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Everyone is talking about cryptocurrency right now. Celebrities are endorsing it, Tweets are tanking it, countries are banning it, etc. But no one is talking about how you actually go about buying it. Surely you can’t just pick it up with the morning newspaper…?
If you are looking into the idea of buying cryptocurrency, read our blog to understand how to buy and what you should buy.
Keep up with crypto news
Things change with cryptocurrency like the wind. Making a safe purchase will depend on you being able to ride that wave that is the cryptocurrency market. You will have to spot patterns of behaviour and know when to duck out or invest more.
As mentioned above, ideas as simple as a Tweet have caused currency rates to crash, and because it is a new concept, a lot of people, powerful people, are wary of it. On the other hand, powerful people have embraced it, but that still might not be good news. For example, China plans to make their entire currency cryptocurrency, but in the meantime that has meant eliminating competition and making crypto trading illegal, leaving its citizens with frozen assets.
Like stocks, cryptocurrency depends a lot on the events of the day and since it’s a global currency, it can be affected by something occurring on the other side of the world. Make sure to keep up to date with trends and news around the world.
Understand that it is/isn’t stock
Cryptocurrency shares a lot of basic features with stock. Both have monetary value and they are generally handled in the same way: traded, invested, etc. The main difference enforced is that cryptocurrency bypasses the bank, offering open trade to anyone.
But it’s important to understand that they are not the same concept. Buying Dogecoin and buying company stock is not the same thing and thinking of them in the same way can lead to getting burned.
The appeal and drawback of crypto is that anyone can make it, which means it isn’t mandatory for it to be backed by special groups like stocks are. They live and die on hype, where a number of factors can affect stock in smaller ways.
Where stocks are created for the sole purpose of fundraising for a company, cryptocurrency can serve multiple purposes such as using its blockchain technology for gaming and programming.
Your buying cryptocurrency options
You have three main options when it comes to buying cryptocurrency: via crypto exchanges, stockbrokers, and payment apps.
Crypto exchanges are specially dedicated apps for the sole purpose of buying, selling, and trading cryptocurrencies. They offer the most features to help you manage your bought crypto, however using them requires a learning period as you get used to how everything works. Some apps come with easy-to-use interfaces and educational coverage to help you make as informed a decision as possible.
On these apps you can exchange one type of cryptocurrency for another, or for a fiat currency like US dollars, and spend crypto by transferring it into a debit card linked to your account.
The best apps offer superior security, customer service and a range of currencies. There are over 4,000 cryptocurrencies currently available, so you will have choice.
If you don’t like the idea of a cryptocurrency exchange, you can approach a stockbroker. Some, not all, have started getting involved with cryptocurrency, creating a convenient way to get involved, if you already have a stockbroker you trust.
Most of these platforms all ask for the same information to register, asking for full name, email address, phone number, home address, social security number, and date of birth. However, a few might additionally ask for proof of identity. This can be confirmed with either a valid ID like a passport or driver’s license, proof of address like a bank bill and occasionally a selfie.
The two biggest payment apps, PayPal and Venmo, also allow you to buy cryptocurrency. Unfortunately, they will offer far fewer features, so you will make a less informed decision on what you are buying. Plus, they don’t allow you to transfer your crypto into their apps.
Make your first purchase
Making your choice will require some research to make sure you don’t end up burned.
Unlike stocks, crypto usually has a lively community discussing the ups and downs of their investments. Follow a few groups and keep an eye on what they are saying about your currency. This would be the fastest way to make sure you are not investing in a pump and dump scheme, for example.
Research the cryptocurrency’s team and vet their expertise. Do you trust everyone on the team? Do they have credentials and a successful track record? Take a look at the pricing history of the coin to give you an idea of their past behaviour and if you want to invest in them.
Big currencies will have a white paper which outlines the purpose of the coin, the coin’s technology, and the overall vision of the coin. If you expect the coin to be around for the next 5-10 years you will have a vision for it: a long-term goal to reach.
With that, it’s just a matter of putting in your details and buying your first cryptocurrency. Congratulations.