Bitcoin prices remain high as institutional investors continue to pile into the cryptocurrency. If you’ve been thinking about diving in, too, you may be wondering how and where to buy cryptocurrency. It’s not as hard as you might expect.
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Get A Digital Wallet
Before you learn how to buy cryptocurrency, you have to be ready to hold the digital coins. To do that, you will need a digital wallet, either online or on a specialized hard drive. The most secure option is a specialized hard drive because hackers won't be able to break in and steal your digital coins. However, if you have a habit of misplacing things, you should probably opt for online storage.
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Some examples of digital wallets include Exodus and the Ledger Nano X. Exodus may be the best crypto wallet for beginners because it also allows you to trade between cryptocurrencies. The platform supports swaps between more than 100 different cryptocurrencies. Beginners will also appreciate the support that comes with the crypto wallet.
The Nano X is Ledger's second-generation digital wallet. It's a specialized hard drive that looks like a USB drive and connects to your device via Bluetooth or USB. That means you can also connect the Nano X to your mobile device to gain access to your digital coins that way.
There are many other digital wallets available, but these two are two of the best options out there.
How To Buy Cryptocurrency: Choose An Exchange
Now let's discuss how to buy cryptocurrency. Some online crypto wallets also have exchanges attached to them, but you might want to use a different exchange than the one attached to your wallet. It's generally a good idea to have your crypto wallet separate from the exchange you use.
After you have a crypto wallet, you will need to choose an exchange for conducting trades. There are many crypto exchanges to choose from, and not all of them are available in your country. OKEx is one popular cryptocurrency exchange, but it isn't available in the U.S., so you might need to look to their partner, OKCoin, or another exchange that supports trading in the U.S. Other popular crypto exchanges include Coinbase, Binance and Bitstamp.
Before you choose an exchange, you should research to make sure it allows trading in your country and your currency of choice. You should also learn about the regulations involved in trading cryptocurrency in your country, if there are any. There is no standard for crypto regulations yet, which means you will find a wide range of requirements, depending on where you live.
What To Consider When Choosing A Crypto Exchange
One factor to consider when choosing an exchange is the type of cryptocurrency you want to buy. Not all exchanges offer trading on all of them because there are so many available. Some, like bitcoin and Ethereum, are almost a guarantee because of how hugely popular they are. However, exchanges tend to pick and choose which altcoins they want to offer.
Another factor to consider as you learn how to buy cryptocurrency is the payment method you want to use. Credit cards and bank transfers are standard methods of payment, but not every exchange supports each one. Some venues might support one type of credit card but not another. You should make sure the exchange you want to use supports the payment method you wish to use.
Additionally, it would help if you looked for an exchange that allows you to store your cryptocurrency in a separate digital wallet. Not all venues allow that, but it's safer to hold it in an account that isn't your exchange account.
Finally, you should use safe internet practices when setting up your crypto exchange account, which means utilizing two-factor authentication and using a long, complicated password.
How To Buy Cryptocurrency: Connect Your Payment Option
After you have an account set up with the crypto exchange of your choice, it's time to connect your account to a payment option. Most venues will require you to prove your identity before connecting a payment method to your account.
You may have to upload images of your driver's license, your Social Security Number, employer's name, and the source of funds. The information that will be required will depend on where you live and the laws that govern crypto trading. Generally, the process will be similar to what you have to do to open a standard brokerage account.
After the crypto exchange verifies your identity, you will be able to connect a payment method. Most venues allow you to connect your bank account directly or use a credit or debit card. Each technique will have a fee associated with it. For example, costs for transfers from bank accounts amount to 1.49% for bank accounts with Coinbase and 3.99% for credit or debit cards.
Order Some Digital Currency
Finally, you are ready to learn how to buy some cryptocurrency. The process differs with every exchange, and there are different ways to invest. Most crypto exchanges offer market and limit offers, and a few offer stop-loss orders. If you've traded with a standard brokerage account, then learning how to buy cryptocurrency will be easy.
Some exchanges also allow recurring investments if you want to do dollar cost averaging on your crypto investments; this may or may not be a wise decision with cryptocurrencies because they tend to be very volatile. Due to the volatility, it may be better to wait for dips in the price and buy those dips, just as you would with stocks.
Learning how to buy cryptocurrency is not tricky, but the volatility and the extra security you need to store might make it seem challenging. All you have to do is follow the steps in this guide, and you'll be trading cryptocurrency soon with the best of them. You might be tempted to dive in as quickly as possible, but with prices as high as they have been, it wouldn't be a bad idea to wait for the next pullback. It seems likely that one will be coming soon, even if it isn't a steep one.