How To Buy Cryptocurrency Online
Cryptocurrencies (crypto) like Bitcoin are virtual digital assets and are tradeable. Those new to the crypto world may be confused about how to buy digital assets and capitalize on this relatively new opportunity.
We have put a guide together that explores how to buy cryptocurrency in 2022.
Best Brokers To Buy Cryptocurrency in 2022
If you are planning to invest in cryptocurrencies, you should take a look at the different brokers. We have compiled a list of the best cryptocurrency brokers for your quick-start and where you can get great deals.
What Is the Difference Between Buying and Trading Cryptocurrency?
Buying cryptocurrency involves exchanging fiat currency like USD, GBP, or EUR for cryptocurrency. Exchanging one crypto to another with the intention of selling is also considered, “buying”.
Trading is a popular way for investors to make profits on price movement in the market. It involves speculating crypto price movement, usually via instant buy or sell, contract for differences (CFDs) and spread betting.
How To Buy Cryptocurrency Online?
Exchanges and brokers provide the best trading platforms to buy cryptocurrencies. These platforms allow you to purchase crypto with most fiat currencies, including GBP and EUR. There are many to choose from, though the most popular include Binance, 7b, and CEX.io.
Here’s a step-by-step guide to buying cryptocurrency online:
Step 1: Find a suitable wallet to store your cryptocurrency.
We do not recommend storing your crypto on exchanges. After purchase, transfer your coins to a wallet.
Step 2: Select a suitable exchange or broker.
A good exchange will have reasonable fees, high liquidity, and your preferred payment/withdrawal methods.
Sign up and complete the KYC (Know Your Customer) verification. Verification time may range from a few hours to several days, depending on the exchange.
Fund your account with fiat currency or crypto. It is possible to connect your bank account, credit, and debit cards directly to the exchange.
Step 3: Execute the trade.
Select the number of tokens or the amount you wish to spend. Click “Buy” and double-check on the transaction details. Confirm that the crypto has been transferred to your account.
Transfer the cryptocurrency to your wallet.
How To Trade Cryptocurrency?
Step 1: Find a suitable exchange or broker.
Select a broker who offers crypto trading. Other factors to check are fees, commission, and trading limits. Traders can check on these popular cryptocurrency trading platforms for trading, Binance, eToro, and Robinhood.
Step 2: Fund your account.
Funds can be deposited into the account via bank transfers, credit cards, and debit cards.
Step 3: Decide how to trade.
Common methods include spread betting and contract for differences (CFDs). Beginners should first learn how to use these trading instruments.
Step 4: Execute the Trade.
Set up a demo account for practice. Understand the trade view and the trading tools. Trading involves going long or short. Traders may decide to sell their cryptocurrency early at a better price and hope to repurchase the tokens at a lower price, making a profit while at it.
Going long involves holding your cryptocurrency as an asset for more than a year, betting that the price will increase.
Also, if you would like to know more, we have created a guide of the best Bitcoin brokers.
What Are the Different Ways To Pay for Cryptocurrency?
There are many ways to pay for digital coins, although this depends on an exchange and the jurisdiction. Peer-to-peer exchanges lead in payment methods integrations, with the likes of Paxful offering 300 payment methods.
Payment methods offered in the UK by crypto exchanges will differ from those in Japan. This section covers the most common payment methods offered across all exchanges and available in most countries.
Buy Cryptocurrency with Credit Card
Financial institutions offer a credit card against a line of credit. Not all card issuers accept the use of their cards for buying cryptocurrency. Confirm with your card issuer that they allow the purchase of cryptocurrencies.
Most exchanges readily accept Visa and Mastercard credit cards. When signing up and giving out your credit card information, be careful that the exchange is verified.
Crypto purchases via credit cards may be treated as cash advances by some financial institutions. This will eventually attract high interest.
Deposits also via credit cards also attract 1%-5% fees. This depends on the exchange and card issuer. On average, purchasing crypto with a credit card adds one-eighth to the total cost.
Also, you can find out more by reading our guides about buying cryptocurrency with credit card, such as buy Bitcoin with credit card.
Standardised security – VISA/Mastercard
Quick – Credit card deposits are fast compared to bank or wire transfers.
High fees – Credit card purchases face higher charges compared to methods like bank transfers. Fees may go up to 5%
Multiple fees – Apart from the deposit fees, cash advance interests apply on credit card purchases.
Risky – Market volatility may cause a dramatic drop in crypto value, leading to high debt to the investor.
Limitations – Due to the line of credit advancements by the credit institutions, there are limits to how much an investor can spend.
Buy Cryptocurrency with Debit Card
Debit cards are linked to your bank account, which has money. Most exchanges accept Mastercard and Visa debit cards.
Security – High standards of safety by card issuers.
Simple to use – Linking debit cards and using them on an exchange or broker is simple.
Quick – Purchasing cryptocurrency with debit cards is fast. This is advantageous, especially when traders want to take advantage of volatile markets
Usage restrictions – Some banks do not allow the purchase of crypto from debit cards.
Also, you can find out more by reading our guides about buying cryptocurrency with debit card, such as buy XRP with debit card.
This is the most common method of depositing money into your crypto account. Standard bank transfer methods include SEPA (Europe), ACH transfers (USA), PAYID/NPP (Australia), and SWIFT(Worldwide).
Minimal fees – Bank transfers to crypto accounts are usually free.
There are no multiple fees and interests like those associated with credit cards
Secure – Bank transfers are generally considered easy and safe.
Wide adoption – Many exchanges support bank transfers
Slower – Buying cryptocurrency using bank transfers is typically slower compared to other methods of purchase. Some exchanges take up to 5 days to complete transactions.
KYC verification – Those who transfer money from banks have to undergo verification which may take longer.
Also, you can find out more by reading our guides about buying cryptocurrency with bank transfer, such as buy Bitcoin with bank transfer.
Other methods to buy cryptocurrency
PayPal, Neteller, and Skrill are online payment platforms that are integrated into some exchanges. Depositing funds is straightforward. There are also no limits to how much one can spend as long as your account is verified.
On the downside, there may be fees for the use of these platforms and are also not widely adopted by exchanges.
What To Consider When Buying Cryptocurrency?
Many investors buy cryptocurrency due to sentiments or fear of missing out. Consider the following factors before purchasing cryptocurrency.
An investor may want to take advantage of market volatility to buy a specific cryptocurrency. This is primarily during bear markets. Some exchanges take days before completing KYC verification. Exchanges like Binance, Kraken, and Gemini take two to ten days for verification.
Other exchanges have adopted a different way to process KYC. They offer basic, intermediate, and advanced verification depending on the level of activity on the platform. Basic will not be lengthy compared to advanced verification. Examples of such platforms include Gate.io and Coinmama.
Deposit fees vary depending on the mode of payment. Investors who use credit cards can expect charges, while bank transfers are likely to be free. Depositing other cryptos like Ethereum is usually free.
Trading charges may be fixed or presented as a percentage of a 30-day trading volume. Fixed fees are tiered depending on the account type. With tiered percentages, the rates decrease with an increase in trading volume.
Market volatility refers to the speculation of crypto prices, which may sometimes move a lot. If the volatility causes prices to tumble, it might be a good time to buy and vice versa. Crypto volatility refers to price swings brought about by price speculations. Volatility typically happens because of market sentiments,
Different jurisdictions observe different laws and policies on crypto. This is especially true on taxes, with countries like Australia and Japan levying capital gains tax on long-term crypto investment. Many governments globally are drawing up a policy to regulate crypto.
Long-term holding (HODL)
Investors usually hold onto cryptocurrency if they believe in the project and its value. Before deciding whether to hold onto a cryptocurrency for the long term, verify its roadmap and the community activity.
This refers to holding your crypto assets within one year before selling. Before deciding to hold a crypto asset in the short term, make sure you understand price actions, market sentiments, and risk management.
Is It Safe To Buy Cryptocurrency Online?
There are ways to ensure that you buy and store cryptocurrency online safely.
This should be a must when setting up your account on any exchange. 2FA protects your account against compromise in case of an email/password security breach.
Storing crypto safely
After successfully purchasing your cryptocurrency, you will need to transfer them to an external wallet. Some exchanges offer inbuilt wallets, e.g., Gemini wallet. We strongly recommend storing your crypto on hardware wallets, especially when you have a significant investment.
Getting help from official sources only
Exchanges have customer support ranging from live chats, phones, and email. Ensure to get help from official communities and avoid seeking help from online platforms like Telegram.
Passing only necessary KYC
Fill only the mandatory KYC to complete the signup process. This is to reduce the risk of all your personal information getting into the wrong hands.
Use strong passwords for your hot wallet
Combine alphanumeric characters with special characters to make a strong password. You can also use password-generating software to get a strong password.
Use secure internet connection
Avoid accessing your online wallets or exchange while using public wifi. You can always use a VPN service for increased security.
Never give out your private keys
Just like the popular saying in the crypto community confirms, “Not your keys, not your coins”. Anyone may steal your crypto when they get access to your private key or wallet address.
How To Store Cryptocurrency?
Investors can store their cryptocurrency in digital wallets. Digital wallets can be in the form of hot, cold, or paper wallets.
Some exchanges may provide an inbuilt wallet. It should be understood that exchanges are not in the business of providing asset security. In case of a security breach on an exchange, you may lose your cryptocurrency.
Here are the different types of wallets available:
These are wallets designed to operate online. They are typically offered for free, and investors can download them as desktop wallets, online wallets, and mobile wallets. Apart from storage, wallets help send and receive cryptocurrency.
Cold wallets are associated with hardware wallets. They store your cryptocurrency in an offline mode (cold storage). Experts recommend cold wallets as the safest way to store your crypto assets.
The private key and wallet address are stored offline. This limits the chances of access to your wallet or stealing your private keys. Examples of hardware wallets include Trezor and Ledger.
How To Sell Cryptocurrency?
Cryptocurrency investors can sell their assets via exchanges or brokers. Other methods include ATMs and in-person purchases.
Exchanges are the most popular way to sell cryptocurrency. Exchanges like Coinbase and CEX.io are good exchanges where investors can do instant selling and spot trading.
There are two ways investors can sell their crypto to brokerage firms.
Using trading instruments such as CFDs and spread betting.
Selling crypto assets directly on the market.
CFDs allow investors to leverage their cryptocurrency portfolio for greater exposure. Traders should understand the risk before using CFDs. Spread betting allows traders to speculate and bet on the future price of a cryptocurrency.
Bitcoin has ATMs where investors can buy and sell cryptocurrencies.
Selling cryptocurrency in person
Traders can seek willing buyers in meetups or reputable forums. Sell your cryptocurrency for cash.
To guarantee safety, it is best to seek the services of an escrow service. After the price agreement, conduct the trade in a public place where security is assured.
Is It Worth Buying Cryptocurrency Right Now?
The crypto space is an exciting space at the moment. There are new cryptocurrencies, altcoins, stablecoins, and New fungible tokens (NFTs) that investors can buy.
Market sentiments, project value, and fear of missing out are some of the things that affect the value of cryptocurrency.
Before investing your cash, understand the crypto project and check the community activity. Good projects that solve real-world problems will rise in value in due time. Bitcoin, Ethereum, Litecoin, Binance Coin, and Dogecoin are major cryptocurrencies users can invest in.
Investors should also understand market cycles. There are times when prices of cryptocurrencies generally go up and the opposite is true.
What To Consider Before Buying Cryptocurrency?
Buying cryptocurrency has been made easy with the many exchanges and brokers available globally. Crypto can make you a millionaire, or you can lose your money. Consider all factors such as market volatility, price action, and security before buying a cryptocurrency.