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A Beginner’s Guide On How to Buy Bitcoin and Other Cryptocurrencies

So you’ve brushed up on your knowledge about cryptocurrency, understand the financial risks involved, and have met your primary financial obligations. Now you’re ready to invest in crypto.

There are literally thousands to choose from, although there are only a handful that you ought to consider. If your goal is steady, long-term gains, opt for the well-established cryptos such as Bitcoin and Ethereum. But if you want to potentially make more money and are willing to accept the nerve-wracking volatility that comes with it, lesser-known altcoins might be more your thing. Regardless of what you’re looking for, here are some tips to get started when you’re investing in crypto for the first time.

1. Choose an Exchange

Buying crypto isn’t as simple as walking into your bank and swapping dollars for Ethereum, although someday it could become a reality. But for now, it’s only possible through cryptocurrency trading platforms. There is no shortage of exchanges, although if you want to be sure the platform is on the up and up, Coinbase, Kucoin, Kraken and Gemini are the best mainstream choices.

Security

Be aware that cryptocurrency investments are not FDIC-insured. So if your account is hacked, your investments could vanish. This is why you should choose a platform that has a good reputation. In particular, they should use offline, cold storage.

Fees

Some platforms charge a flat fee per transaction, while others take a percentage of your trade. You don’t necessarily want to go with the exchange that charges the lowest fees since the ones with the best reputation, such as Coinbase, also provide the best service and security. Also note that if you buy crypto at the market price (known as a maker fee) rather than waiting to buy it at the price you set (called the taker fee), you’ll save money. Bottom line: read up on the platform’s fee structure before signing up.

Available coins

Not all exchanges offer every single cryptocurrency out there. On the other hand, it is probably a good idea to stay clear of the most obscure altcoins. Mainstream platforms offer the most popular coins such as Bitcoin, Ethereum and Litecoin while also selling less-known coins that are known to be reputable.

2. Fund Your Account

When you open an account, you might be asked to provide information about your identity. You will also be able to link your bank account or debit card. Note that simply putting money into your crypto account isn’t the same as investing. You actually need to take an additional step and exchange your dollars for whichever crypto you choose.

3. Place an Order

Once you’ve deposited money into your crypto account, simply enter the amount of dollars you want to trade for the crypto, purchasing it at the current rate (minus fees). If you are a more active trader, using the Coinbase Pro platform allows you to buy either at the market rate or when the price falls to the price point you’ve set. Note that you don’t have to fork over $36,000 to buy a single Bitcoin. Instead, you’ll buy a fractional share of the coin (i.e., investing $3,600 worth means you own 0.10 of Bitcoin).

4. Practice Safe Storage

Coinbase and other platforms allow you to store your investment safely in your account. However, if you would prefer even more security, you can place them in a cryptocurrency wallet. There are different wallets to choose from, with varying degrees of security. The platform you use might offer a wallet option (although PayPal and Venmo are examples of ones that don’t) or you can opt for third-party software or even cold storage on an offline hardware device.

Is crypto a sound investment for me?

Just like when you’re investing in the stock market or real estate, always do the research beforehand. You should also make sure you’ve paid off your debt obligations. Financial advisors usually recommend not investing more than 5% of your portfolio into crypto. It’s also a terrible idea to dip into your retirement fund. The golden rule is to invest only what you’re willing to lose, even if that means the entire amount of the investment. For beginners, Bitcoin or Ethereum are good places to make an initial investment. Even though they experience massive price swings, most experts believe they are the cryptos that will still be around decades from now. Plus, a small investment in a highly volatile digital currency is a healthy way to diversify your overall portfolio.