You may be wondering how to buy cryptocurrency safely. This usually happens in three stages.
Step 1. Select a platform
The first step is to choose a platform to use. Typically, you can choose between a traditional broker or a specialized cryptocurrency exchange.
Traditional brokers. These are online brokers offering the purchase and sale of cryptocurrency, as well as other financial assets: stocks, bonds, ETFs. These platforms typically offer lower trading fees but fewer cryptocurrency features.
Cryptocurrency exchanges. There are many cryptocurrency exchanges, each offering different cryptocurrencies, wallet storage, interest-bearing account options, and more. Many exchanges charge fees based on the assets traded.
When comparing platforms, it is recommended to pay attention to the cryptocurrencies traded, fees, security features, storage and withdrawal options, and educational resources.
Step 2. Add funds to your account
The next step after choosing a platform is to fund your account so that you can start trading. Most cryptocurrency exchanges, depending on the platform, allow users to purchase cryptocurrency using fiduciary (government-issued) currencies such as the US dollar, British pound, euro, or by paying with debit or credit cards.
Cryptocurrency purchases using credit cards are considered risky and are not supported by all exchanges. Some credit card companies also do not allow cryptocurrency transactions. This is due to the extremely high volatility of cryptocurrencies - when trading certain assets, it is not recommended to take risks by making trades in debt or potentially paying high fees for credit card transactions.
Some platforms also accept ACH transfers (automated clearing house transfers) and bank transfers. Acceptable payment methods and times for deposits and withdrawals vary by platform, and deposit clearing times vary by payment method.
An important factor to pay attention to is the size of the fees, which includes potential deposit and withdrawal fees as well as trading fees. Fees vary depending on payment method and platform. It is recommended to study this issue at the platform selection stage.
Step 3: Place an order
Orders can be placed through the website or mobile application of the selected broker or exchange. To buy cryptocurrency, you need to select the “Buy” option, order type, indicate the amount of cryptocurrency to be purchased and confirm the order. A sales order is placed in the same way.
There are other ways to invest in cryptocurrency. These include payment services such as PayPal, Cash App and Venmo, which allow you to buy, sell and store cryptocurrencies. In addition, there are the following investment instruments:
Bitcoin trusts. Bitcoin trust shares can be purchased through a regular brokerage account. Such instruments provide individual investors with access to cryptocurrency through the stock market.
Bitcoin Mutual Funds. There are Bitcoin-linked ETFs as well as Bitcoin mutual funds.
Blockchain stocks and ETFs. You can invest in cryptocurrency indirectly through blockchain companies that specialize in the technologies behind cryptocurrency mining and cryptocurrency transactions. Alternatively, you can buy shares or ETFs of companies using blockchain technology.
The best option depends on your investment goals and risk appetite.
