Initial Deposit
Once you have selected the cryptocurrency brokerage that you will be using and the method through which you will be accessing the brokerage, you will need to make your first deposit.
You can either use FIAT currencies as a deposit method or other cryptocurrencies. Keep an eye on the minimum deposit limit, as some brokerages will require you to deposit at least $200 so you can start using them.
Step 4: Buy or Trade Cryptocurrencies
With the money loaded into your account, you can start buying or trading cryptocurrencies. This process is dependent on the user interface and overall design of the cryptocurrency brokerage in question. However, in most cases, find the search bar and look up your preferred cryptocurrency token either through its name or through its ticker symbol. Click on “Buy” or “Trade,” depending on what you want to do, and you should be good to go.
The Best Cryptocurrency Trading Platforms
There are many cryptocurrency brokerages and other platforms out there. Many of them will provide you with a cryptocurrency wallet, multiple methods of depositing FIAT currency, as well as a multitude of cryptocurrencies to invest in or buy. Let’s go over some of them.
When it comes to beginners, the cryptocurrency brokerages would ideally provide a simple user interface as well as educational content.
Coinbase is by far one of the largest cryptocurrency brokerages out there. It provides users with a variety of different cryptocurrency tokens and offers a service known as Coinbase Pro, which tries to list new cryptocurrency altcoins. Also, it has a low minimum deposit and is simple to use.
Robinhood has an account minimum of $0 which makes it extremely easy to get into, where it also provides free cryptocurrency trades. Its user interface is also streamlined, and anyone can get started easily.
For Day Traders (eToro, Kraken, Bittrex)
There are cryptocurrency brokerages specifically tailored towards day traders. Here are the best ones out there:
eToro is a cryptocurrency brokerage with a reputation for its low trading minimum, which starts at just $50 and has an innovative copy feature that lets you mirror other people’s trades. The fees are between 0.75% and 2.9% and it offers a wide array of cryptocurrency tokens.
Kraken offers a large number of crypto tokens as well as relevant educational content. It has a customizable ordering platform and a solid dedicated mobile application.
Bittrex has one of the quickest verification processes out there and offers features such as financial chart comparison tools alongside research-based analysis on financial markets.
Best for Earning Interest (BlockFi)
If you want to earn interest on your cryptocurrency tokens, you need to utilize platforms such as BlockFi. This is a brokerage that specializes in allowing you to earn interest on your cryptocurrency balance.
BlockFi offers you the ability to make commission-free trades at low spread rates.
It has no minimum account size requirement and offers instant trades as well as recurring trades. It is available in many countries, and users earn up to 7.5% per year.
What to Look For in a Cryptocurrency Broker?
Here are some features to look for in a brokerage:
Design and Ease of Use
Ideally, you need to find a cryptocurrency brokerage that has a simple user interface.
Fees & Commissions
Each cryptocurrency brokerage will have its own set of fees and commissions, and you will need to find one that suits your needs.
Reputation can also play a major role. Ideally, seek a well-established brokerage with no concerns over security.
You might be trading through cryptocurrency pairs, so ensure that the brokerage offers a wide variety of pairs.
Ensure that you find a brokerage that allows you access to as many different trading options as possible.
Should I Use Brokers to Buy and Sell Cryptocurrency?
The main advantage that you have whenever you use cryptocurrency brokerages to buy and sell cryptocurrencies is that they will almost always be available for you. This allows you the convenience of always having crypto to buy and having a location to sell them in an instant.
Final Thoughts on Cryptocurrency Brokers
Cryptocurrency brokerages will provide you with a higher level of convenience relative to other avenues. While this translates to higher fees, brokerages are well regulated, and secure.
Do I Have to Verify My Identity?
You typically need to undergo KYC and AML procedures.
Can I Buy Different Kinds of Cryptocurrencies?
Each brokerage will have its own set of cryptocurrencies on offer, some offering around 10, others over 100.
Do I Need a Wallet to Use a Cryptocurrency Broker?
A cryptocurrency brokerage will typically provide you with an on-account cryptocurrency wallet, to begin with, but it is always recommended to have your personal wallet as well.
How Do You Safely Store Cryptocurrency?
The safest way of storing cryptocurrency assets is through a cold storage device such as a hardware wallet.
Are Cryptocurrency Brokers Anonymous?
No, because they require you to complete a KYC verification.
Can I Deposit and Withdraw Money to PayPal Using Cryptocurrency Brokers?
Yes, many brokerages do offer this as an opportunity.
Are Cryptocurrencies Available 24/7?
Cryptocurrencies run on blockchain technology and, as such, are always available.
Can I Use Multiple Cryptocurrency Brokers?
You are not limited in any way; however, this incurs higher fees as you’d be transferring your funds from one wallet to another constantly.
Are Cryptocurrency Brokers Legal?
This depends on the country you live in. Many countries have made cryptocurrencies legal, while others are still regulating them; check to be sure.
Are Cryptocurrency Brokers Regulated?
Many cryptocurrency brokers are indeed regulated; however, this usually depends on the brokerage in question.