So, you have finally decided to get involved in one of the most exciting industries out there. You have heard friends, family and colleagues talk about their profits, but where exactly do you invest in cryptocurrencies, and how?
Cryptocurrency exchanges:
Well, first things first, lets introduce you to the idea of a cryptocurrency exchange. This is the most popular option used by crypto buyers, it allows you to buy and sell the cryptocurrency of your choice. Two such cryptocurrency exchanges include coinbase and binance.
These exchanges will enable you to buy your first cryptocurrency, be it Bitcoin, Litecoin, Ethereum and so on. For certain cryptocurrencies such as Bitcoin, however, they can be considered quite expensive to purchase a single coin, do not let this put you off, as it is possible to purchase a fraction of a Bitcoin. A bonus of being allowed to buy a fraction of a Bitcoin is that you can purchase a small amount initially and dip your toes into the market so to speak. When you get more comfortable, you can then start investing in more and more fractions of a Bitcoin.
Once you have decided on your chosen cryptocurrency exchange, you will need to set up an account and link a payment method. They are generally quite flexible as you can sometimes avail of many different payment options. For instance, on Binance, you can pay for your chosen cryptocurrency using a bank deposit, credit/debit card, P2P trading, a cash balance, and even third-party payments. This should hopefully alleviate any concerns you may have had concerning the flexibility of payment options. One thing aspiring crypto traders should consider, however, is that each payment method will have its own drawbacks associated, such as varying exchange fees. For example, with Binance, the crypto exchange which I use, I can purchase cryptocurrencies with no added service charge when I pay using a bank transfer, however, using a bank card such as my Visa card, I am charged a 1.8% fee.
Buying & Holding:
So, once you have bought your cryptocurrency, what next? Will you simply hold onto it for the foreseeable future until you realize a profit can be made? Well, if this is you, you will be regarded as someone who tends to 'HODL', the infamous term given to those who hold onto their coins to reduce the risk of price fluctuations in the short run. Since cryptocurrencies are so volatile in terms of price, holding can be highly effective as you can hold onto your coin until it is profitable to sell.
Despite this, it is important to be aware of the risks involved with holding your coins on exchanges. For instance, when your cryptocurrency is on the exchange, it has the potential to be hacked by third parties. Since, these exchanges may not adhere to the same regulatory controls of mainstream banks, your finances could be in jeopardy if such an event were to occur.
Bitcoin ATM:
For those of you who have your heart set out solely on purchasing Bitcoin, there is another interesting alternative to purchasing this crypto coin.
Bitcoin ATMs can be used to buy Bitcoins using cash or a bank card, whilst some machines also pay out cash for your pre-existing Bitcoins.
Some tips:
Like all internet practices, it is essential that you take the necessary precautions when setting up accounts on these cryptocurrency exchanges. Be careful with any, and all information pertaining to your transactions and account holdings just like you would with any bank statements you get from a ‘physical’ bank.
As mentioned above, there is always the chance of a hack, since these cryptocurrencies are based on the internet, unless you acquire a secure hardware wallet of course. Therefore, it is essential you keep track of your holdings and monitor them carefully.
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