After you’ve learned about the risks and decided what cryptocurrencies you want to invest in, it’s time to figure out the best ways to buy and trade crypto. In this Crypto 101 article, we will find out what tools suit your needs best.
There are many options available, so it’s important to find the best one for you. However, before you make a decision it’s vital to consider some factors:
How Much You Can Afford
The major rule — don’t invest all your life savings. If it’s your first investment, try with small amounts first until you figure out the most convenient tools, type of investments, risks, and earnings/losses you can expect.
Different countries have their own specific legal perception of cryptocurrencies. Take into account the crypto regulations applied to your location to find out if there are any limitations on cryptocurrency trading, what’s the taxation system applied and so on. You can check this link to find out more about the crypto regulations of your country.
Today you can buy cryptocurrencies with a credit/debit card, bank transfer, or even cash. Different websites offer different commission rates, so prior to setting up an account, do research first.
On Binance, for example, depending on your local money you can choose different types of payment methods. If you want to buy crypto with Chinese Yuan, you can use Alipay or WeChat; with Euro you can get the desired crypto with bank transfer, debit/credit card, PayPal, bank transfer, or third party payment systems.
When you purchase crypto, you should have a safe place to store your assets. There are so-called cold and hot storage places. Hot wallets come in two forms — online and desktop wallets. Mobile wallets can be considered hybrid due to their mobility. Cold wallets are non-custodial specifically designed devices that are designated physical cryptocurrency storage. Will talk about them further.
Wallets can also be custodial and non-custodial. Custodial wallets are exchanges and wallets in which a third party stores your private keys. It means that a third party gets complete control over crypto-assets while a user can only make permission to send or receive payments. Some examples are btc.com, Сoinbase, Kraken. You can keep your money on exchanges if you want to try trading, but don’t entrust all your crypto to them. As the saying goes “Not your keys — not your crypto!”.
Non-custodial wallets allow their users to fully manage and own their private keys and data. Non-custodial wallets include Hardware wallets (Trezor, Ledger), “paper wallet” (it’s when you write down or print your private key or mnemonic phrase on a piece of paper), desktop, mobile light wallets, or web wallets like citadel.one.
Decide what you want to do with your crypto assets: hold, stake, or trade.
Trading cryptocurrencies is similar to stocks trading. Crypto trading supposes buying and selling cryptos frequently in an attempt to time the market. The goal of crypto traders is to capitalize on short-term market events to sell tokens for a profit or buy them at a low (dips). Some traders are day traders, which means they buy and sell several times throughout the day.
Where to buy cryptocurrency?
Whether you want to stake, trade, or hold your coins, (almost) all the roads lead to exchanges, as they are the most popular, easy, and widespread way to exchange your local money for crypto.
To choose the best exchange website, let’s first consider some factors you should keep in mind:
Security of the exchange
Perhaps, one of the most important factors. You don’t want to lose your money, right?
For instance, CoinGecko, a cryptoasset data aggregator, has developed a “Trust Score” to combat fake exchange volume data. Trust Score measures trading pairs and crypto exchanges taking into account reported trading volume, reported orderbook data, web traffic statistics, and other metrics. So, you can choose an exchange taking into account this table.
There are transaction fees and exchange fees. Like many things in life, there are fees attached to cryptocurrency transactions. Every time you send any crypto from one address to another, you have to pay a network transaction fee.
The fees you pay are not consistent. They can fluctuate depending on market demand and network capacity. If you keep your assets in exchanges, you don’t pay fees for swapping (exchanging) your coins, but you need to pay to the exchange for purchasing crypto with fiat or for withdrawing your assets from there. The general rule — the smaller the fee the better for you.
Choose the exchange according to your preferred method of buying crypto: credit/debit card, bank transfer, PayPal, etc.
To be able to buy crypto you will have to go through the identity verification process (KYC). For some websites, it can take a few hours while for others up to three days.
Kraken: 1–60 minutes to 5 days (depending on level and verification method).
Binance: 1–3 days (might also take a few hours).
Bitmax: up to 2 business days.
If you want to urgently purchase crypto, consider websites with a fast verification process, or try messaging the client support.
Not all cryptocurrencies can be bought with fiat. To get the ~6000 cryptocurrencies that exist now, users need to exchange Bitcoin (BTC) or Ethereum (ETH). Every coin has a BTC/crypto pair, and most have ETH pairs as well. This means that first, you will have to purchase Bitcoin, Ethereum, or other supported currencies and find an exchange pair for your desired coins. CoinGecko has a nice feature to see what exchanges offer pairs for particular coins. Below you can see a table of exchanges and exchange pairs for $XTZ — Tezos Blockchain native token :
Centralized or decentralized exchange
“Centralized cryptocurrency exchange” means that a third party is helping you to conduct transactions. Examples of such are Binance, Coinbase, Kraken. If you want to store your assets in a non-custodial wallet, to use centralized exchanges, you will have to transfer your assets to the exchange first, and then initiate the exchange process. However, if you’re using citadel.one wallet and want to swap your assets, good news — you can choose among exchanges already built into the platform for you.
Decentralized exchanges are the new wave in the crypto world. DEX’s users keep the private keys to their digital wallets and don’t need to transfer assets from native account to the exchange. To use DeFi exchanges, such as Uniswap you need to attach your wallet first and then initiate the exchange process. In this case, you don’t need to transfer your money anywhere and only have to pay transaction fees applied by the network.
P2P exchanges allow you to trade directly with other participants who also want to sell/buy cryptocurrency without any trusted third party to process all trades.
Sometimes you can find better exchange rates when using P2P trading option, but it is also associated with a bit of a risk, as there is another person standing behind and you never know if you can trust them or not.
Bitcoin ATM (Cryptomat)
With cryptomats, users can simply come to a physical location and either a) purchase Bitcoin or other supported cryptos using fiat currency and send them to a digital wallet or b) sell Bitcoin from the ATM to withdraw fiat money.
There are almost 10 000 Crypto ATMs worldwide that support 11 cryptocurrencies. You can find the closest to you on Coin ATM Radar.
As the crypto industry becomes bigger, there are new ways to buy cryptocurrency every year. Based on your needs and wants, decide what suits you the best. If you want to try trading, consider an exchange; if you want to buy crypto without providing your ID, use the P2P option.
However, always mind the security and consider trying out a non-custodial platform, such as Citadel.one.
Citadel.one is a non-custodial Proof-of-Stake platform for the management and storage of crypto assets. Users can create public addresses for all supported networks with one seed phrase, connect their Ledger or Trezor device, or import an address generated by another wallet. The analytical dashboard provides relevant information on wallets’ balances and networks’ main metrics. One of the main functions of the Citadel.one platform is participation in the PoS consensus — users can stake and delegate their assets, claim rewards, and follow the latest network proposals in the voting tab.
Citadel.one offers its users instant cryptocurrency exchange services that allow fast and secure crypto assets swap, and it is also possible to buy and sell crypto with a credit or debit card. Among PoS platforms Citadel.one supports Cosmos ($ATOM), ICON ($ICX), IOST, Orbs, and Tezos ($XTZ). For our user’s convenience we also support Ethereum, Bitcoin, and Tether ($USDT). Mobile and desktop versions, new networks, including Polkadot and Ontology, are scheduled for the upcoming updates.
Learn More About Citadel.One