Buying cryptocurrency is now commonplace. There are many ways to buy digital assets, but you can make a lot of mistakes at the stage of buying cryptocurrency and lose both part of the capital and all the money invested. We are sure that no one wants to get into such trouble, so in this article we will look at how to buy cryptocurrency safely. Let’s get started!
What you need to know before buying cryptocurrencies
There are no universal rules that can turn a beginner into an experienced trader overnight, but there are some recommendations that you should keep in mind when entering the market. Namely:
Read the White Paper
Beginners should always do their research before making an investment. A White Paper on cryptocurrencies is a guide or report that describes everything there is to know about the currency. It explains the principle of a particular cryptocurrency and how it functions. Getting to know the white paper will benefit you in two ways: primarily, you will learn about the intricacies of how a particular cryptocurrency works. In addition, the White Paper will give you an overall impression of the project as a whole. If the White Paper is poorly written, it means that the project is probably not worth investing in.
Pay attention to the cryptocurrency news that interests you
As a rule, the more intentions the developers of a coin have, the more actively they develop the product, the higher the relevance and authority of the coin and the greater the chance of value growth. Relevance and credibility are determined by capitalization, recognition of the currency by organizations, foundations and countries, and the developers’ desire to reach out to banks and centralize the currency.
You shouldn’t invest all your capital in one currency
Everyone knows about this rule, even people who are far from investments. You should buy both expensive and popular coins, as well as inexpensive ones that have just started to develop.
Buy a coin after the price drops
The rise in the price of cryptocurrency won’t last forever. It is advantageous to buy the currency after a fall and stagnation, close to the value below which the price hasn’t fallen.
Stick to your trading plan
A trading plan is considered one of the most important elements in cryptocurrency investing. It determines how you will buy and sell cryptocurrencies. By sticking to a trading plan, you stay focused and choose only trades that meet your requirements and instructions. The most important thing about a trading plan is to stick to it. A cryptocurrency trading plan adapts your strategy to market movements. So you work in a monitored environment and get measurable results. This allows you to set your investment goals.
Newcomers shouldn’t invest in memecoins
Memecoins are not much different from other cryptocurrencies, except for the fact that they were created as a joke. These coins are risky in terms of investments, because they have no specific business plan. The basic principle of these coins is speculation. In order to make money from these assets, you need to carefully study the movements of the market and bet on an increase in demand in the very short term. When you buy a cryptocurrency, be it Bitcoin or any other, keep in mind that it has a White Paper that clearly lays out all the information about it. You can study it and make a proper trading plan. But the value of memecoin goes up and down depending on the hype that occurs. Since it is impossible to determine the real value of memecoins, you are always putting yourself at risk by investing in memecoins.
Where to buy cryptocurrencies
Since cryptocurrencies are mined by users, it is not possible to buy coins from any official store or bank. To buy cryptocurrencies, you need to use the services of cryptocurrency exchanges, electronic payment systems, P2P exchanges, as well as cryptocurrency wallets and crypto ATMs. Let’s now break down each of them in detail.
Cryptocurrency exchanges
Currently, there are more than a hundred exchanges for buying cryptocurrencies, which differ from each other by the volume of transactions, the registration procedure, the convenience of transactions and the level of security. To date, exchanges remain one of the most popular ways to buy cryptocurrencies. It attracts thousands of traders and investors who create millions of orders to buy and sell cryptocurrencies.
The algorithm is quite simple: create an account on a cryptocurrency exchange and verify your identity if the site’s terms and conditions require it. Then, deposit the assets for which you want to buy cryptocurrencies on the exchange balance. Most platforms support fiat funds. After that, you can go to the trading terminal and create an order to buy the cryptocurrency you want or use the exchange mechanism (exchange at the current rate).
Many people choose exchanges to buy cryptocurrencies because they offer high liquidity, fast order execution, a wide range of currencies, as well as high security and low commissions. All these advantages are combined in the cryptocurrency exchange platform, which provides a simple and convenient trading terminal, a functioning mobile application and additional opportunities for both active and passive income.
Electronic payment systems
Electronic payment systems support not only local, but also digital assets, specifically cryptocurrencies. Users can do all the usual actions with digital currencies by activating their own usual wallets. It really is worth considering this method of buying cryptocurrencies, as in some cases it is the easiest and most profitable.
Cryptocurrency payment systems usually offer lower fees than traditional credit card payment systems. Some of these tools are easy to set up and offer their own dashboards to keep track of all payments. When a customer makes a purchase using cryptocurrency as payment, the transaction usually passes through the payment system at a fixed rate and is automatically converted to a traditionally recognized fiat currency, allowing the merchant to avoid the volatility of cryptocurrency markets. Nevertheless, some cryptocurrency payment systems don’t auto-convert cryptocurrencies to a fiat currency and let the seller keep the digital coins as long as they wish, usually in a wallet.
P2P
P2P exchanges can be used to buy digital assets in almost any way: all common banks, e-wallets, etc. are supported. The main thing is to find someone willing to carry out such payment acceptance, because the market is based on the offers and conditions of users.
Unlike centralized trading platforms, which act as an intermediary between the parties, on P2P-exchanges sellers and buyers interact with each other directly. When creating a buy/sell advertisement, the user specifies the exchange rate and the payment method they prefer. A P2P platform operates as a kind of ad forum, where some users post their offers to buy/sell cryptocurrencies and others respond to them, which is quite handy. P2P exchanges don’t keep users’ money in their wallets, which means that they aren’t of much interest to hackers.
Purchases via cryptocurrency wallets
The functionality of many popular wallets allows you to make a quick payment, using a bank card. The convenience of this method is undeniable, because in just a few clicks you can instantly get crypto on your account, without performing any unnecessary operations. There are different types of crypto wallets, in which keys are stored and which can be accessed in different ways.
- Local wallets are downloaded and installed on a computer/laptop. You can only access your account from the device on which they are installed. This provides a certain level of security, but at the same time, if the computer is infected with a virus, it is already a threat.
- Online wallets work in the cloud and can be accessed through a browser from any device. That’s convenient, but private keys are often stored with a third-party service provider rather than the user, putting them at risk of attack by attackers.
- Paper wallets encrypt all wallet access information in the form of a QR code, and this information is not stored on the site. The user prints out the card and keeps it in a secret location, which guarantees high security.
- Hardware wallets come in the form of standalone devices. With these devices, cryptocurrencies can be stored offline and connected to the Internet only when a transaction is needed. The wallet is protected by a pin code.
- Hot and cold wallets. The first ones are constantly connected to the Internet while they work. This is a convenient solution for fast and frequent transactions, but of course much less secure. In contrast, cold wallets, as long as they are not connected to a software wallet, are always fully autonomous and inaccessible to hackers.
Cryptomats
Cryptomats are payment terminals that specialize in cash transactions with cryptocurrencies. In the simplest case, cryptomats can only be used to buy cryptocurrencies in exchange for cash. More advanced cryptomats also allow you to trade.
Buying cryptocurrencies is fairly easy. Depending on the developer and the software installed on the cryptomat, the procedure may differ slightly, but in general the scheme remains the same:
- The user selects the cryptocurrency they want to buy;
- The cryptomat scans the QR code from the phone or a piece of paper with the address to which the purchased cryptocurrency is transferred;
- The customer deposits cash and sees the current conversion rate, the amount of cryptocurrency that will be transferred to his address, and the amount of commission;
- Once the customer confirms the transaction, the system finds the best open counter order on the exchange to which the cryptomat is connected, saves it, sets the price and sends the cryptocurrency to the customer’s address.
The purchase price can be set either during the creation of the best open counter order on the exchange used by the cryptocurrency network or during the actual transaction. Some cryptocurrencies are linked to multiple exchanges simultaneously so that the customer or trader can choose the best rate.
Bottom line
Well, now you know the basics of buying cryptocurrency, where to do it and where to store it. We live in the age of digital technology, a lot of information is accessible to us, so don’t neglect to research, carefully study the cryptocurrency market, follow the price changes of coins, read the White Papers, and don’t forget to make your trading plan!