It’s 2022 and cryptocurrencies are taking the mold of a mainstream asset, piquing the interest of investors around the globe. The rise of virtual currencies did not happen overnight, rather, it was a culmination of certain small events over a 12-year period.
The crescendo came in 2021, during the last bull run that sent Bitcoin (BTC), Dogecoin (DOGE), and Shiba Inu (SHIB) to previously unseen highs. Following the spike in values, adoption rates went up through the roof as both retail and institutional investors jostled for a piece of the pie.
For new investors, buying their first cryptocurrency is a daunting process, fraught with complexities. However, this guide will shed a light on the steps to buy digital assets with ease and in no time, your portfolio will have a range of cryptocurrencies.
Remember, tracking cryptocurrency prices is quite the hassle because of their inherent volatility but the use of a coin price tracker like CoinStats will be a handy addition to your trading arsenal. The crypto portfolio tracker allows users to track virtual currencies across a wide range of trading platforms while still offering the unique benefits of customization.
Without further ado, let’s jump right in and learn where and how to buy cryptocurrencies!
In the early days, buying digital currencies was a complicated process but rising interest in the asset class has opened the door to a wide range of options for intending investors.
One of the easiest methods of buying virtual currencies is through the use of a cryptocurrency exchange. A crypto exchange is simply a platform that allows users to trade digital currencies using fiat or other cryptocurrencies. Over the years, beginner investors have opted for crypto exchange because of the ease of buying assets and the additional features that they offer like Peer-to-Peer (P2P) functionality and the option of leverage.
Leading exchanges like Binance, Coinbase, FTX, Kraken, Gemini, Crypto.com, OKX, and Bithumb have carved a niche for themselves in the space, recording daily transaction volumes running into billions of dollars.
Choosing a crypto exchange as a beginner is hard. However, there are certain boxes that the exchange should tick. First of all, the security of the platform must be flawless with a decent record of safeguarding investor funds. The platform should be beginner friendly, offer low trading fees, and allow a wide range of fiat funding options.
Another great alternative for beginners to get their hands on cryptocurrencies is through the use of cryptocurrency brokers. Cryptocurrency brokers play the role of an intermediary between crypto markets and intending traders to facilitate the buying and selling of digital assets. In some instances, they may offer derivative products to individuals but have the benefit of being an easier channel for beginners to get their first taste of cryptocurrencies.
Platforms like Robinhood and SoFi are leading cryptocurrency brokers in the industry. Apart from their ease of use, there are some pitfalls associated with their use such as high trading fees and the inability of users to transfer their tokens out of the platforms to other wallets.
After deciding whether to use crypto exchanges or brokers, the big question on the minds of newbie investors is the steps to buy their first crypto asset.
Regardless of the choice, the first step involves creating an account on the selected platform. Creating an account is often a straightforward process involving the filling of personal detail, and email addresses while verification of the account might require uploading a government-issued passport.
As a first-time buyer of virtual currencies, you will need to use fiat currency to make your purchase. Top exchanges and brokers often allow users to access a wide range of funding options such as wire transfers, use of debit and credit cards, and payment platforms. Before choosing a funding method, it is important to pay attention to the fees associated with such a method.
After creating, verifying, and funding your cryptocurrency, the next step is to choose a digital currency from the ones listed on the platform. Using the search functionality is one way to find the preferred asset and entering the amount of fiat currency to be used in the purchase is the next step. Concluding the transaction is as simple as hitting the buy button.
Once the deal is done, most platforms will offer users a storage option but more security-conscious users may opt to move their holdings to cold wallets
There are several reasons why individuals buy digital assets. Top of the list is the need to diversify their investment portfolios. There is a trend of hedge funds and money managers pivoting to cryptocurrencies to ride the bullish waves of rising cryptocurrency adoption.
Another reason why individuals are turning their sights on cryptocurrencies is their use as a hedge against rising inflation. On a broader spectrum, digital assets have performed better than assets like gold and shares, leading investors to refer to them as the new safe haven asset class.
Promoting financial inclusion is another reason for the rising interest in cryptocurrencies. The fees and delays typically associated with cross-border payments have triggered mass adoption of virtual currencies while privacy-focused persons have found ubiquity in them.
We’ve gone over the options open to first-time buyers of virtual assets, the steps, and the reasons for making the purchase. Cryptocurrency exchanges and brokers are the easiest ways for newbies to get skin in the game but they have to pass the hurdle of choosing a platform that suits their needs.
Once the choice has been made, traders will have to create an account on the platform, and fund the account before making their first purchase.
Custody options should be considered before buying a digital asset given the array of options available in the markets. Hot and cold wallets have different functionalities but software wallets are often the easiest ways for beginners to store their crypto assets.