Cryptocurrencies are the latest popular asset class that people around the world are looking to invest in. the growth that cryptocurrencies have demonstrated in the past few years has far outstripped that of other asset classes, which has made it a very popular option for those looking to make quick gains. However, there are quite a few people out there who wish to invest in crypto but have no idea how to do so.
In this guide, we discuss the different platforms that you can use to trade cryptocurrencies, as well as provide some general information about the best crypto to buy.
In This Guide
There are a variety of platforms that you could use to buy several cryptocurrencies, and the process is usually quite straightforward. Of all the platforms that you could use, we like eToro the best, and this is true for a variety of reasons. These reasons have been discussed below in detail. However, before that, a quick discussion of the several steps that you need to take to begin buying crypto through eToro has been given below.
However, eToro is not the only broker that you could use for this purpose. There are several top brokers that can be used to buy cryptocurrencies, and these have been reviewed below in detail.
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75% of retail investor accounts lose money when trading CFDs with this provider.
83% of retail investor accounts lose money when trading CFDs with this provider.
Your money is at risk. The exchange holds an e-money license from the FCA.
Crypto assets are highly volatile, unregulated investment products. No EU investor protection
Despite there being 100’s of different platforms that you can use in order to buy crypto, eToro easily earns our full recommendation as being the best overall platform, especially for beginner or intermediate traders. For starters, the platform’s interface has been designed in a way that makes it easy to navigate and use. The eToro design team has said on multiple occasions that they tried to design the platform like a social media platform, thus making it easier for people to use the platform. In addition to this, the platform also has a demo account option, which will allow you to get familiar with the platform and place orders through it before you start to trade with real capital.
The next reason why eToro is considered to be the best platform for buying crypto overall is their product variety. Through eToro, you can buy up to 17 different cryptocurrencies including BTC, ETH, ADA, DASH, and DOGE. At the same time, you also have the possibility of being able to trade crypto options, however, these are usually only available in certain jurisdictions for a few cryptocurrencies. When you make a cryptocurrency trade through eToro, you can also store the coins you own in their crypto wallet. However, the eToro product offering is not limited to cryptocurrencies, and you can even buy stocks, commodities, forex pairs, and indices through eToro.
In this day and age, safety is important, and the eToro platform is highly regulated to provide you with top-notch security for your capital. The list of regulatory agencies that eToro is regulated by includes the FCA from the UK and the CySEC, alongside other Tier-1 regulatory agencies. This ensures that any capital you choose to invest in eToro will be as safe as it can get, and this is something that enables eToro to stand out from other platforms.
As far as standing out is concerned, eToro also does this through its commission-free revenue model. Most crypto platforms charge flat commissions on each trade, making day trading through them a highly complex affair. On the other hand, eToro charges fees only in the form of spreads, which is the difference between the bid and ask price. This makes it a lot cheaper to be trading with eToro because their spreads are highly competitive.
Lastly, for inexperienced or new traders, it might take a while to get used to the different strategies that you will use as a trader. It’s not always easy to be able to spot patterns and make the right decisions to trade on them. However, you would also like to not miss out on gains during your learning period. Through eToro, this can be done via their range of copy trading tools, which will allow you to copy other experienced traders. By simply browsing through a collection of 1000+ traders and choosing the one you wish to copy, you can mirror all their trades and make the same gains that they do. There are also a variety of portfolios that are maintained by the eToro team, which you can choose to invest in for the same results.
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Binance is the platform of choice for traders who are looking to actively trade instead of just investing in cryptocurrencies, and this is true for multiple reasons. First and foremost, Binance is a specialized cryptocurrency exchange and trading platform, which brings with it a variety of benefits. For starters, the platform has a very large variety of cryptocurrencies to trade on. In addition to this, a variety of cryptocurrencies are regularly launched on Binance. The platform deals with billions in trading volume on any given day, and simply getting listed on Binance can make a cryptocurrency’s price go soaring due to the high liquidity it now enjoys.
Another advantage that Binance has over other trading platforms by virtue of its being a specialized cryptocurrency trading platform is the range of tools that it provides. As a day trader, there are several charting and analysis tools that you will tend to use for analyzing patterns and spotting trading opportunities. These tools are marginally different for each asset class, and using a crypto trading platform means that all these tools will be attuned to cryptocurrencies.
You can trade cryptocurrencies in two ways through Binance. First off, you can trade them for fiat currencies, for example, buying the BTC/USD pair or the ETH/GBP pair. At the same time, however, you can exchange cryptocurrencies for other cryptocurrencies too. For example, you can exchange DOGE/BTC or BTC/BNB, and so on. This makes it convenient because if you wish to sell Ethereum and buy Bitcoins, you can do so through just one trade instead of having to firsts change your crypto to fiat and use that to buy Bitcoins. Thus, cross-crypto trading is a way to save fees.
Your money is at risk
Coinbase is another very popular platform that is used to trade and buy cryptocurrencies, and it is a dedicated crypto exchange. This means that it offers many of the same advantages as Binance, including the dedicated tools, the high liquidity, the wide variety of available coins, and so on. However, where the two platforms differ is in terms of what kind of trader they are most suitable for. While Binance is the platform of choice for most day traders due to the advanced nature of its platform and the access to Level-2 order books that it provides, Coinbase is much more suitable for beginners and is used more frequently by them. There are numerous reasons for this.
The Coinbase standard trading platform is based on simplicity, and trading on it is as simple as clicking on the cryptocurrency and selecting buy or sell. You do not have to worry about the several technical details associated with trading cryptocurrencies, such as the order type or the predetermined conditions under which the trade will be closed off on its own. On the other hand, if you want access to these options while trading through Coinbase, you can always use the Coinbase Pro platform, which is available for free to all users of the app. This allows you to perform more technical analysis and gives you access to a variety of order types that you can choose from.
Kraken is one of the oldest cryptocurrency exchanges in the world, and thus it commands a unique level of respect in the crypto space. While the platform has several advantages that set it apart from other similar platforms, perhaps the biggest stand out factor is simply the fact that it allows you to set up a regular recurring investment. For example, say you wish to invest $50 into BTC every month so as to avoid having to time the market, and reduce your risk by spreading out your investments over a period of time. Kraken will allow you to do this in a very simple and efficient manner, by simply linking your bank account to your Kraken account and setting up an automated deposit and investment on a given date of every month.
In addition to this, the platform has over 4 million users, and thus enjoys a very high level of liquidity. It also provides traders with the option of trading up to 66 different crypto pairs, which can either be traded for fiat or for other cryptos. Kraken is also known for providing a very high level of leverage for cryptocurrencies, which is quite rare in the crypto world and enables the platform to set itself apart. It is also moderately regulated, which offers a welcome change as compared to most other old cryptocurrency exchanges, and provides some level of relief and security to investors.
Crypto is, put very simply, a digital form of currency that can be exchanged for conventional money. Since it is digital, it is highly protected through blockchain technology, which makes it impossible to counterfeit a cryptocurrency. A blockchain is a ledger that is enforced by a network of computers that are not located together. A key feature of cryptocurrencies is that they are highly decentralised, which means that they are not launched by any one central bank, instead, they are mined by a variety of computers from around the world.
The first and most popular cryptocurrency that was launched was Bitcoin, and it is currently the crypto with the highest market cap. All cryptos other than Bitcoin are called altcoins, and their prices are usually highly correlated to crypto prices. Other popular altcoins include Ethereum, Cardano, Ripple, and Doge. There are several categories of altcoins, and they each have their own set of peculiarities. For example, most altcoins are mining-based. This means that there are miners all around the world who are creating these coins from thin air using their computers. How this process works is that a group of computers use their computing power to maintain the blockchain that keeps track of the ownership and authenticity of each coin. In return for using their computer to maintain the ledger, the miners get some of the coins that are newly mined using this computing power. However, not all altcoins are mining-based. Some coins come into existence through an ICO, which is an Initial Coins Offering. This is similar to a stock’s IPO, and through this process, coins can simply come into existence and get listed on an exchange directly.
Since cryptocurrencies are usually either mined or listed through an ICO, there has to be a mechanism that prevents them from becoming highly inflationary assets due to their unlimited supply. This is the reason that most cryptocurrencies have a cap on their supply. For example, the mining of Bitcoin has slowed gradually over the years, and the rate at which it can be mined has also largely reduced. At this rate, Bitcoin will touch its supply cap in 2140, after which no further Bitcoins will be mined. This makes cryptocurrencies a deflationary asset and allows users to not worry about inflation. This is also part of the reason why Bitcoins and other cryptocurrencies are being considered a hedge against inflation as opposed to the standard hedge of gold.
Cryptocurrency investing has become more and more popular over the last few years, and this has coincided with the rise in cryptocurrency prices. At the same time, an increased number of platforms have come up that allow users to trade cryptocurrencies easily, and the general public has also gotten more attuned to the benefits that cryptocurrencies offer, which make them a very attractive investment and a speculative asset. There are a variety of reasons why you should consider investing in cryptocurrencies, and these have been discussed below in detail.
For the past 1-2 years, cryptocurrencies have consistently been the best performing asset, with high enough gains to completely outperform every other asset class such as stocks, commodities, and currencies. Despite the fact that cryptocurrencies are associated with a higher degree of risk than most other asset classes, so the higher rewards could just be compensation for this higher degree of risk. However, the high degree of speculation that accompanies the lack of knowledge surrounding cryptocurrencies has fueled a wild frenzy that has taken cryptocurrencies to unprecedented heights. For example, if you’d bought $100 worth of Bitcoins in 2009, you would now have more than $400 million to show for it, which is among the largest gains on any single investment in 12 years ever. But even more recently over the short term, buying Bitcoins in 2020 would have allowed you to 10x your money in only slightly longer than a year. Looking at this trajectory and not wanting to miss out on these gains, there has been a sudden increase in liquidity in the crypto markets as people scramble to invest in crypto, making the prices rise even higher.
As mentioned earlier, most cryptos have a cap on their supply, in that only a finite amount of these cryptos can be produced and mined by the consumers. Therefore, they serve as a deflationary asset due to their limited supply. This makes them a good hedge against inflation. In recent times, even major financial advisors and investment banks have begun to realise the deflationary characteristics of gold, and it is now being used as a hedge against inflation. Especially in these times of high inflation, it is of the utmost importance to invest in assets that are not as highly correlated with inflation, and cryptocurrencies are exactly this.
As mentioned earlier, cryptocurrencies are an asset class fuelled largely by speculation and an abnormally high level of volatility. What this means is that to be completely honest, there is no 100% safe way to buy crypto. This is because even if you get a 100% safe platform or broker, such as a regulated platform, the assets you are investing in are still highly risky and could inevitably cause problems for you. Since cryptocurrencies, at present at least, do not have a very high intrinsic value and derive their value from how valuable people perceive them to be, which leaves them very highly correlated with market sentiment, contributing to the higher volatility that they face.
However, if you understand the risks associated and still wish to invest capital into the cryptocurrency markets, then it is of the utmost importance that you are able to invest and trade in a safe manner, regardless of the assets. This is harder for cryptocurrencies than it is for other asset classes because very few of the top cryptocurrency platforms are regulated by agencies. Among the ones that are, the best choice for you is easily eToro.
Cryptocurrencies might very well be a medium of exchange in the future, but at present, they do not really have a lot of intrinsic value. There are a few companies here and there that have to begin to allow payments in cryptocurrencies, but this is usually done more as a marketing technique than it is as a genuine form of appreciation for the assets. Therefore, the future of such schemes is tenuous at best. Therefore, at present, they are a wildly speculative asset class, which is both a good thing and a bad thing. Investing in such assets is always a double-edged sword because more often than not, there is little rhyme or reason to why prices move except investor sentiment. Therefore, if you’re looking to invest in cryptocurrencies, it is highly recommended that you only choose to invest what you can afford to lose.
Bitcoin was the first cryptocurrency ever, and therefore, a lot of crypto infrastructure out there has been designed keeping Bitcoin specifically in mind. The problem is that Bitcoin technology is now outdated and far from perfect, but any new cryptocurrency that is developed to fix these flaws will have problems with infrastructure because it was all developed for Bitcoin. These technological differences have necessitated rebuilding the infrastructure several times, leading to a further reduction in the rate at which people are accepting cryptocurrencies.
The bottom line is, that a high degree of caution needs to be exercised whenever you are investing in cryptocurrencies, and you should be prepared to face large losses too.
Selling cryptos is a process that is not much different from buying cryptocurrencies. When you wish to sell a cryptocurrency that you own, all you need to do is to head over to the platform that you use to trade. Then, go over to your portfolio, select the asset that you wish to sell, and decide on the quantity you wish to sell. Then, it is as simple as clicking the sell button, and the trade will go through immediately. While trading through most platforms, you can either sell your crypto for fiat currencies or for other cryptocurrencies, based on your preferences. The moment the sale goes through, you will be able to see a change in your crypto wallet that reflects this.
The overall best platform that you should use to invest in cryptos is eToro, and below, we have detailed the process of setting up an account with them. It is quite a simple process and only involves 4 steps.
The first step is to head over to their website and fill up the signup form. This will require you to fill in basic information such as your contact information and login credentials.
Once you have done this, the next step is to upload and verify your ID. You will need to submit proof of identity and address, which could be any government-issued form of identity or utility bills. The verification process usually only takes a few hours.
Once your account is verified, you can easily deposit funds to your account using either your debit/credit card, a bank transfer, or electronic wallets like PayPal. The minimum deposit to fund your account is $150.
Lastly, just head over to the cryptocurrencies section, pick the crypto you wish to invest in, and get started.
While there are several platforms that you as an American trader could use to buy cryptos, the overall best platform easily has to be eToro. Not only does it have the best user interface, but it also offers an unparalleled product variety coupled with a highly secure and regulated trading platform. All of this is further compounded by their commission-free fee structure and their social trading tools.
Satoshi Nakamoto is the name used by the presumed pseudonymous person who developed Bitcoin, the first cryptocurrency.
At the time of writing this article, the market cap of crypto is $2,138 billion.
No, you do not need a crypto wallet if you choose to buy cryptocurrencies through CFD platforms such as eToro. However, buying actual cryptocurrencies through a wallet means that you will be able to transfer cryptocurrencies between platforms
Yes, you can buy cryptocurrencies in the US through any established cryptocurrency trading platforms such as eToro, Binance, or Coinbase.
The amount of money you need to need to buy Bitcoins will depend on the minimum balance requirements associated with your platform, however, in general, it can be as low as $25.
I'm a second year Accounting and Finance student at the University of Warwick, in addition to being an incoming Trading Analyst at Morgan Stanley. I'm passionate about the financial markets and all things finance.
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