If you are someone new in the world of cryptocurrencies, blockchain technology and NFTs, then it may seem difficult for you to buy or invest in cryptocurrencies in one go. You must have heard of famous cryptocurrencies such as Ethereum, Bitcoin, Dogecoin, SafeMoon and more, but the way to buy them can prove to be tricky for a beginner. But the process itself is very simple and easy. In this article, we will help you get the basic concepts of buying a cryptocurrency and how it can be done.
Follow these five simple and easy steps in order to start investing in cryptocurrency from the United States of America:
Select a cryptocurrency exchange platform or a cryptocurrency broker
In order to buy cryptocurrency, you will need to select a cryptocurrency exchange platform or a broker (cryptocurrency broker) first. Both of these platforms offer their clients to buy cryptocurrency, but they have different approaches from each other. Let us look at the difference between a crypto broker and a crypto exchange platform while we are at it.
What is a cryptocurrency exchange platform?
In a crypto exchange platform, the buyers and sellers of cryptocurrency assemble together in order to trade cryptocurrencies. The crypto exchange platforms tend to offer lower exchange fees, but the user interface and complexity are relatively high. But if you want to research crypto coins to track live prices and performance charts, then a cryptocurrency exchange platform can prove to be a better option for your use case.
But if you are a new investor who does not possess much experience and knowledge in the cryptocurrency domain, then using an exchange platform can be a little bit intimidating for you. Nevertheless, there are crypto exchange platforms that offer easy and user-friendly cryptocurrency purchase options for their clients.
The beginner-friendly platforms charge considerably more from the customers than the actual price of the crypto. If you are willing to save the cost, you might want to educate yourself more about these crypto platforms before making your first purchase or investment. Also, you need to keep in mind that the exchange platform you have chosen provides you with the opportunity to use fiat currencies such as US dollars. There are some exchange platforms where you can only buy cryptocurrency using another cryptocurrency, that is why it is essential to be aware of all these when buying your first-ever cryptocurrency.
What is a cryptocurrency broker?
The sole aim of cryptocurrency brokers is to take away the complexity of buying crypto and offer an easy to use interface. Moreover, the platform interacts with exchanges for their customers and charges higher fees from their clients than any exchange platform. Some platforms claim that they offer their services for free, but that is entirely not the case. In exchange for offering free services, these platforms sell their user information to large brokerages and funds on what their users are buying as well as they often do not execute the trading at the best possible market price.
While using cryptocurrency brokers can be convenient for a lot of people, you need to be very careful about them because, in most cases, you will face restrictions if you want to move your cryptocurrencies to another platform. For those who are unaware, this may not be a huge problem, but the advanced crypto investors prefer holding their cryptocurrencies in a separate crypto wallet for an extra layer of protection. Some investors also use hardware crypto wallets that are not linked with the internet for more security.
Create your account and complete the verification process
Once you have gone through multiple cryptocurrency exchange platforms and brokers and chosen the appropriate crypto trading platform for yourself, you need to sign up by providing proper details, and your account will be opened on the designated platform. In the next step, you have to verify your identity, this is an important step and simply unavoidable because, without verification, you will not be able to withdraw your money from the wallet. The verification process has been applied in order to prevent fraudulent activities and fulfil the federal regulatory requirements.
Also, you won’t be able to sell or buy cryptocurrency unless your verification has been approved by the platform. The platform may ask for the details and a copy of your passport driver’s license, and some platforms also ask for a selfie of the customer to prove the identity and appearance of the customer to match the details.
How to make an investment: Deposit Cash
Now it is time for you to buy your cryptocurrency, and in an effort to do so, you need to have money in your account. You need to deposit money in your bank account by linking your bank account with the crypto platform and opt for a wire transfer, or you can also use a debit or credit card. After the money transfer, it may take some time to reflect it in your account, the time to reflect the funds in your crypto trading platform is dependent upon the exchange platform, broker as well as the method you have chosen to initiate the transaction. You may have to wait for some days before you can buy or trade cryptocurrency.
Also, note that when you are transferring money using a credit card, the process is extremely risky and ends up causing you lots of issues in the financial domain. When you deposit money in the account using a credit card, the credit card companies consider it as a cash advance. In case you don’t know, taking cash from credit cards incurs higher interest than buying or making a purchase. That means you will have to give high interest because of the cash you have taken from the credit card.
Time to place your cryptocurrency order
Once the money has been successfully deposited into your account, you will be ready to place your first crypto currency order. Currently, there are a total of 16,598 cryptocurrencies available in the market, and some popular crypto coins include the likes of Bitcoin, Ethereum, Tether, etc.
When you have decided which coin you want to purchase, you can directly enter its name or symbol. For example, if you want to purchase bitcoin, you have to write its name or symbol, which is BTC. Then you need to enter how many coins you want to purchase. Most of the exchange platforms and brokers offer their clients fractional purchases of high-valued coins such as Bitcoin and Ethereum. Otherwise, to purchase a single bitcoin, you will have to spend around 39,504 US dollars at the time of writing.
Based on the market capitalization of March 2022, the top ten cryptocurrencies are as follows:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- USD Coin (USDC)
- XRP (XRP)
- Terra (LUNA)
- Cardano (ADA)
- Solana (SOL)
- Avalanche (AVAX)
Select a Storage Method to secure your cryptocurrency
Unlike the Federal Deposit Insurance Corp. (FDIC), cryptocurrency exchange platforms and brokers don’t have appropriate protection. Therefore, there is a constant risk of hacking and theft. In case you lose the codes to access your account, you are at the risk of losing all of your investment. In the past, there have been multiple circumstances where millions of dollars of bitcoin have been lost for multiple reasons. That is why it is necessary to implement proper security measures and storage facilities in order to protect and store your cryptocurrencies.
As mentioned earlier, if you are utilizing a broker to buy cryptocurrency, then you have little or no control over how your cryptocurrency is stored. But if you are purchasing your cryptocurrency through an exchange platform, then you can possess multiple options to secure your cryptocurrency.
Leave the cryptocurrency in the exchange platform
Whenever you purchase any amount of cryptocurrency from an exchange platform, your coins are usually stored in a cryptocurrency wallet attached to the exchange platform. If you don’t trust your provider and want to move it to a more secure location, then you can transfer the cryptocurrencies from the exchange to a more secure hot or cold wallet. You need to pay a small transfer fee, and the amount will be dependent upon the exchange platform and the size of your transfer.
Try hot wallets
Hot wallets are stored online and only perform on internet-connected devices, such as phones, computers and tablets. The hot wallets are convenient, but the risk is also high because the device will still be connected to the internet.
Use cold wallets for more security
Cold crypto wallets are the most secure option to confine cryptocurrencies because they are not connected to the internet. You may use an external device like a hard drive or a USB drive as a cold wallet. But you have to be really cautious with cold wallets because in case you lose the associated keyword or the device breaks, you may not be able to recover the cryptocurrency ever again. The same can happen with the hot wallet, but in the case of hot ones, some wallets are run by the custodians who can help you with the recovery of your account if you are locked out from your own account.
With all these, you can get a grasp of how to buy your first cryptocurrency and store them in a secured location where no one can access them except for you. If you haven’t tried investing in cryptocurrency, it is your chance to do it now.