How to Buy Cryptocurrencies

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Contributor, Benzinga
Updated: August 19, 2022

Want to jump straight to the answer? You can buy cryptocurrencies on UpholdeToro and Robinhood.

If you’ve been paying attention to the crypto scene, you may be wondering how to buy cryptocurrencies. You may also worry that it’s too complicated to get involved in cryptocurrencies, or that it’s too late to start.

The good news is, it’s neither too late nor too complicated. This is a great time to start buying cryptocurrencies and once you make your first purchase, you’ll see how simple it really can be.

How to Buy Cryptocurrencies

If you’re wondering how to buy cryptocurrency, chances are good that you’re also a little nervous about that first purchase. You aren’t alone! Everyone is nervous the first time because it’s so new, but once you’ve made that first purchase you’ll see that it’s easier than you expected it to be.

Start small. If you only purchase a few dollars worth of a particular asset, you aren’t as upset if you make a mistake as you would be if you made a mistake with hundreds of dollars. Also, keep in mind, you can buy a fraction of a coin. People sometimes think they can’t buy Bitcoin because they don’t have $40,000+ to purchase one coin. The truth is, you can buy $10 of Bitcoin if you want, and add to that amount any time you like.

  1. Choose a cryptocurrency exchange.

    Your first step in buying cryptocurrency is to choose an exchange. Uphold, eToro, Robinhood and Webull are some of the best known and safest exchanges, but they aren’t the only ones. 

    Steer clear of exchanges that are new unless you know they are well established and trusted. If you are a complete beginner, Uphold is always a great choice. The interface is very user-friendly and they offer over 50 altcoins for investing and trading. It also offers a wide variety of different cryptos and you can even trade stocks and precious metals on the platform too.

    Gemini is also excellent for beginners, while also offering features for more advanced traders. This exchange has over 40 cryptocurrencies to choose from and they have other nice perks as well, like Gemini Earn which allows you to earn up to 7.4% APY on your crypto.

    eToro has a unique program called CopyTrader that allows you to copy the transactions of successful traders and learn from them. This is an amazing way to learn the ins and outs of trading if you’re worried about trying it on your own.

    Webull and Robinhood are great because you can not only invest in cryptocurrencies, but you can purchase stocks as well. 

  2. Create an account.

    Once you’ve chosen your exchange, you’ll need to create an account. While each exchange may be set up a little differently from another, the basics are pretty much the same.

    First, go to the registration page where you will be prompted to enter your email address and a strong password. When that is done, you should receive an email with a code that must be entered on the website. This verifies your email address.

    After you are verified, you will likely be prompted to enable two-factor authentication or 2FA. This is important to add an extra layer of security to your account. After all, you don’t want someone else to access your account and take your valuable assets.

    Now you’ll need to take one more step before you are able to make your first purchase. Know Your Customer, or KYC, is a process of verifying your identification to ensure that you are who you claim to be. You’ll be asked to submit certain documentation; usually, this is a picture of your driver’s license, passport, social security card or another form of ID. Some may also require a picture of you holding your driver’s license.

    Usually, this step takes only a few minutes but sometimes you may be asked to provide additional information. Don’t let this concern you. The sooner you get them the needed information, the sooner you can make your first purchase!

  3. Fund your account.

    Now that you are verified and approved, you can fund your account. Often you need only to connect your account to your bank account. Some exchanges also allow you to use a credit card. 

    Whichever method you use, you can now deposit the amount that you feel secure starting with. It’s okay to start with small amounts until you feel comfortable. 

  4. Make your purchase.

    Now that your account has funds, you can make your first purchase. For most people, this is simply a little bit of whatever cryptocurrency they have decided to start with. Soon, however, you’ll realize that this is only the beginning.

    When you make an order to buy or sell crypto at the current market price, this is called a market order. However, if you only want to buy or sell at a specific price, this is called a limit order. There is also a stop limit order which is when a pre-determined stop price triggers the buy or sell order at the limit price.

    There are also trading pairs, such as Bitcoin/Ethereum or Bitcoin/Litecoin pairs. The first currency listed in the pair is called the “base currency”. The second currency is called the “quote currency” or “term currency”.

    Trading Bitcoin pairs means you can trade any coin that lists Bitcoin with it as the base currency. The pair indicates how much of the term currency is equal to the amount of Bitcoin listed. 

    Similarly, USD pairs use USD as the base currency and are basically a price quote of the exchange rate between the two currencies.

  5. Buy a cryptocurrency wallet (optional).

    Now that you’ve made your purchase, you’ll likely want to keep it safe in some type of wallet.

    Usually, exchanges will allow you to keep your crypto there, but this is never a wise choice unless you plan to sell or trade it immediately. This is because there is always a chance of an exchange being hacked or frozen. If this happens, you no longer have access to your assets.

Best Cryptocurrency Exchanges

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    This ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) and USA (by eToro USA LLC); which is highly volatile, unregulated in most EU countries, no EU protections and not supervised by the EU regulatory framework. Investments are subject to market risk, including the loss of principal.

What is Bitcoin?

Bitcoin is fairly well-known, but even if you’ve heard the name you may not know quite what it is. The quick answer is, Bitcoin is the world’s first widely adopted cryptocurrency. In 2008, a whitepaper was written by Satoshi Nakamoto, whose true identity is unknown, where he outlined the basic concept of Bitcoin. It is a digital currency that allows secure, peer-to-peer transactions online without the need to rely on the traditional banking system. 

It didn’t take long for this idea to explode and Bitcoin is now priced at nearly $50,000 per BTC. Considering that its original price was a fraction of a penny, it isn’t difficult to see the investment potential even today.

Investing in Bitcoin vs. Altcoins

There are some investors who feel that Bitcoin is king and they will invest in nothing else. There is nothing wrong with that, of course. However, there are thousands of other coins, called altcoins, that you should take a look at as well. 

No one can say for certain if these coins will ever overtake Bitcoin but it may not matter. Many of these coins have proven to be excellent investments and have provided outstanding returns to those who purchased them. 

There is no reason why you can’t invest in both Bitcoin and altcoins. The key is to do your research so you can determine the potential of each coin you are considering. Not every new offering is successful but those that are can do wonders for your financial security.

Cryptocurrency Market vs. Stock Market

The cryptocurrency market is not the same as the stock market, though there are some similarities that can help you understand how the crypto market works.

As a rule, stocks are issued by companies and are backed by the potential profits each company is expected to see. Cryptos, on the other hand, are issued by pretty much anyone who wants to make their own blockchain ledger.

This means it’s just a matter of mathematics to figure out the value of a stock. It’s a little more tricky to determine the value of a cryptocurrency. Value is based partly on utility and partly on other factors including those that are purely subjective. 

Stocks are sold to raise money for the company selling the stock. This money helps the company grow. Cryptocurrencies have different purposes. A blockchain project may be for games, NFTs, DeFi or any number of things.

Cryptos are also considered more volatile than stocks. If you spend time watching both, you’ll see that cryptos make great gains and stomach-turning drops that rival any amusement park ride you’ve experienced. 

What’s interesting, however, is when you look at the overall path of a cryptocurrency, you are very likely to see that ultimately, it has gone up. In fact, Bitcoin has grown more than any stock in spite of its volatility. Naturally, this doesn’t happen with every new cryptocurrency, which is why it’s important to thoroughly research any altcoin you are considering. 

What is a Cryptocurrency Exchange?

A cryptocurrency exchange is basically a digital marketplace that allows you to exchange your fiat money for the cryptocurrency you want to purchase. Some exchanges offer extra perks as well to tempt you to choose them over other exchanges. 

To be sure, there are many exchanges to choose from and the options can be a little overwhelming. Don’t feel rushed. Take some time to learn about each exchange so you can choose the one that best fits your needs and experience level.

New: MoneyLion Roar Account

MoneyLion’s Roar account is the latest in multifunctional investing. When you join MoneyLion, you gain access to a digital bank that gives you all the features you’re looking for. While you have the option to get paid before payday, take a cash advance or even build your credit with a loan, MoneyLion also allows you to invest in crypto.

With a RoarMoney account, you can invest in Bitcoin and Ethereum any time you like. Because this market is decentralized, you can continue to invest in the early hours or in the middle of the night.

When you join MoneyLion, you can also use your debit card to add round-ups to your account. Rounding up your purchases allows you to add extra cash to your crypto investment portfolio, allowing you to grow your investments whenever you like. This is similar to the “set it and forget it” style of investing that grows your savings without much hassle.

There is also a prize pool of $1 million you join after opening a crypto account. You can even invite your friends with the hope of winning a piece of the pie.

Best Cryptocurrency Wallets

There are two main types of wallets. Hardware wallets and software wallets. Often people use both kinds of wallets, depending on their needs. 

If you use your cryptocurrency frequently for transactions, it may be a good idea to keep what you will use for the day in a software wallet and keep the rest in a hardware wallet. 

The choice is yours; just be sure to consider the features that are most important to you as well as the safety of your assets when you make your decisions.

Best Hardware Wallet: Ledger

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Hardware wallets are by far the safest option for a cryptocurrency wallet. This is because they are not connected to the internet, so it’s impossible for hackers to access them. You can even keep your hardware wallet in a safe for an extra layer of security. 

The Ledger wallets are by far the best, giving you the safety and security of a hardware wallet with the ease of Ledger Live. Ledger Live is an app that works on your phone or computer, allowing you access to over 1800 coins and tokens that you can buy, sell, exchange and grow. It supports Bitcoin, Ethereum, Dogecoin, XRP, all ERC-20 tokens and many more.

Best Software Wallet: Metamask

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Metamask is possibly the most popular software wallet for Ethereum and ER-20 tokens. It essentially creates a bridge from your Firefox, Chrome or Brave browser to the Ethereum blockchain. 

Metamask allows you to store cryptocurrency and also allows you to interact with smart contracts and decentralized applications (DApps). It’s also compatible with Ledger. Unfortunately, you can’t use it for Bitcoin.

Alternative Ways to Buy Crypto

There are some other ways to buy cryptocurrency without going through an exchange. Some people feel these are safer ways to buy, but that doesn’t necessarily make them better ways to buy.

For example, if you invest through Grayscale trust, you must pay an annual fee, so the value of the trust goes down over time. Also, Grayscale only trades when the stock markets are open. So if there is a big crash in crypto over the weekend, you are stuck until Monday.

Crypto EFTs are similar to Grayscale. Both allow you to get involved in cryptocurrency by using brokers instead of doing it yourself.  While that may sound great, you have to pay fees for this service. Additionally, you aren’t the actual owner of the cryptocurrency. You’re just a shareholder. This means you can’t make trades or benefit from decentralized finance.

You’ll have to weigh out if the costs and loss of benefits are worth the “easy” method of getting into crypto.

Should You Buy Cryptocurrency?

Should you buy cryptocurrency? Truthfully, you are the only one who can answer that question. 

Cryptocurrency is volatile and will probably be that way for quite some time. However, if you look at where it started compared to where it is now, you’ll see that it has grown tremendously. Clearly, crypto isn’t just a fad; it’s here for the long term.

If you opt to get into the world of crypto, always do thorough research and never invest more than you can afford to lose. Also, take advantage of every opportunity to learn, because crypto is ever-changing and ever-growing. You don’t want to miss anything!

Frequently Asked Questions

Questions & Answers

Q
Do I need a cryptocurrency wallet to buy cryptocurrency?
A

No, you do not need to have a wallet to purchase crypto, however, if you plan on doing alot of cryptocurrency investing, a wallet is worth investing in. Third party platforms such as Coinbase, Robinhood, and Paypal allow you to dip your feet in the world of owning cryptocurrency without a wallet.

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