How to Buy Cryptocurrency: A Beginner’s Guide to Cryptocurrency Investing
Suppose you are active in the financial market or looking for investment opportunities. In that case, you undoubtedly must have heard a lot about cryptocurrency from daily financial headlines, friends, business associates, or elsewhere. And How to Buy Cryptocurrency must be on your top priority list.
Inundated by exciting stories about individuals who have turned their financial status around by investing in digital gold, you are probably rummaging through the Internet for cryptocurrency investment tips and advice.
This article is written to provide the needed guidance and assist potential Cryptocurrency investors to understand what digital coins are, the best cryptocurrency to invest in, investing tips and advice, and other information.
The information in the article for How to Buy Cryptocurrency will ease your investment journey and help you make informed cryptocurrency investment decisions.
Investopedia, a reliable source of investment-related information, defines cryptocurrency as “a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.”
The crypto prefix is “cryptography.” Cryptography refers to a technology used to keep a piece of information safe and hidden from unauthorized people, including hackers.
Although cryptocurrencies are digital currencies, they perform similar functions as fiat currencies. Apple, Microsft, Tesla, and other big companies have started to accept Bitcoin as a payment option.
While one can send and accept payments at high speed locally and internationally at a low cost via digital currencies. These and other incredible uses of cryptocurrency are responsible for its growing worldwide popularity.
Blockchain technology is “a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system and used for Digital currency creation. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain,” according to Euro Money.
Thanks to their solid and secure foundations, cryptocurrencies have some fantastic features that support their wide use as a medium of money transfer and payment system. Consider a couple of these features:
Cryptocurrencies are decentralized. They are not controlled by a central authority or body, making it impossible for an individual or a group of individuals to alter them. Cryptocurrencies are the perfect examples of democratized systems. Banks and central authorities are in charge of fiat currencies-based transactions. Conversely, an open and distributed network under no one’s control processes and validates cryptocurrency-based transactions.
2. Immutable and irreversible:
Transactions performed with cryptocurrencies are irreversible. Such transactions simply can’t be undone once they are recorded on the blockchain. Cryptocurrency’s immutability increases the difficulty of modifying a transaction.
There’s no gainsaying that cryptocurrencies are secure. Transactions performed with digital coins are recorded on distributed ledger or blockchain, thereby eliminating the possibility of failure or vulnerability. Hence, such transactions are fortified against bugs, hacking, and system failure.
The absence of a central authority in charge of digital currencies guarantees users’ anonymity. Transactions are done without the transacting parties revealing their personal information. The decentralized network’s responsibility includes checking, verifying, and recording such transactions on the blockchain. Thus, rest assured that your identity isn’t public knowledge during transactions.
These cryptocurrency’s features are responsible for their wide usage as a payment solution and an investment option.
Best Cryptocurrencies to Buy
Cryptocurrency’s adoption as a payment option and long-term investment option has led to more digital currencies. It is estimated that there are currently over 7,000 digital coins for investors and crypto enthusiasts to choose from.
As a beginner, you may have a hard time in knowing how to buy Cryptocurrency or choosing the best coin to invest in, especially if you have zero or little knowledge of the existing cryptocurrencies.
Here is a list of the top 5 digital coins that you may check out before investing your hard-earned money in a cryptocurrency:
This is a no-brainer. Bitcoin is the grandfather of all digital coins. It was the first cryptocurrency released to the general public in 2009 by an anonymous creator working under the pseudonym, Satoshi Nakamoto.
Bitcoin is the most popular and acceptable digital coin. The acceptance is the major factor behind the crypto coin’s astronomical appreciation over the past 12 years. On introduction in 2009, Bitcoin was a valueless digital coin. Over the years, as more organizations start accepting the digital coin and more investors invest in it, Bitcoin has appreciated considerably. Today, Bitcoin is valued at $58,195.02 per coin, according to Coinmarketcap.
If Bitcoin is regarded as the indisputable king of the Cryptocurrency kingdom, Ethereum is undoubtedly the queen. Ethereum came on board six years after Bitcoin. Over the years, it has established itself as the second most tradable coin after Bitcoin. It also has the second-largest market capitalization, circulating supply, volume, and price, thanks to Ethereum blockchain’s wide range of applications.
Smart contracts and decentralized applications are Ethereum’s two major uses, factors behind its growing popularity. As more developers explore the blockchain and come up with other uses, Ethereum will keep appreciating. If you have invested in Ethereum in December 2018 at $90 per coin, you would have been over $2,500 richer now as Ether is currently $2,847.98 as of the time of writing.
When Ripple came on board, it forced a revolution in the banking industry. This coin is designed explicitly for international transactions. It eliminates the challenges associated with money transfers through traditional banks.
Before Ripple was created to salvage the situation, international money transfers were fraught with challenges. It usually takes a couple of days, up to 10 days in some cases, to complete a simple transaction. However, such transactions will only take a couple of minutes via Ripple, thanks to its adoption of different payment-validating algorithms.
4. Binance Coin
BNB (Binance Coin) always makes the list of the top cryptocurrency to invest in. Binance exchange, a leading crypto exchange, behind the creation of Binance (BNB) Coin. Its origin is one of the several factors behind its success.
With a market cap of over $97 billion and an impressive trade volume, BNB is one of the few coins that have come to stay and are potentially good investments.
Trading Education chipped in another reason why investing in BNB is a wise investment decision. According to the investment education website, “Perhaps the most appealing aspect of investing in BNB is the fact that traders who make transactions with Binance Coin on the Binance exchange get a discount of 25%. In 2017, this discount was even greater, 50%.” The discount is undoubtedly an incentive for BNB investors and Binance exchange users.
One of Ethereum’s founders, Charles Hoskinson, created Cardano. Cryptocurrency experts touted the coin as an Ethereum killer. While it may not overthrow Ethereum, Cardano has gradually proven to be one of the cryptocurrencies to watch out for in the future.
Cardano can boast of a strong development team working around the clock to make it one of the most bankable coins in the future. Cardano also uses proof of stake, a more robust verification system than the proof of work used by most digital coins. Transaction charges via the coin are lower than with Ethereum. The lower transaction fee is a major reason many investors consider it an investment-worthy coin. Cardano coin currently goes for $1.32 and has a market cap of over $43 million.
These are the top 5 coins you may include in your investment portfolio. They have the potential to appreciate and give you a reasonable return on investment (ROI).
Where to Buy Cryptocurrencies
Cryptocurrencies are only available for sale on cryptocurrency exchanges. Corporate Finance Institute aptly defined cryptocurrency exchanges as, “platforms that facilitate the trading of cryptocurrencies for other assets, including digital and fiat currencies. In effect, cryptocurrency exchanges act as an intermediary between a buyer and a seller and make money through commissions and transaction fees.”
In the crypto space, investors can choose from scores of exchanges to patronize. However, choosing the right exchange may be tricky, no thanks to fraudulent exchanges, security concerns, and other challenges. So its not easy to know How to Buy Cryptocurrency.
Here are some of the best cryptocurrency exchanges you can patronize in terms of security, payment methods, supported coins, customer support, and other essential features, which simplifies How to Buy Cryptocurrency for newbies.
Coinbase has positioned itself as the leading cryptocurrency exchange since it came on board in 2012. It is the most widely used crypto exchange in the United States as it operates in more than 40 states in the country.
Aside from supporting an impressive number of coins, Coinbase is easy to use to encourage more new users to the platform. Investors can take advantage of its custodial wallets to store their assets and have zero worries over them.
The Pro version users can benefit from the cheaper transaction fee, more indicators and chart options, and other incentives.
On the negative side, you don’t control your wallet keys. The exchange does.
Binance is another big shot in the cryptocurrency exchange business. With over 200 supported digital coins, Binance is undoubtedly one of the exchanges that can walk the talk.
It doesn’t matter whether you are a beginner user or a veteran; Binance offers a platform where you can make your dream of owning some digital assets come true.
Through Binance’s partnership with Simplex, the exchange’s users can pay for some 31 different digital coins with their credit card, although such transactions attract a fee for US dollar purchases.
Binance offers an easy-to-use trading platform where users can trade different currency pairs or buy coins for keep. The exchange provides three interfaces with different features to enable users to choose any of the interfaces that suit their investment plans. The interfaces are Basic, Classic, and Advanced.
Coinmama is operative in 188 countries, attending to over 2.7 million users. That’s expected of an exchange that has consistently made the list of the best crypto exchanges in the world since it joined the cryptocurrency exchange race in 2013.
Account creation is smooth and stress-free on Coinmama. You can set up a trading account in minutes. That’s aside from the many payment options that allow users to make payments with ease.
Coinmama supports several coins so that its users can get all their favourite coins from the exchange. The exchange delivers your coin as soon as you place your order.
Coinmama accepts payment via credit/debit cards, in addition to other online payment options.
Gemini has carved a niche for itself as one of the most reputable crypto exchanges. It is suitable for all classes of users, irrespective of their years of experience in the cryptocurrency investment space.
Security is one of Gemini’s most significant selling points. It incorporates additional security measures that guarantee users their assets and personal information security. Personal information verification is a prerequisite to account creation on Gemini.
You must verify your identity by linking your bank account and mobile phone number to the exchange at the verification point. The exchange also requires you to submit your fully-filled document with the provided information to complete the verification process.
Aside from Bitcoin and Ether, you can trade Orchid, Bitcoin cash, Dai, Chainlink, Zcash, and some other relatively unknown digital coins on the exchange.
Kraken is another member of an elite group of cryptocurrency exchanges that know their onions. The cryptocurrency exchange is designed for new traders and experienced traders alike. Kraken’s transaction fee is relatively low. The low fee is another incentive that encourages more patronage.
Kraken is one of the few exchanges that allow direct fiat to cryptocurrency trading. Investors can choose from the over 50 cryptocurrencies the exchange supports and transact with any supported fiat currencies. You must complete the Know Your Customer (KYC) validation process before as an eligibility requirement to use the fiat currency option.
However, you can’t trade some coins directly with fiat currencies. To buy such coins known as altcoins, buy Bitcoin first and buy your target coin with the Bitcoin.
Kraken charges a low transaction fee that ranges between 0% and 0.26% to encourage more participants on the platform. Buying a crypto coin with a credit card attracts a higher transaction fee of 3.75 of the transaction volume plus an additional $0.25.
Crypto.com is an affordable cryptocurrency exchange, designed for traders who need a low-cost and secure digital currency exchange to buy their favourite digital asset.
If you are a mobile investor with a keen interest in conducting all your transactions over your tablet or phone, this exchange offers you a Crypto.com app to meet your needs. Aside from the app, other attractive features that support easy trading are the interactive and user-friendly website, support for multiple payment systems, and more.
Bittrex was launched in 2014 to join the race as the demand for more cryptocurrency exchanges kept increasing. A clear distinction between Bittrex and its competitors is that the exchange offers a spot trading platform. The trading platform allows users to trade in the USD market and three other crypto-based crypto markets.
Bittrex stores a good percentage of its user’s funds in a multistage wallet to guarantee the funds’ security. It also enforced a two-factor authentication security strategy for all withdrawals. Wire transfer is the adopted option for USD withdrawals and deposits for the over 400 altcoins that users can buy on the exchange.
Except for cryptocurrency investors in Syria, North Korea, Cuba, and Iran, the exchange is open to the public.
Regardless of your trade volume, Bittrex charges a 0.2% transaction fee.
iFinex inc founded Bitfinex in 2012 in the British Virgin Islands. Starting as a Bitcoin-only peer-to-peer margin lending platform, the exchange has become a big name in the cryptocurrency exchange space.
The Bitfinex exchange is an advanced crypto exchange with over 50 crypto pairs, customizable GUI, and a good number of order types.
Bitfinex also accepts fiat deposits in some of the world’s popular currencies, such as the Japanese Yen (JPY), the Euro (EUR), the United States Dollar (USD), and the British Pounds (GBP). Some assets such as Dash, Bitcoin, Litecoin, Monero, Ethereum, Ripple, ZCash, and several others attract affordable withdrawal fees and free deposits.
Bitfinex adopted the cold storage system for storing its clients’ funds. A significant percentage of clients’ funds (0.5%0 are stored in hot wallets. That is aside from the two-factor authentication and Universal 2nd Factor security measures that make the exchange one of the most secure in the industry.
Bitfinex is open to all cryptocurrency investors except those residents in Bolivia, Kyrgyzstan, Bangladesh, and Ecuador.
Kucoin entered the game later than some of the exchanges on this list. Its late establishment has never affected its rating as one of the heavyweights in the industry.
KuCoin’s selling points include transparency and over 450 trading pairs, offering users rare investment options on some exchanges. That’s aside from its impressive security features that assure users that all is well with their personal information collected during the sign-up stage.
The exchange also supports payment with fiat currencies. It supports 22 fiat currencies, giving international users a platform to buy digital coins with the fiat currency of their choice.
KuCoin’s million active users are proof of its wide acceptance among cryptocurrency investors, thanks to its attractive features.
Gate.io belongs to an elite group of cryptocurrency exchanges that charge zero withdrawal or deposit fees. The exchange nevertheless charges a 0.2% transaction fee, considered by experts as low compared to other exchanges.
The elite crypto exchange supports over 360 markets and allows investors to purchase major and minor currencies such as Bitcoin, Ether, and several other digital coins.
Gate.io offers several investment tools and resources to help its users get the best from the exchange. The resources and tools include outstanding security features and a host of others.
For ease of use, Gate.io offers a trading app. Through the app, users can conduct any transaction or purchase any currency pair of their choice.
Trading Exchanges and Signals
Aside from buying cryptocurrencies on the above exchanges, you can also trade one coin for the other. When trading cryptocurrencies, it is essential to leverage trading tools, indicators, and trading signals for you to be a successful trader. While you can get trading tools and indicators from your chosen exchange, trading signals are only made available by signal providers.
There are lots of crypto signal providers on the market, choosing one for your trading needs can be completely overwhelming. While there are several signal providers including ours own Best Trading Signals.
Best Trading Signals provides Telegram signals, trading bots, and indicators. Whether you are an experienced or newbie trader, you can still find the signals profitable. The signals are over 80% accurate and come with risk management measures.
Cryptocurrency Buying Strategies and Tips
Knowing the best digital coin to buy, How to Buy Cryptocurrency, and knowing how to go about it are two different things. The Internet, especially the cryptocurrency market, is populated by unscrupulous elements taking advantage of investors’ naivety to defraud them.
Here are some investment strategies and tips that will help you identify such frauds, avoid them, and invest wisely. And simplify the term How to Buy Cryptocurrency.
Crypto Investment Strategies
Crypto investment can be challenging and risky. Without a clear-cut investment strategy, you are bound to make wrong investment decisions that may cost you your hard-earned money. Implement the following strategies to increase your chances of profiting from our investment:
1. Dollar-Cost Averaging
Most cryptocurrency investors invest their capitals on one digital asset and ignore others. That is not only risky but increases the possibility of losing their investment if the crypto coin depreciates. The dollar-cost averaging investment strategy encourages spreading investment out on different coins.
You can diversify your cryptocurrency portfolio by investing in a couple of coins with the potential for appreciation. Fix a specific time to invest in your chosen coin regardless of the crypto’s price at the specified purchase time.
“In effect, this strategy removes much of the detailed work of attempting to time the market in order to make purchases of equities at the best prices,” per Investopedia.
Before investing in these coins, do your due diligence and select the ones that meet your investment goals. For instance, if you intend to invest $5,000 in cryptocurrency, rather than invest the whole lot on Bitcoin, you may spread your investment on the five digital assets listed in this article. If you wish, you may invest in other currencies aside from the ones listed here.
Cryptocurrencies are volatile. A coin may appreciate today and depreciate tomorrow. So, diversifying your portfolio will help you deal with the fluctuation. If some of your coins depreciate, the remaining ones may appreciate between the same timeframe.
Diversifying your investment enables you to deal with the worrisome volatility effectively. The strategy also helps investors maximize their profits and minimize their losses.
2. Relative Strength Index Divergence
The RSI is a chart indicator, a tool designed to measure trading momentum. It finds the average number of losses and gains over 14 days to arrive at the right momentum. With the result, investors can easily find when an asset is overbought and may depreciate or be oversold with the potential for appreciation.
A cryptocurrency is said to be oversold when its RSI is below 30. Coins with RSI over 70 are considered overbought. ALT FINS gives a breakdown of how this trading strategy works.
3. Golden Cross/Death Cross
The golden cross/death cross trading strategy is an effective strategy that depends on two moving averages. Hence, it is a chart indicator line where investors can read the mean average price of a digital coin over a given period.
The strategy provides the crossovers between the average price of the asset in the previous 200 days (200 MA) and the average price of the given asset in the last 50 days. This trading strategy is best for long-term investment for investors considering investing in crypto for 18 months and above.
There are two crossovers. These are:
Divergence or death cross: This occurs when the 50 moving average crosses below the 200 moving average.
Divergence occurs when there is an exodus of traders from the market, leading to a mass asset sale. Thus, the short-term moment falls in comparison with the long-term momentum. Divergence is a sell signal.
Convergence or golden cross: You have this type of crossover when the 50 moving average crosses above the 200 moving average. You have a convergence cross when there is an influx of buyers in the market, driving the prices higher. Hence, short-term momentum exceeds long-term momentum, a perfect signal for investors to keep buying.
Cryptocurrency Trading Tips For How to Buy Cryptocurrency
Every new cryptocurrency investor is concerned about the best way to go about investing their money in digital assets. Their fear is borne out of the cryptocurrency asset’s volatility.
However, if you share their sentiment, these helpful trading tips will help you navigate the cryptocurrency market and put you in a better position to profit from your crypto investment:
1. Do Your Due Diligence To Know How to Buy Cryptocurrency
Doing your due diligence to know How to Buy Cryptocurrency before investing in a coin is undoubtedly one of the most challenging parts of cryptocurrency investment. Some investors base their investment decisions on crypto news online, their friends’ or colleagues’ “testimonials,” and information from other unverifiable sources. Using these sources of information as the basis for your crypto investment is wrong.
You are investing your hard-earned money in digital assets. You can do better than throwing caution to the winds and investing in some assets just because some “experts” believe that’s the best investment decision.
In this Internet age, you have all the tools and resources to do due diligence on recommended digital coins at your disposal. The available resources include tons of website articles, and of course, the crypto’s Whitepaper. Use these resources and tools judiciously to figure out How to Buy Cryptocurrency and which one to do so.
Do a background check on all the digital assets and consider their background, history, security, acceptance, and other factors that may influence their value. If you find out during your background check that a coin isn’t worth it, consider other options since it’s your money. Therefore, do everything possible to make your investment worthwhile.
2. Use A New Email Account
Some investors get it wrong here. They use their email accounts to open accounts on exchanges. While there are no specific laws against such action, using your account to invest puts you at the risk of a data breach. If a hacker or an unauthorized person gets hold of your account, they automatically have unrestricted access to your investment account. The result of such free access is better imagined than experienced.
It takes next to nothing to create a new Email for your investment. Boost its security with two-factor authentication. Therefore, do the same for all your accounts: personal or business. With the new account and incorporated security measures, you can trade with confidence.
3. Don’t Store Your Coins on Exchanges
The most convenient place to store your investment is on an exchange. Since you buy digital assets from cryptocurrency exchanges, keeping them with the exchanges is appealing. Well, convenience doesn’t mean that’s the right decision.
However, when you store your digital asset on an exchange, the exchange has some control over your asset. Most of the exchanges hold private keys to users’ accounts. The keys give them complete access to your account and assets.
More so, cryptocurrency exchanges are prone to hacking. And when an exchange holding your investment is hacked. You automatically lose your investment. What is the alternative?
4. Store Your Asset in Crypto Wallets
A crypto wallet is designed for safekeeping users’ digital assets. There are two types of crypto wallets: cold wallets and hot wallets. While cold wallets work offline, you can’t use hot wallets without an Internet connection. Each wallet type has its pros and cons. Choose the wallet type you feel comfortable using after doing a background check on all the available options.
5. Use Mobile Wallets With Caution
Storing cryptocurrency in wallets is a common practice among investors. They opt for this storage option to take advantage of mobile phone’s convenience of use. While the convenience of use portrays mobile phones as great storage devices, they are vulnerable to theft and attacks.
Aside from phone theft, a matter of grave concern, hackers can compromise your phone electronically and make away with your asset. Nothing justifies choosing ease of use over security.
6. Learn the Basics
Your cryptocurrency knowledge shouldn’t be restricted to the best crypto coins to invest in or how to buy Cryptocurrency. You should understand the crypto market. Know what works and what doesn’t. Educate yourself about several aspects and keywords in the crypto world. Know what private keys, public keys, hodl, total supply, and other relevant keywords mean.
Understand the factors that influence a cryptocurrency’s price. What causes price fluctuation? When is the best time to sell or buy an asset? If you can readily answer these questions without a second thought, you have a rock-solid cryptocurrency investment foundation to build on. Otherwise, pause a bit and improve your knowledge before investing in any coins.
7. Don’t Invest Your Life Savings
The “overnight” cryptocurrency investors’ success stories are misleading. Since most of these successful investors have been in the business for years. The reality is that cryptocurrency shouldn’t be treated as a short-term investment plan but a long-term one.
So, while investing to make some profits in the next 5 or 10 years, it isn’t advisable to invest your life savings. Ask yourself how you intend to take care of your emergency financial needs if you invest everything you have in crypto.
What happens when the coin dips and doesn’t worth a tenth of your initial investment at the current rate? Will you be comfortable selling it to meet your needs?
The rule of thumb is to invest what you can afford to lose in any investment opportunity, cryptocurrency inclusive.
8. Don’t Borrow to Invest
Out of the fear of missing out on an excellent cryptocurrency investment opportunity, some investors take loans from banks, financial institutions, family, or friends. They hope to repay their loans from the profit they make from their investment. Sadly, this isn’t usually the case.
As previously mentioned, investing in crypto should be considered in the long term. Hence, you can’t predict when your investment will appreciate. Consider how to repay the loan while waiting for the coin to appreciate your plans. Failure to repay your loan at the due time will put you in a financial mess and hurt your credit history.
9. Don’t FOMO
The Fear of Missing Out is a common pitfall in the crypto space. Investors fear missing out on something they consider big if they don’t take action on the spot and invest in the promising coin because other investors are investing in the cryptocurrency. As a result of their impatience, they may ignore the need to research the coin and determine whether it is investment-worthy or not.
For instance, you may come across websites or blog posts promoting a coin with catchy headlines such as “XYZ is the next big thing in the crypto space.” “You will miss out on the biggest crypto investment opportunity if you don’t act now.”
Some investors may also flood social media platforms with screenshots of their “profits” from the particular coin over the last few days. When you see such impressive “profits,” you tend to believe you are missing out on the opportunity to have invested in the coin and make some profits too. Therefore, don’t be tempted to act prematurely.
10. Beware of FUD
FUD is antonymous to FOMO. FUD means Fear, Uncertainty, and Doubts. You have concerns over your asset, unsure whether it will appreciate or depreciate. However, all sorts of negative thoughts give you the impression that the investment may fail, especially when you notice that other investors are already selling off their coin. Thus, you hurriedly sell yours off too.
However, you may be oblivious to the factor behind the investors’ reaction. Some influential cryptocurrency investors, known in the cryptocurrency parlance as shills, may be behind the depreciation. Shills sometimes propagate negative news about a cryptocurrency to force its price down. They take advantage of the dip to invest massively in the same digital coin at a lower price.
Closing Remarks On How to Buy Cryptocurrency:
Don’t base whatever decision you want to take about your digital asset on emotional feelings or baseless propaganda. Instead, do your homework and base your decision on personal conviction, nothing else. It helps with figuring out how to buy Cryptocurrency easily.
Hence, implementing these helpful tips will make the difference between a successful and satisfying cryptocurrency investment journey and a waste of your money. They will help you trade like a pro and avoid some of the pitfalls that cost many investors their money and assets.
As you can see, trading cryptocurrency isn’t rocket science and even how to buy Cryptocurrency is simpler. Create a trading account on any cryptocurrency exchange of your choice and buy your preferred coin. Store your investment in a secure wallet and follow market trends to benefit most.