At its heart, cryptocurrency is a digital currency that can be used over the Internet.
Cryptocurrency offers a first-class alternative to traditional financial system and offers huge advantages over existing payment methods and asset classes.
Like the US dollar, cryptocurrencies can typically be used to pay for goods or services.
How to Purchase Cryptocurrency
It can seem confusing for a beginner crypto investor to buy bitcoin, Ethereum and Litecoin. But it’s quite easy.
The Pros and Con’s of Cryptocurrency
There are pros
- massive returns potential
- Immediate settlement for international transactions
- Liquidity increased
- Diversification
- Payment fraud protection
- Clear execution direction
- There is no fraud or scam
- Secure and private
Cons
- Black market activity
- Refunds not possible
- High volatility and potential for large losses
- Cyber hacking
- Unbacked, unregulated
- Potent network stall
These are the steps to buy or sell cryptocurrency.
Step 1. Choose a cryptocurrency exchange/brokers
There are many options for buying bitcoins or any other cryptocurrency. These include traditional brokerage services and crypto exchanges.
Brokerages online
Online brokerages let you buy digital assets, such as ETFs and stocks.
They also provide 529 college savings plans, IRAs and trusts. Retail investors can purchase Bitcoin and other altcoins via a regular brokerage account.
A handful of online brokers provide ways for you to buy cryptocurrency along with other assets.
Traditional brokers make it simple to buy crypto.
Many online brokers have higher fees than the exchanges. Some brokers claim to offer free services, but they make money when you sell information about your crypto investments to brokerages.
You can buy bitcoins online, but you will find fewer features and trading costs with an online brokerage.
Robinhood, a mainstream broker for investment, was the first to provide customers with ways to purchase and sell Bitcoins.
Crypto Exchanges
An exchange for cryptocurrency is a platform where buyers and sellers can trade crypto.
While cryptocurrency exchanges charge relatively little, they offer more advanced performance charts and more sophisticated interfaces for many trade types. This can make it intimidating for new investors.
Some exchanges do not offer all cryptocurrency.
You can buy Bitcoin (BTC) and other cryptocurrencies like Ethereum(ETH) and Litecoin (LTC) on most exchanges.
While it’s relatively simple to use Centralized crypto exchanges for buying crypto assets, their large number makes them attractive to hackers.
Because their fees are less than those of centralized platforms, decentralized exchanges can be more appealing to sophisticated investors.
Many exchanges place restrictions on where users can buy cryptocurrency. Certain residents of some states are prohibited from using their platform for regulatory reasons.
With most exchanges, you’ll be able to connect a debit card or a traditional account to transfer fiat currency into your exchange account. You will be charged different fees depending on the method you choose to fund your account. Bank transfers usually cost more than cards.
Due to fraud risks, not all cryptocurrency exchanges permit you to buy bitcoin and other investments using credit cards.
This decision by the exchange may work in the customers’ best interest as credit card processing can add additional charges onto such transactions. Crypto purchases are processed by credit card companies as cash advances.
Some exchanges provide wallet options that allow you to quickly and securely transfer digital assets from an exchange account.
The spread, or margin that is added to the market price can also be charged by these exchanges.
Binance and Coinbase are two popular cryptocurrency exchanges. They offer trading options that include Bitcoin Cash, Litecoin and Ethereum.
CoinStats doesn’t offer any advisory services or make recommendations to buy or sell stocks or cryptocurrency.
Step #2: Open your account
Next, open an account once you have chosen the brokerage or cryptocurrency exchanges that you would like to use.
It depends on what platform you choose and how many bitcoins/altcoins that you are looking to purchase, but you may need to prove your identity. This step is essential to comply with regulations and prevent fraud.
Once you have completed the verification process, you will not be able to buy or sell cryptocurrency.
Many exchanges require submitting a passport or driver’s license, and some may even ask you to upload a picture to prove you match the documents you’ve submitted.
Step #3: Fund your account
To trade, you will first need to fund the account. For most platforms, investors can use a debit/credit card to fund their account and buy cryptocurrencies. This varies from one platform to the next.
Crypto/Bank account
The government does not insure crypto accounts. You are not required to reimburse the government if your crypto account is stolen or lost by a third party company.
By linking the account to your existing account, by paying with a debit or credit card, or authorizing wire transfers, funds can be transferred into your cryptocurrency account.
The first thing that many investors do in crypto is to buy bitcoin. While you will need a bank card to purchase bitcoins, that isn’t the only way to trade cryptocurrencies.
If moving crypto holdings from your traditional account into a crypto account is something you’re considering, it is vital to understand the differences. While cryptocurrency accounts provide less protection, they also offer more.
FDIC insurance, interest rates, protection against fraud and hacking, customer support, and availability of currencies are just a few things to consider.
It is different from buying cryptocurrency. Funding an account does not mean that you will be able to purchase it. As with conventional investing, it is important to invest the money you have in your account.
You will need to trade your currency for dollars and euros once your account has been funded.
Step #4: Order your crypto
Now you are ready to order your first bitcoin and purchase it once your money is available. This process differs depending on the crypto exchange you’re using.
Coinbase allows you to enter the amount of dollars you wish to trade in Bitcoin, and then you can buy Bitcoin at the current rate.
The price of your transaction will depend on the type and order that you place. You can choose from three kinds of orders: Market orders, stop orders, or limit orders.
Only a small fraction of cryptocurrency shares can be purchased on certain brokerages or exchanges.
Step 5: Select a storage system
Typically, bitcoin is stored after you have purchased it. But, there are other safe options available. Cryptocurrency wallets can be a good choice.
Crypto wallets are a great way for investors to keep their assets safe.
You can store your private keys securely in crypto wallets, which are either online software or physically-based devices. You have two options when it comes to choosing a digital wallet for bitcoin.
Check out these hot wallets
Hot wallets are also called online wallets and can be stored online. They run on any internet device such as smartphones or computers.
A hot wallet can be convenient but there are greater chances of theft because they are connected to the internet.
As long as strong passwords and two-factor authentication are used, a hot wallet can remain secure.
Cold wallets
Cold wallets are smaller, more portable, encrypted devices that let you carry your bitcoins around, unlike a hot wallet.
Because a cold wallet isn’t connected to the internet, it is a more secure option for storing your cryptocurrencies.
A cold wallet is something you should be cautious about. If your device fails or the keycode goes missing, it could mean that you never get your cryptocurrency back. The same could happen with hot wallets, but the custodians who run them help get your account back if you’re locked out.
Transactions with a hot wallet are typically faster; however, a cold wallet can take longer but it will help to keep your assets more secure.
Many providers have different fees.
There are many options available: Electrum and Blockchain, Mycelium and the CoinStats Wallet.
Crypto Assets
Since Bitcoin’s release, cryptocurrency usage has exploded.
Although the exact number of the functional currency fluctuates and the individual currencies’ values are incredibly volatile, the global market value of all active cryptocurrencies is generally upward trending.
These are the most popular cryptocurrency in circulation right now
Layer 0 Tokens
As the foundation of most blockchain protocols, Layer 0 protocols can be described as:
Cosmos (ATOM)
Cosmos aims to establish a decentralized network of blockchains. Cosmos uses ATOM as its native cryptocurrency.
ATOM holders need to place their tokens for the network’s continued operation. In return, they will receive additional tokens.
Cardano (ADA)
Cardano, which is blockchain-based and based on a Proof of-stake consensus protocol allows for transactions to be approved without high energy consumption.
ADA was named for Ada Lovelace (a 19th-century mathematician), and is the native token in the blockchain protocol.
Layer 1 Tokens
A layer one protocol or an implementation in layer refers to a system associated with a blockchain network’s main or base architecture.
The entire network’s parameters and rules, such as transaction throughput, block time, and consensus algorithm, are set by a layer one protocol.
Here are some examples for layer one protocol tokens.
Bitcoin (BTC).
A group of software developers created Bitcoin to allow them to control their digital money supply without any government oversight.
Bitcoin is becoming a legal means to exchange money. Many companies are familiar with Bitcoin and accept payment in Bitcoin. However, most partners work with an exchange that converts Bitcoin into fiat currency to receive their funds.
Ethereum (ETH)
Ethereum was founded in 2015. The blockchain platform supports several cryptocurrencies and decentralized applications. After Bitcoin, Ether is second in market capital and second-most popular virtual currency.
The ETH coin, also known as Ethereum, is a cryptocurrency that is powered by blockchain technology.
Litecoin, (LTC).
Litecoin, which was created two years ago after Bitcoin (2011) by Charlie Lee, an ex-Google engineer and is based upon an open-source global payments network. It’s not under the control of any central authority.
LTC holders can use it to purchase goods or services through payment processors who accept bitcoins and other cryptocurrency on merchants’ behalf.
Dogecoin, (DOGE).
Dogecoin can be described as a variant of Litecoin. Its casual appearance suits the crypto community’s mood.
DOGE, like all digital currencies, has a floating rate of exchange and can be exchanged for cash, physical goods, or traded.
Basic Attention Tokens (BAT).
Brendan Rich (co-founder Firefox and Mozilla) created the Basic Attention Token to enhance fairness and efficiency through blockchain technology.
BAT, the Brave native token, is used to get many different services.
MakerDao (DAI)
DAI was created and is controlled by Maker DAO (Decentralised Autonomous Organisation). It’s a fully collateralized, stablecoin that aims to combat the volatility of digital currencies. DAI has a fixed value equal to one U.S. Dollar.
DAI clients do not need to go through a credit cycle, where banks or other monetary organizations assess their credit. Instead, they can set up Ether and receive DAI.
Stellar (XLM)
Stellar is an international decentralised payment network that aims to connect individuals, financial institutions, and payments systems using blockchain technology. This will drastically cut the processing time and transaction costs required for cross border transfers.
Stellar Development Foundation native asset XLM. Stellar lumens (XLM), a cryptographic liquid equivalent to cash, allows for fast remittances and low-fee international payments.
Ankr, (ANKR).
Ankr, a Distributed Cloud Computing Network was launched as Ankr in 2017. It allows you to use excess computing capacity from other machines than one provider.
ANKR (the native cryptocurrency) is used as a payment option across Ankr for API services, node deployment, insurance and participation in on-chain governance.
USDT Tether
Tether is a cryptocurrency based on blockchain and has been endorsed by U.S. dollars. Most cryptocurrency’s value fluctuates based on market demand or supply.
USDT tokens can be purchased by design and are worth one USD. To avoid the risk associated with investing in stock markets, Tether can be a great option.
Quant (QNT)
Launched in June 2018, the quant project aimed to guarantee seamless interoperability between numerous blockchains and link networks on an international scale without lessening the network’s efficiency.
The native token for the quant project is QNT. It provides digital access (MApps) to specific applications or services.
Shiba Inu (SHIB)
Shiba Inu, (SHIB), is a secure decentralized meme token which was launched as an ERC-20 token for the Ethereum Blockchain.
Name SHIB is a Japanese breed of dog Shiba Inu. As an important pet trait, its loyal investors are guaranteed loyalty.
Bitcoin S.V. (BSV)
Bitcoin S.V. is Satoshi Vision’s representative and it was born from bitcoin cash. declares itself to be the “original Bitcoin,” which represents the purest form of the original version of the bitcoin protocol by Satoshi Nakamoto.
BSV is committed to security, stability and scalability.
Uniswap
Uniswap is an Ethereum-based, decentralized trading platform that aims at solving the liquidity problem in decentralized markets by allowing token traders to make their own liquidity.
UNI, the governance token of Uniswap, allows its owners to participate in network and policy upgrades.
Tron (TRX)
Tron is a blockchain protocol decentralized that allows for easy and cost-effective digital content sharing. Tron has over 50 million users and is now a worldwide phenomenon.
Tronix tokens or TRX is the native cryptocurrency used for payment to content creators in order to gain access to their applications. Tron doesn’t require content creators to pay a transaction fee.
USD Coin (USDC),
USD Coin, a stablecoin and dollar-denominated currency that runs on Ethereum’s blockchain is the USD Coin. USDCs are backed by 1 USDC. They can be deposited in bank accounts.
USDC is managed by Centre. This is an association-based consortium which sets technical, financial and policy standards for USD stablecoins.
Stratis (STRAX)
Stratis is a blockchain-as-a-service (BaaS) consultancy and platform that enables enterprise businesses to test, create and deploy blockchain-based applications without utilizing their networks.
STRAX token powers the Stratus network. Users can use it to purchase tokens and earn staking rewards.
Chiliz (CHZ)
CHZ is the cryptocurrency of the Socios platform, a blockchain-based sports engagement platform, where fans can buy branded NFTs to show their favorite artists, athletes, and teams’ support.
Near (NEAR)
NEAR is the Near protocol’s utility token, a smart contract-capable blockchain aimed at addressing the limitations of competing systems, such as poor cross-compatibility, low transaction speeds, and limited transaction throughput.
VeThor (VTHO).
VeChain Thor’s blockchain uses a dual-based token system: VeChain Thor energy tokens (VTHO), and VeChain token (VET). The VeChain Thor network is a blockchain-as-a-Service platform that makes data transparent and facilitates enterprise users utilizing smart chips.
Frax (Frax Share).
Frax Share is the native governance token of the Frax Protocol. The Frax Protocol’s first fractional algorithmic stablecoin was created to replace fixed-supply crypto assets with decentralized, scalable algorithmic money.
Compound (COMP).
Compound, a blockchain-based decentralized lending platform, is available on Ethereum. The native currency of Compound is the ERC-20 token COMP. It’s a reward to protocol users who participate in it.
Chainlink (LINK).
Chainlink, a distributed oracle network, allows smart contract platforms and public Blockchains to bring off-chain external data sources for on-chain operators. LINK is native token Chainlinks uses to pay oracle’s or the network’s node operators for providing secure data feeds.
Terra Luna
Terra Protocol uses blockchain technology to power price-stable, global payments systems using algorithmic stablecoins.
Terra and LUNA represent the two cryptocurrencies in the Terra Protocol.
Ren
REN, the Ethereum token that powers the Ren protocol allows for fast contract execution and communication. Ren is known for its speed and scalability. This led many investors to include the REN coin in their portfolio.
Gala (GALA).
Gala is an NFT platform, game and NFT platform aiming to create an ecosystem for blockchain games.
The platform GALA allows users to use the functional token as a means of participating in governance, purchasing NFTs, in-game goods in the gala shop, or rewarding node operators.
Decentralization (MANA).
MANA (the governance token and cryptocurrency user of Decentraland) is used to buy and control virtual items such as goods, services and land.
Sandbox (SAND).
Sandbox, a game-to-earn on blockchain is similar to Roblox or Minecraft’s decentralized finance versions. Sandbox uses the native token SAND.
Enjin Coin(ENJ)
ENJ stands for Enjin’s native token. Since 2017, it has allowed its users the ability to create F.T.s, NFTs, and other financial products.
Prometheus Coin(PROM)
The utility token for the Prometheus Network is PROM. Prometheus Network is completely decentralized and solves all data brokerage problems.
Qredo (QRDO)
QRDO token serves as a governance token. It also provides utility for Qredo. It drives the network’s user adoption by rewarding users with its user-centric incentive structure.
Plex (PLEX).
Mineplex’s native token is called PLEX and it is used to fund its new-generation mobile crypto bank.
Bitcoin Gold (BTG).
BTG, or bitcoin gold, was formed from Bitcoin. It split from the bitcoin blockchain on October 2017. BTG’s original purpose was to restore bitcoin’s decentralized mining.
Bitcoin Cash (BCH)
Bitcoin cash was created to be faster than the original bitcoin in transaction speed, and allow for larger block sizes. In August 2017, the Bitcoin Cash cryptocurrency was created by developers.
Cake Swap
PancakeSwap’s utility token, CAKE, can be used for a variety of purposes, including yield farming and staking. It also allows you to vote through the PancakeSwap community governance Portal.
Solana (SOL)
SOL is a new cryptocurrency that has just been launched. It’s the native token for the Solana network. SOL can be used for transactions and gas, such as when users interact with smart contracts.
Algorand, ALGO
ALGO, the cryptocurrency for the open-source decentralized blockchain network Algorand is called. Algorand combines traditional and decentralized finance in order to offer instant transaction closure by leveraging a special variation of the POS consensus mechanism.
Uma(UMA)
UMA, or Universal Market Access, is a platform for decentralizing financial transactions. It allows users to establish, manage and settle financial contracts using coins listed on multiple crypto exchanges. Unlike most cryptocurrencies, UMA cannot be purchased directly with fiat money; you’ll need to buy crypto and transfer it to an exchange that offers UMA for trade.
Aave(AAVE)
AAVE token holders enjoy governance rights on the network. Real-time interest earning is possible with the Aave protocol. Deposits are tokenized using aTokens and issued in a 1:3 ratio.
SafeMoon
SafeMoon, which was founded in March 2021, now boasts an impressive user and investor count of almost two million. The owners of SafeMoon are uniquely rewarded. Investors selling their SafeMoon token reserves will have to pay a heavy exit fee of 10%.
Amp
Amp, a cryptocurrency which gained huge popularity in 2021. The ERC-20 token Amp implements Ethereum’s latest technologies and provides unprecedented capabilities via its collateral management interface.
Binance Coin (BNB).
Binance Coin, also known as BNB (Binance coin), is the currency that Binance Cryptocurrency Exchange uses. The Binance Smart Chain hosts it, but initially the Ethereum blockchain was used. Binance is the cryptocurrency exchange that issues Binance Coin, which has the trade symbol BNB.
Layer 2 Tokens
Sometimes referred to as layer 2 protocols (or off-chain blockchain protocol), these protocols are placed on top of one another in order to offer scalability and interoperable features.
These are just a few layer two tokens.
Polygon(MATIC)
Polygon was originally called MATIC. This scaling-solution increases the efficiency and speed the Ethereum network using Layer 2 sidechains. The polygons network’s transaction processing speed is enhanced, which reduces the gas fee.
Bancor Network Token (BNT)
A virtual reserve currency called the bancor network token (BNT), is an automated exchange mechanism that allows prices to be controlled and trade volumes to be automatically adjusted through the platform. BNT, the reserve currency of all tokens on the Bancor Network is used.
Conclusion
Cryptocurrencies, which are highly volatile, can make investments more risky than other types of investment, like stocks or bonds or mutual funds.
If you’re new to investing, it is a good rule of thumb to invest no more than 10% of your portfolio in risky assets like Bitcoin or individual stocks.
According to Andy Rosen of the Boston Globe, one needs to consider if he’s in an excellent position to buy crypto and market research before he ventures into investing in cryptocurrencies.