How to Buy Cryptocurrency: What Investors Should Know

Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Once there is money in their account, investors are ready to place their first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel. Depending on the exchange or broker and the funding method, investors may have to wait a few days before they can use the money deposited to buy cryptocurrency.

John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight. His work has appeared in CNBC + Acorns’s Grow, MarketWatch and The Financial Diet. Assuming new traders are aware of the risk, the second danger is around security. However, the main danger for newcomers is being unaware of just how volatile the market is, a lesson that experienced traders may have learned the hard way. Transaction fees vary by platform, so traders are advised to compare fees before executing any trades.

Some crypto-focused funds invest in cryptocurrency directly, while others invest in crypto-focused companies or derivative securities such as futures contracts. Once there is money in your account, you’re ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.

Investors may not be able to buy or sell cryptocurrency until they complete the verification process. The platform may require investors to submit a copy of their driving licence or passport, and even to upload a selfie to prove their appearance matches the documents they submit. Frank Corva is a cryptocurrency writer and analyst for digital assets at Finder. Frank has turned his hobby of studying and writing about crypto into a career with a mission of educating the world about this burgeoning sector of finance. He worked in Ghana and Venezuela before earning a degree in applied linguistics at Teachers College, Columbia University.

An investment strategy is a high-level overview of your investing outlook for assets of any type. Tethering individual investment decisions to a larger, comprehensive plan ensures they are working in concert as you work toward your goals. Self-storage options are generally divided into two categories, hot wallets and cold wallets. Hot wallets have some internet connectivity, which may make them easier to use but could expose you to some security vulnerabilities. Cold wallets are unreachable to anyone who doesn’t have the physical device, but they do take more effort to use.

Figuring out how to buy any cryptocurrency can be confusing to newcomers. But, so long as investors are aware of the considerable risks, learning the ropes can be pretty simple. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive payment from the companies that advertise on the Forbes Advisor site.

  1. The prices of cryptocurrencies in the future could also be affected by regulatory changes, with the worst-case possibility that cryptocurrency becomes illegal and therefore worthless.
  2. Robinhood — another online brokerage — has a smaller investment selection, but you can trade cryptocurrencies commission-free.
  3. Everyone’s financial situation is different, so it may help you to develop a strategy before you make any decisions about crypto.

But all exchanges or brokers don’t automatically provide wallet services for you. Online brokerages usually don’t offer as many cryptocurrencies as crypto exchanges (nor do they provide interest-earning account perks like staking). If you’re looking for a wider range of assets and account options, crypto exchanges might be a more beneficial option to consider. You no longer have to open an account with a crypto exchange or traditional brokerage to gain some exposure to the crypto asset class.

What is a cryptocurrency exchange?

Our partners cannot pay us to guarantee favorable reviews of their products or services. To open a crypto exchange account, investors can visit the exchange’s website or download its app. If one had a high tolerance for risk and didn’t invest any more than they were prepared to lose, one might be able to consider investing in crypto currency. According to a Forbes Advisor survey, just over a quarter of respondents (27%) said they had cryptocurrency holdings to £500. Just under a quarter (24%) said their exposure to the sector was between £501 and £1,000. When the cryptocurrency to purchase is decided on, investors can enter its ticker symbol (Bitcoin, for instance is BTC) and how many coins they’d like to purchase.

Choose a crypto asset to buy

Plus, the time it takes for deposits to settle varies for different payment methods. For instance, ACH transfers at Coinbase take three-to-five business days. However, debit card transfers are instant, but wire transfers can take one-to-three days. You’ll also have multiple other options to choose from when it comes to buying crypto. In the past year, payment services like PayPal, Cash App, and Venmo all expanded their accepted payment options, allowing you to buy, sell, or hold cryptocurrencies like bitcoin. Unlike physical fiat currencies (e.g., the US Dollar), cryptocurrencies are decentralized, virtual currencies that are typically used to purchase goods or services.

You can make your first crypto purchase in a few easy steps. But you’ll need to consider these 4 things first.

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Depending on the crypto exchange, you can trade one cryptocurrency for another, or exchange fiat money (like the US Dollar) for cryptocurrency, or vice versa. As you’re comparing different platforms, it’s wise to consider things like supported cryptocurrencies, security features, fees, storage and withdrawal options, and educational resources. While buying cryptocurrency is a relatively straightforward process, the decision about whether crypto is a good investment for you may require more consideration. Crypto assets require a private key, which proves ownership of cryptocurrencies and is necessary for carrying out transactions. If someone gets your private keys, they can dispense with your cryptocurrencies however they want.

To buy cryptocurrency, first you need to pick a broker or a crypto exchange. While either lets you buy crypto, there are a few key differences between them to keep in mind. The best exchange for you depends on your needs, but beginners should look for exchanges that offer simple web and mobile interfaces, educational resources, and readily available customer support. Here’s how to buy cryptocurrency — along with an outline of where you can buy it and the different types of investment vehicles you can use to gain exposure to it.

How to buy cryptocurrency – a beginner’s guide

While buying cryptocurrency is a trend right now, it’s a volatile and high risk investment choice unlikely to be a suitable investment for many investors. But some investors may choose to indirectly invest in Bitcoin and other cryptocurrencies. The are several ways to invest in cryptocurrency, so if you’re interested and can accept the risks involved, you have many choices.

Once you decide on a cryptocurrency broker or exchange, you can sign up to open an account. Depending on the platform and the amount you plan to buy, you may have to verify your identity. This is what is a cryptocurrency matching engine and how does it work an essential step to prevent fraud and meet federal regulatory requirements. These fees vary per exchange, so you’ll want to pay close attention to each platform’s prices before you get started.

You can invest in Bitcoin directly by using one of the major cryptocurrency exchanges, such as Coinbase or Binance. Another way to gain investment exposure to Bitcoin is to buy shares in a company with significant Bitcoin exposure, such as a Bitcoin mining company. A third option is to invest in a Bitcoin-focused bitcoin for beginners fund such as an exchange-traded fund (ETF). But this volatility is also what makes cryptocurrencies a speculative investment. In fact, even more passive crypto tactics like staking aren’t completely immune to loss, nor are virtual assets absolutely invulnerable to cybersecurity threats.

Using the Coinbase platform, for example, you can buy cryptocurrency with as little as two units of your local currency. You may not be able to buy or sell cryptocurrency until you complete the verification process. The platform may ask you to submit a copy of your driver’s license or passport, and you may even be asked to upload a selfie to prove your appearance matches the documents you submit. After you’ve purchased your cryptocurrency, you’ll need to store it in a safe place to protect it from hacks or theft. The most straightforward way to buy crypto is using an exchange. We believe everyone should be able to make financial decisions with confidence.

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