The cryptocurrency market has been on a steady rise since October 2020. As of this writing, stablecoin powerhouse Bitcoin has reached a value of about $19,400 per coin as it steadily approaches its all-time high of $19,665. This price increase has brought value to a wide range of other cryptocurrency options along with it, providing investors with a plethora of affordable coin offerings.
If you’re thinking about investing in the cryptocurrency market, it’s never been easier to make your first crypto purchase. Before you begin, you’ll need to choose which cryptocurrency to buy, where you’d like to invest and where you’d like to store your coins. Our guide will help you get started buying, selling and trading cryptocurrency — no matter which coins you’re interested in.
Step 1: Open an Account.
Though the cryptocurrency market is decentralized, it’s much easier, faster and safer to purchase cryptocurrencies using a trading platform when compared to purchasing coins directly from other investors or waiting for an initial public offering. A cryptocurrency broker operates in much the same method as a stock brokerage platform. You’ll place orders using your broker’s platform, and your broker will fill them on your behalf, sometimes in exchange for a fee or commission. After your transaction closes, you’ll see your coins in your brokerage account.
The cryptocurrency broker you choose will dictate your investing experience. Some factors you might want to consider before you choose where to open your account might include:
- Coins available: There are thousands of cryptocurrencies trading online, and no single broker offers access to every coin on the market. Review each broker’s list of available coins before you open an account. It can help to do a bit of research on the coins you’re interested in before you open a brokerage account so you can be sure that your broker offers access to everything you need.
- Additional asset availability: Some brokers (like Coinbase and Kraken) focus entirely on offering you access to the cryptocurrency market. Other brokers (like Webull and Robinhood) offer access to other assets — precious metals, stocks and exchange-traded funds — with cryptocurrency offerings.
Limiting offerings only to cryptocurrencies isn’t necessarily a bad thing. If you’re looking for the widest range of coins supported, you might want to consider a broker that specializes in crypto. If you want a 1-stop-shop for all of your investing needs, you’ll be better off with a full-service broker. Consider your individual needs before you decide where to open an account.
- Trading tools: Do you plan to invest frequently and trade on a day-to-day basis? Or do you plan to invest infrequently and hold your coins in the long term? Your trading preferences and style will dictate which type of trading platform is best for you. If you plan on trading frequently, you might want to consider a platform that offers a wide range of order types and analysis tools. If you plan on investing in the long-term and holding your coins, you might want to choose a platform with an easy, intuitive ordering system.
Some brokers, like Binance US, provide investors with a wide range of unique trading tools.
Once you choose a broker that has everything that you need, follow the broker’s instructions to open your account. You’ll typically need to provide a bit of personal information before your broker can provide you with trading access.
Best Cryptocurrency Platforms
Not sure where to open your account or even begin comparing platforms? Start your search with a few of our favorite cryptocurrency brokers below.
Step 2: Select Your Digital Currency.
Once you open your brokerage account, it’s time to choose which digital currency you’d like to invest in. Start by viewing your broker’s list of available currencies and the current market prices of each coin. Some factors you might want to consider when you compare crypto offerings could include:
- Your personal risk tolerance: Though the entirety of the cryptocurrency market is significantly more volatile than regulated markets (like the New York Stock Exchange or the forex market), some currencies hold their values more consistently than others. Bitcoin and Ethereum are among the oldest cryptocurrencies and tend to balance the potential for growth and stability well. If you’re looking for maximum stability, you might consider a “stablecoin” (a coin tied to an underlying asset) like Tether or USD Coin. While these coins are unlikely to drastically move in value, they have limited potential for profit.
Smaller coin offerings (like Ripple or Chainlink) are popular among investors because they show more volatility and potential for profits. Remember that these coins, however, can also lose value just as quickly. Be sure to do your due diligence before investing in a smaller coin.
- Daily trading volume: If you plan to engage in short-term trading, you’ll want to search for a coin with a larger daily trading volume. A high daily trading volume makes it easier to liquidate your coins when you decide to take profits.
- Underlying technology: Most cryptocurrencies have underlying technology that inspires investors to buy a particular coin or token. If you’re interested in learning more about the benefits of a coin, research the crypto’s white paper, which is a publicly available document that outlines the purpose and technology behind a cryptocurrency.
Once you decide which token to invest in, fund your brokerage account and place an order through your broker.
Not sure which cryptocurrency to invest in? Consider a few of our favorite cryptocurrency offerings below.
Step 3: Deposit Cryptocurrency into a Wallet.
After your broker executes your order, you’ll see your coins in your brokerage account. Depending on which cryptocurrency you’re buying and the volume of your order, it may take a few seconds to a few minutes to execute your order in most cases.
After your order is executed, transfer your cryptocurrency to a secure wallet. A wallet ensures that only you have access to your coins and provides another layer of protection to your investment. After selecting a digital wallet, search for your wallet address. Your wallet address should be a long string of numbers and characters.
Copy your wallet address exactly and initiate a transfer from your brokerage account to your wallet. Be 100% certain that you have the correct wallet address before you initiate the transfer. You might even want to copy your wallet address and send a small amount of crypto before initiating the remainder of your transaction. This is because it is virtually impossible to get your cryptocurrency back if you send it to the wrong wallet address.
Best Crypto Wallets
If you don’t already have a cryptocurrency wallet, consider a few of our favorite wallet offerings.
If you want to buy and sell cryptocurrencies frequently, it can be expensive, time-consuming and inconvenient to convert your tokens back to fiat currency after each trade. Trading cryptocurrencies involves converting your fiat currency into the crypto you’re interested in buying, waiting for the currency to rise in value and then converting back to a stablecoin to take your profits.
After you initially fund your account, you’ll convert your stablecoin to the crypto you’re trading and sell the crypto in exchange for the stablecoin each time you want to trade. This allows your order to be executed more quickly, and can often save you money on fees. If you prefer, most brokers also allow you to convert Bitcoin and Ethereum directly into a range of currencies even though neither coin is pegged to an underlying asset. When you decide to cash out, you can convert a percentage of your stablecoin into fiat currency.
Best Online Crypto Brokers
Trading cryptocurrencies is a bit more complicated than funding your account with fiat currency, investing and holding your cryptocurrency. Fees and transaction spreads are particularly important to investors who plan on making a large number of trades. Explore a few of our favorite brokers for frequent crypto trading below.
Depends on security and leverage
$50 for US and Australia; $200 everywhere else
Depends on security and leverage
$50 for US and Australia; $200 everywhere else
1 Minute Review
eToro, headquartered in Cyprus, England and Israel, has provided forex products and other CFD derivatives to retail clients since 2007. A major eToro plus is its social trading operations, including OpenBook, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its lack of tradable currency pairs and underwhelming research and customer service features
- U.S.-based cryptocurrency traders
- Social and copy traders
- Simple user interface
- Community engagement and following other traders
- Expansive network of social trading features
- Large client base for new traders to imitate
- U.S. traders can only buy cryptocurrency
- Only 15 cryptocurrency pairs available
0.50% per sale
1 Minute Review
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
Adding Cryptocurrencies to Your Portfolio
Cryptocurrencies can add a truly unique level of diversification to any investment portfolio. The cryptocurrency market is not regulated by a government body — there are no value guarantees on any of your crypto investments. Its risk can be high; it’s possible to lose all of the money that you invest, and if this occurs, you have no recourse to gain it back.
Never invest more money than you can afford to lose in any cryptocurrency, no matter how promising it appears.