How To Buy Crypto - Beginners Guide For 2022

Updated: Jun 20th, 2022
James Hendy
James Hendy
How To Buy Crypto - Beginners Guide For 2022

Cryptocurrencies have become extremely popular with both retail and institutional investors, driving the total market cap of the industry to $3 trillion last year. With world-beating returns, it is easy to see why. But due to the vast number of options available adding cryptocurrencies to an existing portfolio can sometimes feel like walking through a minefield.

The speed of development within the industry coupled with the obscurity of regulations can leave prospective cryptocurrency investors with more questions than answers.

In this guide, we will define what a cryptocurrency is, outline the risks and potential benefits involved in buying crypto, and highlight some of the best platforms for making that first purchase.

How To Buy Crypto - Quick Guide

To buy cryptocurrencies, follow these simple steps:

  1. Compare and select a crypto exchange. Find and compare the best cryptocurrency exchanges that support the preferred fiat currency. Other important considerations to finding the right exchange are the deposit, trading and withdrawal fees, account and wallet security and customer support.
  2. Register an account with the exchange. Create an account with the exchange using a valid email address or mobile number. Exchanges have a mandatory Know Your Customer (KYC) process that will need to be completed.
  3. Deposit funds to a wallet. Choose a payment option that offers the best fees and reasonable speed for the funds to arrive. The most common payment methods include a bank transfer, wire transfer, debit card, credit card and PayPal.
  4. Buy Crypto. Browse the supported assets and buy the desired cryptocurrency. Enter the amount to spend and finalize the transaction by clicking on 'Buy'. The purchased amount of crypto will be transferred to the user's wallet.

Where To Buy Crypto?

The easiest and most popular method for acquiring cryptocurrencies is through a regulated cryptocurrency exchange or broker. These platforms have been designed to make the process of buying crypto as easy as possible and provide investors with the tools to then store, track and manage a cryptocurrency portfolio.

Due to the enforcement of regulations, including Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) policies, the majority of exchanges and brokers will require Know-Your-Customer (KYC) documentation before a purchase can be completed.

The following section provides an overview of highly-regarded exchanges and brokers that have been reviewed by our team at HedgewithCrypto.

1. Coinbase - Best Overall Crypto Exchange

Coinbase is a US-regulated cryptocurrency exchange that has become highly reputable among cryptocurrency investors. Since launching in 2012, the platform has helped over 98 million users gain access to the cryptocurrency market. Its daily trade volume and deep liquidity place it within the top tier of cryptocurrency exchanges worldwide.

Although Coinbase Global Ltd is composed of two main platforms, Coinbase and Coinbase Pro, it is the original Coinbase that targets beginners first venturing into the industry. The exchange has found success where other platforms have failed by providing products that are simple, efficient, and easy to use. Both the Coinbase web and mobile applications have clear user interfaces and are littered with helpful user guides in case investors get into trouble.

List of supported crypto on CoinbaseList of supported crypto on CoinbaseList of supported cryptos on Coinbase.

Users can invest in over 176 cryptocurrencies such as buying Bitcoin, Ethereum, Litecoin and Bitcoin Cash. To begin buying cryptocurrencies on Coinbase, investors must first deposit fiat currencies via a range of payment methods, which include ACH bank transfers (US only), wire transfers, instant cashouts, and credit/debit card deposits. In addition to a range of payment methods, the exchange supports a variety of fiat currencies including USD, GBP, AUD and EUR.

Although the range of cryptos is vast and the beginner-friendly design undeniably helps to attract users, one of the biggest drawbacks with Coinbase is the fees involved with purchases. For the comfort that Coinbase offers bank transfer purchases can incur a higher than average 1.49% fee and credit/debit card purchases can be as high as 3.99%. For those looking for a quality fiat-to-crypto exchange, there are more economic options.

Security features on CoinbaseSecurity features on CoinbaseSecurity features on Coinbase.

However, once purchased, all cryptocurrencies can be stored within Coinbase’s internal wallet or transferred externally. For those cryptos stored within the exchange, prices can be tracked live and portfolios updated in real-time. Alternatively, some cryptos can be deposited into the exchange’s Earn module, which allows investors to earn passive rewards.

Importantly, Coinbase employs the latest in security procedures which include storing over 98% of funds in offline storage facilities, requiring multi-factor authentication for all login attempts, and performing an extensive review process for all cryptocurrency assets that are listed. Alongside top-notch security, Coinbase holds cryptocurrency insurance against malicious breaches, and USD deposits up to $250,000 are insured by the FDIC.

2. eToro - Best For Beginners

eToro is a cryptocurrency broker that allows individuals in supported countries to obtain a cryptocurrency portfolio. Unlike other cryptocurrency platforms, eToro was not initially created for cryptocurrencies. The broker, which was originally launched in 2007, started by offering access to stocks, indexes, ETFs, commodities, and forex investments. However, it subsequently added the ability to trade cryptocurrencies in 2017. Due to its social investing ethos, eToro has become extremely popular among cryptocurrency investors.

HedgewithCrypto Score
HedgewithCrypto Score
4.6/5Our ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
StarStarStarStarEmpty Star
Trading Fees:Spread only
Country:Global (USA allowed)
Currency:USD, GBP, EUR, AUD
Promotion:None available at this time
Ease of useStarStarStarStarEmpty Star
ReputationStarStarStarStarEmpty Star
Deposit methodsStarStarStarStarEmpty Star
FeesStarStarStarStarEmpty Star
Visit eToro

AFSL 491139.Capital at risk. See PDS and TMD.

Read our full eToro Review

eToro users can buy and sell from a range of 50 top cryptocurrency assets, including BTC, ETH, BNB, and XRP. Although a respectable range for new cryptocurrency investors, some users may be left wanting more. In addition to a lower range of cryptocurrencies, eToro fees are also quite high. Due to taking on the risk of market maker, a flat fee of 1% is charged for every purchase. A market spread is also then implemented, which varies depending on each cryptocurrency. The cumulative effect is a fee that is likely to be higher than 1% for most purchases.

Although the range of digital assets and fees are slightly inferior, what draws users to eToro is the platform’s focus on social investing. A module, known as CopyTrader, allows investors to copy the trades executed by leading professionals on the platform. In 2021, returns from the top 50 traders reached 30.4%. In addition to CopyTrader, the platform is built around forums and blogs where cryptocurrency investors can share ideas and expand their knowledge base.

eToro copytradereToro copytraderDisclaimer: Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

To get up and running on eToro, users can deposit funds in multiple ways such as via a credit card, bank transfer and through the platform’s E-wallet, which is compatible with PayPal, Skrill, and Neteller. There are no deposit fees, but all withdrawal requests incur a charge of $5.

In addition to buying and selling digital assets, eToro users can take part in cryptocurrency staking to earn passive rewards on their holdings. For those that purchased specific Proof-of-Stake cryptocurrencies, including Cardano (ADA), Tron (TRX), and ETH, eToro will stake those assets on a user's behalf and pay up to 90% of the reward based on the account level. While the number of staking assets is not as diverse as the top crypto staking platforms, it's an easy way for eToro users to earn staking rewards.

Staking rewards on eToroStaking rewards on eToroStaking coins and rewards on eToro.

Another reason to consider eToro for buying crypto is the platform's strong compliance with regulations by leading government bodies from around the world including FinCEN (US), FCA (UK), CySEC (Cyprus), and ASIC (Australia). As a result, the platform abides by all dictating financial laws and cooperates with financial authorities. Moreover, for the safety of crypto-assets, eToro employs both cold and hot wallet storage, advanced encryption techniques for storing data, and two-factor authentication (2FA). For US users, cash funds are insured by the FDIC for up to $250,000.

3. Binance - Great Exchange For Low Fees

Binance is ranked as the leading global cryptocurrency exchange by trading volume. After launching in 2016, it has become one of the most trusted and well-developed cryptocurrency platforms that are currently available within the industry. With the number of services and products packaged into Binance, the exchange is rated highly amongst investors that are looking for an all-in-one platform to buy crypto.

HedgewithCrypto Score
HedgewithCrypto Score
4.8/5Our ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
StarStarStarStarEmpty Star
Trading Fees:0.1%
Country:Global (USA allowed)
Currency:AUD, USD, EUR, GBP, SGD & UGX
Promotion:20% off trading fees
Ease of useStarStarStarStarEmpty Star
ReputationStarStarStarStarStar
Deposit methodsStarStarStarStarEmpty Star
FeesStarStarStarStarStar

Users can buy, and sell over 300 different cryptocurrencies through the platform which should cover most investors’ requirements, whether new to the industry or not. Binance has also implemented a range of payment methods including bank transfer, wire transfer, and credit/debit card deposits. There is also a Peer-to-Peer exchange that supports additional payment options such as PayPal, gift cards and pre-paid cards. There are over 40 different global currencies supported to ensure that the exchange meets the flexibility sought by its 90 million users.

Deposit USD to a Binance accountDeposit USD to a Binance accountScreenshot of depositing USD to a Binance account.

Due to the high user base and trading volume, Binance is able to keep the fees for buying and selling cryptocurrencies extremely low. The fees for purchasing crypto through Binance work on a maker/taker style system, with the higher taker fees starting from 0.1%. Fees can be reduced from there depending on trading volume and how many native BNB coins are held within an account. Services such as instant purchases do incur a higher fee which varies depending on the payment method chosen.

Binance fees for buying and selling cryptoBinance fees for buying and selling cryptoBinance fees for buying and selling crypto.

Once cryptocurrencies are held within a Binance account, users can use those digital assets to trade amongst 1500 cryptocurrency pairs, earn passive rewards from savings accounts and staking, or trade derivative markets such as futures. Binance Earn, which is a leading exchange to earn interest on crypto supports a huge range of savings accounts. This will appeal to investors that are looking to buy and hold crypto in fixed or flexible deposits to earn interest and grow their portfolio.

The only major downside to the exchange is the complexity of the ecosystem. Binance offers almost everything that an investor could ever need, however, the feature-packed platform may seem overwhelming to first-time users. With that being said, Binance has worked hard to ensure all services and products are easy to understand. It includes one of the most detailed user guide blogs within the market.

4. FTX - Top Platform For Advanced Traders

FTX is becoming one of the best options for prospective cryptocurrency investors. There are over 325 cryptos listed on the exchange that can be bought and sold with fiat, Bitcoin, altcoins and stablecoins. However, unlike traditional exchanges and brokers that focus on the ability to purchase cryptos, FTX has focused on offering cryptocurrency derivatives such as futures, options, and the opportunity to trade with margin. With that being said, FTX Exchange is still applicable for new investors thanks to the exchange’s spot markets, extremely low trading fees, and detailed user guides, that should ensure any investor can navigate the platform correctly.

HedgewithCrypto Score
HedgewithCrypto Score
4.7/5Our ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
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Trading Fees:0.02% / 0.07%
Country:Global (USA allowed)
Currency:Crypto only
Promotion:5% off trading fees
Ease of useStarStarStarStarEmpty Star
ReputationStarStarStarStarStar
Deposit methodsStarStarStarStarEmpty Star
FeesStarStarStarStarEmpty Star
Visit FTXRead our full FTX Review

To get started on FTX, after the necessary KYC documentation has been submitted, users can deposit a range of fiat currencies including USD, EUR, GBP, AUD, HKD, CAD, CHF, and BRL. The exchange also has plans to add SGD, TRY, and ZAR. Wire transfers are primarily used for fiat currency deposits, although credit card deposits are also accepted. The fees for wire transfers and credit card deposits vary depending on the location of a user.

For existing crypto owners, there are plenty of options available to gain further exposure to the cryptocurrency market. For instance, investors can use the futures market to enter a long position on a range of crypto pairs. FTX is also one of the best crypto margin platforms for its range of levered tokens. These contracts allow traders to long or short the market with up to 3X leverage but do not require any margin requirements.

Selection of crypto markets on FTXSelection of crypto markets on FTXSelection of crypto markets on FTX.

The low fees implemented by FTX have attracted millions of users to the trading platform. The exchange supports over 300 cryptocurrencies within the spot markets which can be traded with market-leading fees that start from 0.07%. Like Binance, fees can be reduced further with increases in trading volume and by holding a set amount of native FTT tokens within an account. Other than ETH and ERC-20 tokens, there are no fees for cryptocurrency deposits or withdrawals.

The downside of FTX is that US residents need to use the sister platform, FTX.US, which is slightly more restrictive due to US regulations. Other than that, the FTX platform is thoroughly regulated and implements market-leading security features including 2FA, whitelisting addresses, and a team that constantly tracks suspicious behavior. The exchange also holds a backstop liquidity fund that can be used in the event of a major liquidity issue.

5. Gemini - Best Crypto Exchange For Security

Gemini is another US-regulated cryptocurrency exchange that is quite similar to Coinbase. While Coinbase focuses on simplicity, Gemini focuses on security. Although it is now regarded as one of the most secure crypto exchanges for investors looking to enter the cryptocurrency space, Gemini is also simple and easy to use for those unfamiliar with the ecosystem.

HedgewithCrypto Score
HedgewithCrypto Score
4.6/5Our ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
StarStarStarStarEmpty Star
Trading Fees:0.5%
Country:Global (USA allowed)
Currency:USD, GBP, EUR, CAD, SGD, HKD & AUD
Promotion:None available at this time
Ease of useStarStarStarStarStar
ReputationStarStarStarStarEmpty Star
Deposit methodsStarStarStarStarEmpty Star
FeesStarStarStarStarEmpty Star

Founded by Tyler and Cameron Winklevoss, the Gemini exchange allows users to buy and sell over 75 cryptocurrencies. For example, users can buy Ethereum, Cardano, and Solana. Investors can start acquiring cryptos by depositing a range of fiat currencies including USD, AUD, CAD, GBP, EUR, HKD, and SGD. This vast range of fiat currencies can be deposited via 3 main payment methods: ACH transfers (USA only), wire transfers, and debit card payments. Fees for ACH deposits are free, wire transfers vary based on the bank being used, and debit card deposits incur a 3.49% charge.

Screenshot of buying Ethereum on GeminiScreenshot of buying Ethereum on GeminiScreenshot of buying Ethereum on Gemini

While fiat deposit methods are comparable to other platforms, the structure for completing a purchase means that fees on Gemini are slightly higher than average. Fees can extend to 1.49% for USD purchases, with charges such as a 0.5% convenience fee added if a user decides to make a purchase through the native mobile application. Once a crypto purchase has been completed, digital assets can be stored directly within Gemini’s internal wallet, which updates portfolio values in real-time.

All Gemini users can also tap into the platform’s native earn module to accumulate passive rewards. It is a great way to do more with a crypto investment with compounding interest rates up to 7.4% APY. However, the Gemini Earn program is available to US customers only and available in all states. Gemini also provides the flexibility to move the crypto assets to the trading platform (with interest) and vice versa. Gemini’s ActiveTrader module provides a professional-level trading platform for more frequent cryptocurrency traders but does not match rival exchanges Binance or Coinbase Pro in terms of advanced charting tools and software.

Earn interest on crypto purchases with GeminiEarn interest on crypto purchases with GeminiEarn interest on crypto purchases with Gemini.

The Gemini exchange is one of the very few exchanges that holds a license from the New York Department of Financial Services (NYDFS), which means that the exchange abides by the strictest of government regulations. In addition to NYDFS, the exchange is also regulated by the FCA in the UK and by the Monetary Authority of Singapore (MAS). All funds stored on Gemini are kept safe within multi-signatory cold storage wallets.

In short, Gemini is one of the best exchanges for individuals that want to invest in crypto. It is a safe and secure platform that is easy to use and has options to grow the investment with its Gemini Earn and advanced trading platform. Moreover, there is a world-class mobile app that is modern and intuitive to monitor a crypto portfolio at any place or any time.

Recommended Exchanges To Buy Crypto - Compared

Examples of the best exchanges to buy crypto based on HedgewithCrypto's reviews are listed below.

ExchangeCrypto AssetsTrading FeesRatingPromotionWebsiteReview
Coinbase Logo

Coinbase

1460.5%
RatingOur ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
4.8/5
StarStarStarStarEmpty Star
$5 BTC bonus (USA only)Visit Coinbase

Coinbase Review
Binance Logo

Binance

3970.1%
RatingOur ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
4.8/5
StarStarStarStarEmpty Star
20% off trading feesVisit Binance

Binance Review
FTX

FTX

3190.02% / 0.07%
RatingOur ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
4.7/5
StarStarStarStarEmpty Star
5% off trading feesVisit FTX

FTX Review
eToro

eToro

200+Spread only
RatingOur ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
4.6/5
StarStarStarStarEmpty Star
None available at this timeVisit eToro

eToro USA LLC; Investments are subject to market risk, including the possible loss of principal. Archived, "Virtual currencies are highly volatile. Your capital is at risk."

eToro Review
gemini exchange

Gemini

26+0.5%
RatingOur ratings take into account the ease of use, fees, deposit methods along with the exchange's reputation. All ratings are determined solely by our editorial team.
4.6/5
StarStarStarStarEmpty Star
None available at this timeVisit Gemini

Gemini Review

What Is Cryptocurrency?

Cryptocurrencies, or cryptos, are types of digital assets that exist virtually within a blockchain. Unlike traditional banking, where transactions are validated by a centralized third party, each transaction on a blockchain is validated via cryptographic proof. The first blockchain, Bitcoin, was designed for the decentralized transfer of wealth and popularised what is now known as the idea of crypto.

While some cryptos, such as Bitcoin, have been created to serve as a medium of exchange, others have been developed for a range of other use cases, such as blockchain-based games and blockchain-hosted decentralized applications. This is why there are so many to choose from.

Related: What is crypto & what is it used for?

When To Buy Cryptocurrency?

Cryptocurrencies are one of the most volatile asset classes currently available for investors. This can make it extremely difficult to decide when to buy. However, timing an investment on a dip can be very profitable. Although, there is no perfect solution to determine the best time to enter the market.

In making a good decision on when to buy, it can be useful to determine if an investment in crypto is for the short term or the long term. Short-term day traders should pay close attention to intraday price movements and technical levels. On the other hand, longer-term investors can negate the volatility that is witnessed on a day-to-day basis by focusing on cryptos that are fundamentally strong and then investing periodically. This requires a little bit of homework from each investor.

A common method to assist with timing a crypto purchase is using a dollar-cost averaging (DCA) process. This is a long-term investment strategy that allows individuals to avoid market volatility. The technique involves investing a defined amount of capital over set periods, such as on a weekly, bi-monthly, or monthly basis. In doing so, an investor can capture both upward and downward market movements.

Using a dollar cost averaging strategy to buy cryptoUsing a dollar cost averaging strategy to buy cryptoUsing a dollar cost averaging strategy to buy crypto.

By employing DCA an investor can avoid mistiming the market with a lump sum purchase and consistently accumulate regardless of what happens in the market. If the market climbs overall, an investor will have accumulated a healthy entry point while avoiding the noise that is witnessed on a daily basis. To learn more, read our guide that explains how crypto dollar-cost averaging works.

Can You Make Money Investing In Crypto?

It is important to remember that there is no guarantee of returns when investing in crypto, which means that everyone should invest what they can afford to lose. With that being said, for long-term investors that can withstand market downturns and believe fundamentally in the prospects of the industry, Dollar-Cost Averaging (DCA) could be worth considering to build a profitable portfolio with a diverse range of cryptocurrencies.

Is Crypto A Good Investment?

The question of the feasibility of whether cryptocurrency is a good investment can only be answered by an individual's circumstances. There is no question that, in the past, many investors have been willing to take the gamble of volatility for the chance of exceptional returns. However, a positive outcome is not guaranteed for all crypto investments.

There are plenty of investors that have mistimed the market or invested in poorly conceived projects that have resulted in them losing capital. All market participants must expect rapid price changes on a daily basis and for drawdowns to occur.

Total market cap of the crypto marketTotal market cap of the crypto marketTotal market cap of the crypto market since 2013.

The risk of losing an entire investment can be mitigated by selecting cryptocurrencies that have stood a true test of time. Examples include Bitcoin and Ethereum. Between 2020 and 2021, even these ‘safer’ cryptocurrency assets provided returns stretching into the hundreds of percent; these digital assets far outpaced the returns offered by indexes such as the S&P 500 and commodities such as gold. Before deciding if a crypto investment is the right decision to make, it can be useful to evaluate the risks and benefits that are associated with this asset class.

What Are The Benefits Of Buying Crypto?

Some cryptos offer more advantages than others but the asset class offers many benefits that are applicable to all cryptocurrencies.

  • Capital gains. Cryptos have been the best performing asset class of the last decade. While capital gains are not guaranteed, with the correct fundamentals, cryptocurrencies have been known to return APYs in the thousands of percent.
  • Inflation hedge. Cryptocurrencies such as Bitcoin, are often seen as a hedge against rising inflation, which is caused by the oversupply of fiat currencies. If certain crypto has a limited supply, investors can find that over time the value of that digital asset appreciates relative to real-world goods and services.
  • Maintain custody of own funds. Cryptos are digital assets that are secured and exist on a blockchain. The movement of each coin or token is dictated by a set of private keys, which are generated and are associated with a cryptocurrency wallet. Wallets can be non-custodial which means that individual investors can look after and manage their own funds without the need, or expense, of relying on centralized third parties such as banks.
  • Decentralized. While not true of all cryptos, many follow the industry-wide ethos that decentralization is key. Fiat currencies are centralized and can be printed by the Central Banks that control them. A cryptocurrency is considered decentralized when there is no centralized party controlling the supply and, therefore, there is no outside party influencing its overall value.
  • Generally lower transaction costs. Fiat currency transactions can cost a lot to complete, especially when a payment is sent internationally. The fees for international payments can be as high as $50 in some places. In comparison, on some blockchains, the cost to send a cryptocurrency transaction can be as low as a fraction of 1 cent.

What Are The Risk of Buying Crypto?

There are clearly many advantages to cryptocurrencies and these assets could hold the key to the next stage of financial evolution. However, cryptos are far from perfect and there are some risks that new investors should be aware of.

  • Market volatility. Cryptocurrencies are still speculative investments and, as a result, are highly volatile. Many projects can undergo remarkable price discovery without delivering equivalent real-world value. This means that prices can fall dramatically just as quickly as they rise.
  • Accountability of funds. As previously mentioned, cryptocurrencies can be held in the custody of individual users. However, custody is a double-edged sword. The accountability of funds rests on the shoulders of individuals rather than centralized third parties such as brokers or banks. A cryptocurrency investor looking after their own funds must ensure that private keys are kept safe. If private keys are lost, cryptos can become irretrievable.
  • Unexpected taxes. Cryptocurrencies are no longer tax-free assets. Although initially, the tax implications surrounding cryptocurrencies were a legal grey area, many countries have now implemented crypto-tax policies. Due to the potential for capital gains, any time cryptos are spent or sold the sale must be recorded and sent to the appropriate tax authorities.
  • Technically complex. Cryptos and blockchain technology can be a confusing topic for many people. A lack of understanding can lead to mistakes when trying to build a cryptocurrency portfolio, which can be more unforgiving when compared with traditional finance. For example, when sending cryptocurrencies from one wallet to another, if an investor does not use exactly the right crypto wallet address - which is a long string of letters and numbers - there is no guarantee that funds can be recovered.
  • Hacking attempts. As digital assets, cryptos have become an extremely popular target for hackers and malicious characters looking to make money from other people. There have been hundreds of hacking attempts over the short life of the industry. Although security on most exchanges is now cutting edge, there have been hundreds of millions of dollars worth of cryptocurrencies stolen in the past and unlike banks, there is no government insurance to fall back on.
  • Capital loss. Finally, it would be foolish to think that a complete loss of funds could not occur when investing in crypto. This risk increases with the obscurity of cryptocurrencies chosen, however, the risk remains true for all. There is no guarantee that any cryptocurrency, even Bitcoin, will be around in 5 years' time (although we would bet that Bitcoin will likely be one that is).

What Are The Best Crypto To Buy?

There are several thousand cryptocurrencies that now exist within the market. With get-rich-quick headlines capturing people’s attention it can be confusing to decide where to allocate capital.

In terms of capital appreciation, unfortunately, no one can know with absolute certainty which digital assets will be the best ones to buy. An investor can consider how long a cryptocurrency has existed and how well it has performed against the rest of the market, but even then, historic performance is no guarantee of future returns.

However, for those with a long-term mindset, Bitcoin has proven time and time again that it is the safest store of value within the industry. Although the level of capital gains cannot be estimated, with companies and institutions increasingly offering Bitcoin to clients, it is one of the most likely cryptocurrencies to exist 10 years from now.

Alongside capital appreciation, another element to consider is the opportunity for passive income. Many cryptos now provide passive returns, while also still offering the potential for long-term capital gains. For example, some digital assets can be lent to crypto lending platforms or staked in return for yield. These opportunities for passive income could be a useful determining factor when considering which crypto to buy.

Ways of Buying Cryptocurrency

Once decided on investing in crypto, it is important to choose a way to buy it. This refers to the payment method that will be used to convert into crypto using an exchange or broker. Here are a few of the most common ways to buy into crypto.

  • Bank transfers. Most crypto exchanges, trading platforms and brokers will support bank transfers. Common bank transfer options include SEPA in Europe, ACH in the United States, Faster Payments in the U.K, PayID in Australia and SWIFT which is available worldwide. Bank transfers are a preferred option since they provide higher spending limits and low or no processing fees. Depending on the bank, the downside is the processing time which can take 3 to 5 days to arrive at the exchange.
  • Credit and debit cards. Bank cards are simple, safe, and fast payment options for users who lack bank transfers due to local regulations on exchanges. In this case, users must obtain a credit or debit card with a financial institution that accepts transactions for buying crypto. However, using a credit card typically carries a service surcharge ranging from 0% to 5% per transaction.
  • Prepaid cards. These are similar to conventional debit or credit cards, except they don’t rely on a bank or financial institution. Users only need to load their cards with money and proceed. Cardholders can also replenish their prepaid cards when funds are running low. A limited number of crypto exchanges support prepaid cards and can attract higher fees compared to other payment methods.
  • Apple Pay. For iPhone users, an Apple Pay account can be linked to an exchange. It is a simple payment method and the user can manage their transactions and assets from a centralized place. A drawback is that Apple Pay doesn’t support large crypto purchases per day.
  • Gift cards. Users can redeem unused or leftover gift cards, such as from Amazon, through online exchanges to buy crypto. Investors can cash out their crypto profits into the gift cards and spend like money. For example, Binance offers gift cards that can be loaded and spent at merchants or gifted to another person.
  • PayPal. Individuals located in the U.S. and U.K can buy crypto through the PayPal application. There is a minimum wallet balance of $1. In addition, several exchanges such will even allow crypto purchases through PayPal accounts.

How Do You Buy Crypto – Full Tutorial

While there are several ways of buying cryptocurrencies, the process of acquisition is relatively uniform across most platforms.

1. Compare and select a cryptocurrency exchange

Before purchasing any crypto an investor needs to decide which cryptocurrency platform they are going to use. This involves reviewing and comparing cryptocurrency exchanges/brokerages that are supported in the required geographic location. Exchanges such as Coinbase, Binance and Crypto.com offer a wide range of features, products and services that can be beneficial after the initial purchase. Other aspects to keep in mind when selecting an exchange are:

  • Supported countries and accepted fiat currencies
  • Deposit methods and limits
  • All fee types (deposit, trading and withdrawal)
  • Ease of use for all experience levels
  • Trading volume and liquidity (minimize spread and slippage)
  • Industry-standard security measures
  • Live-chat or support desk

For the purpose of this article, we will demonstrate buying crypto using eToro. This is not a specific endorsement of eToro, however, is a suitable platform for many types of investors.

2. Register an account with the exchange

Create an account with eToro. This will involve providing KYC documentation such as a full name, address, and proof of residency. An ID document may also need to be verified by using biometric face scanning. All data provided goes towards abiding by AML and CFT policies. Full access to all features will only be unlocked once an account has been verified.

Creating an account with eToroCreating an account with eToroCreating an account with eToro.

3. Deposit funds to a wallet

Unless buying cryptocurrencies instantly using either a credit or debit card, an investor will need to then deposit fiat currencies onto the platform. Select a payment method that offers the lowest fees per transaction. Typically bank and wire transfers are cheaper than using a credit or debit card, but always verify the fees involved.

For example, eToro users can click ‘Deposit’ on your eToro account to view the available funding options. From the drop-down menu, choose a payment method and enter the minimum deposit amount required. eToro will then provide on-screen instructions to make the deposit.

How to deposit funds to eToroHow to deposit funds to eToroHow to deposit funds to eToro.

4. Buy Crypto

After funds have been deposited, browse the selection of cryptocurrencies available on the selected platform and choose one to buy. Determine how much funds to use and enter the equivalent number of cryptocurrencies. Review the going exchange rate and any fees involved. Finally, finalize the transaction by clicking the “buy” button.

Buying crypto with eToroBuying crypto with eToroBuying crypto with eToro.

Where To Store Cryptocurrency

While crypto exchanges will generally feature bank-like security measures, the best way to store crypto after purchasing is within a separate wallet. The two main methods to hold crypto are software and hardware wallets.

  1. Software or mobile wallet. Often referred to as 'hot wallets, these wallets store crypto on devices such as mobile phones, computers and apps. They are highly convenient, accessible, available and easy to use. The downside is they have a risk of theft as it is still connected to the internet.
  2. Hardware wallet. The devices are small compact devices that store the unique encrypted private key that gives access to the wallet. The stored crypto is disconnected from the internet. For more information, read our guide on the best crypto hardware wallets.

Frequency Asked Questions

Using a cryptocurrency exchange and broker is the best way to buy crypto. Cryptocurrency exchanges match buyers with sellers, while crypto brokers fulfill the other side of all trades. However, many platforms now combine elements of both. The best platforms are always designed to help new investors navigate the cryptocurrency space. Top crypto platforms should also support a range of cryptocurrencies, a range of fiat currencies, and a range of payment methods.

For beginners starting out in the cryptocurrency industry, Bitcoin would likely be the best cryptocurrency to invest in. It was the first cryptocurrency to be created and has stood the test of time for over a decade. Bitcoin can also be traded for several other cryptocurrencies if an investor wishes to change a portfolio in the future. Even if the first purchase is to understand the basics and become comfortable with procedures, Bitcoin is a good place to start.

Yes, cryptocurrencies can be purchased in extremely small amounts. For example, the smallest unit of Bitcoin is called a satoshi, which represents 100 millionths of a Bitcoin. In other words, an investor would need to hold 100 million satoshis to own 1 whole coin. The only restrictions in place will be from a fiat currency perspective, as an exchange or broker may require at least $1 worth of cryptocurrencies to be purchased.

After a crypto exchange or broker account has been established and verified, buying cryptocurrency can often be completed instantly. Many service providers offer instant buy options, however, it is worth bearing in mind that instant buy methods like credit cards usually come with a slightly higher fee. Bank transfers are usually the most economic type of payment method but transferring fiat funds to a crypto platform can take anywhere between 1 to 5 business days.

Conclusion

We hope this guide gives you useful insight into the process of buying cryptocurrency. As with all investments, it is important to consider both the pros and cons and determine your reasons for wanting to get involved with the industry. Once those conditions have been satisfied, make sure that you select a cryptocurrency platform that is suitable for your needs. Read reviews, understand what security procedures are implemented, and make sure cryptocurrencies of interest are supported.

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James HendyJames HendyJames Hendy

James has been involved in the cryptocurrency markets since 2018. He is a sought-after crypto writer that has published works for many cryptocurrency exchanges, fintech platforms, financial publications and investment disruptors worldwide. James work has been featured on the comparison website Finder and Real Vision covering topics in finance, business and the global economy.

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