How do you deal with cryptocurrencies? (Purchasing - storing)

 

What cryptocurrency will you buy? There are thousands of options, but there are five currencies with the largest market cap, representing 75% of the total value of the cryptocurrency market.

 

 

 

 

 

 

 

Where will you buy digital currency? Cryptocurrencies have been known as a way to transact without any intermediaries. But working with a cryptocurrency exchange is the easiest way for most people to get started.

How will you buy digital currency? Popular options include paying in cash or swapping for another cryptocurrency.

Where will you store your digital currency? Cryptocurrency can be stored on your exchange, in a digital wallet, or on a physical device.

As with any investment, it's a good idea to start by taking some time to understand it and how it fits into your investment plan. You can start buying cryptocurrencies by following these five steps:

1. Choose a digital currency broker or exchange

To buy a cryptocurrency, you need a broker or cryptocurrency exchange. These are the two options available for purchasing cryptocurrencies, but there are some fundamental differences between them that must be taken into consideration.

What is a digital currency exchange?

The digital  cryptocurrency exchange is a platform where all buyers and sellers meet to trade digital currencies. Their trading fees are often relatively low. But these platforms have complex interfaces, with multiple trading options and advanced performance charts.

There are many cryptocurrency exchanges, such as: ‘Coin base’, ‘Gemini’ and ‘Binance.US’. The problem is that it may be difficult for beginners to deal with the trading interfaces of these platforms, especially those who have no experience and expertise in stock trading.

Some of these platforms also offer easy-to-use buying options, but these easy options come at a cost, as beginner-oriented options require much larger fees than it would cost to purchase the same digital currency via the regular trading interface. It may be a good idea to invest in yourself to save these costs, by learning how to use regular trading platforms before purchasing your first digital currency, or shortly after purchasing.

Important note:

If you are a newbie to cryptocurrencies, you need to make sure that the exchange or brokerage you will choose accepts other currencies. Not all exchanges accept buying crypto using another digital or fiat currency, which means you will have to find another exchange to buy crypto that your preferred exchange accepts before you can start trading on that exchange.

Who is a digital currency broker?

Cryptocurrency brokers provide easy-to-use, hassle-free interfaces with exchanges. Some brokers charge higher fees for exchanges. Others claim to be “free,” and make money by selling information about the buying and selling you and other traders make to brokerage firms or big funds. ‘Robin hood’ and ‘SoFi’ are two of the most popular cryptocurrency brokers.

Dealing with brokers is much cheaper and easier than dealing with digital exchanges, however, you should be careful when dealing with brokers, because you may face restrictions on transferring your digital currency outside the platform.

 

In Robin hood and SoFi, for example, your cryptocurrencies cannot be transferred outside your account. This may not be a problem for you, but large crypto investors prefer to keep their coins in cold wallets for added security. Some of them even prefer encryption wallets located on devices that are not connected to the Internet for greater security.

2. Create and activate the account

You can register to open your account when you decide to work with a broker or cryptocurrency exchange. You may have to verify your identity depending on the platform you choose to work with and the amount of cryptocurrencies you plan to purchase.

 

The platform may also require you to provide a copy of your driver's license or passport, or perhaps even upload a photo to prove that your appearance matches the documents you provide.

3. Deposit cash for investment

You will need to deposit funds into your account to purchase cryptocurrencies. You can deposit funds into your crypto account, either by linking your bank account, wire transfer, or even by making a debit or credit card payment, depending on the exchange or broker and your funding method. You may have to wait a few days before you can use the funds you deposit to purchase your cryptocurrency.

Important warning

We mentioned that some exchanges or brokers allow you to deposit funds via credit card, but that is expensive and risky. Commercial banks process cryptocurrency purchases via credit cards as cash advances. This means they subject your purchase to higher interest rates than regular purchases, and this will cost you additional advance fees. For example, you may have to pay 5% of the transaction amount when making cash advances. This is in addition to the fees your cryptocurrency exchange or brokerage may charge; These fees can also reach up to 5%, meaning you could lose 10% of your cryptocurrency purchases just for the fees.

4. Buy digital currency

You will be able to place your first order to buy digital currency once the funds are in your account. There are hundreds of cryptocurrencies to choose from, from well-known ones like Bitcoin and Ethereum, to lesser-known ones, like 'Theta Fuel' or 'Holo'.

When you choose the digital currency you want to buy, enter the tick symbol - for example, in Bitcoin it is: BTC - and the number of currencies you want to buy. Most exchanges and brokers offer fractional shares of cryptocurrencies, allowing you to purchase a piece of your preferred cryptocurrency such as Bitcoin or Ethereum, which costs thousands of dollars to own.

5. Choose a storage method

Deposit your cryptocurrency on the exchange:

 When you buy cryptocurrency on an exchange, it is usually stored in your exchange's wallet. If you do not like the service provider the exchange has contracted with, or want to transfer to another, more secure location, you can transfer your currency from the exchange to a separate hot or cold wallet; Depending on the exchange and the size of your transfer, you may have to pay a small fee to do this.

Hot wallets:

They are crypto wallets that are stored online. Hot wallets are convenient, but they are more risky because they are connected to the Internet.