Newbie starter pack: Where do I buy crypto? (Part 2)
ATM, P2P and cryptocurrency wallets
We’ve already touched the advantages and disadvantages of buying crypto at exchanges, now it’s time to look into alternatives.
Peer-to-peer exchange (P2P)
P2P is a synonym for a decentralized exchange (DEX). Which means DEX do not store your funds. They only act as a platform where a buyer and seller interact. Note the difference: P2P exchanges are by no means intermediaries and warrantors like centralized exchanges are. Non-interference is good for your privacy and security, protecting you from exchange hacks. Yet if you are looking for an intuitive, trouble-free and, what is no less important, legal way of purchasing crypto, we’d recommend considering other options.
Pros:
— Fees are mainly lower on DEX.
— Normally no verification.
— More accessible than centralized exchanges in terms of minimum deposit and withdrawal.
— DEX are considered less vulnerable to hacks.
Cons:
— UI can hardly be named user-friendly in most cases. If you are new to this, it may result in overpaying or being tricked by an adversary.
— You may run into scammer, and exchange won’t be held liable.
— There’s usually no verification which makes P2P ideal for ‘dirty money’.
ATM
ATM is another way of buying (or selling) crypto in a flash. However, there are some drawbacks, too.
Pros:
— With ATM, buying crypto is no harder than using a bank card.
— You insert the cash and get BTC to your address, that’s all.
Cons:
— You may experience difficulties finding an ATM nearby.
— A limited number of coins is available for purchase: most ATMs work with basic assets like BTC and ETH only.
— No verification means the process is quick but no one guarantees the legitimacy.
— Fees normally start from 7–8%
Cryptowallets
In a way, buying crypto with cryptocurrency wallets works similarly to exchanges: you need to register an account and pass the KYC verification. Yet it’s normally quicker and simpler: most wallets offering purchase are already integrated with some exchange. A wallet backed by an exchange is also nothing new.
Pros:
— UI is relatively intuitive: wallets are simpler than exchanges, either centralized or decentralized. Key options like sending, exchanging or purchasing are clearly outlined.
— You won’t have to deal with maker/taker fees.
— It’s legitimate: KYC is a must. What’s more, in some regions wallets must be accredited as financial institutions. Otherwise they would not be entitled to sell you crypto.
— Wallets are safer than ATM or P2P.
— Crypto arrives at an address of yours where you can manage it immediately. Compare it with exchanges: you may be charged an additional fee for withdrawing from the internal address, and there may be a minimum (or even verification) to withdraw.
Cons:
— Fees are often higher than on P2P or some exchanges. However, it’s a matter of priority: you may choose to pay larger fee but stay safe from adversaries or legal trouble.
— Vulnerabilities and bugs may occur. Just check the reviews before embarking.
— Similarly to exchanges, KYC takes some time. In most cases you will pass it once only though.
To sum up, here’s a quick overview of buying crypto with the help of cryptowallets, exchanges and ATMs:
