Regardless of the source of buying cryptocurrencies, you should always be wary about the risks inherent in making an investment in these digital assets.
This is primarily due to the volatility of these currencies which is much more than the tried and tested investments made in bonds, stocks, and mutual funds.
Therefore, it is better to know the best ways to buy cryptocurrencies so that you feel the fun and excitement in exploring and making a new investment. Ideally, there are two rules of thumb to follow, which are:
- Never buy cryptocurrencies if you cannot afford to lose, and
- Do not invest more than 10% of your portfolio in it.
However, those are all about the initial considerations for all to make. Here are the best ways that you should follow to buy cryptocurrencies, especially if this is your first time.
Best Ways to Buy Cryptocurrencies?
You will not only need to buy cryptocurrencies in the best possible and most secure ways, but you will also need to manage it well to gain profits. Here are a few ways to follow as suggested by crypto experts.
Where to Buy?
The most important thing to consider while buying cryptocurrencies is to select a reliable source to buy it. There are lots of ways and sources from where you can buy cryptocurrencies.
For example, you can buy them from a stockbroker, from other owners, and even from several different reliable online trading exchanges such as Binance.
If you wish to buy it from the cryptocurrency exchanges, make sure you consider the following:
- The percentage of the purchase price they may charge as fees
- The payment options offered
- Their daily trading volume
- They ranks and
- Ease of use.
If you choose a traditional stockbroker, make sure that they are licensed and allowed to operate in your state of domicile, since all states in the nation may not accept cryptocurrencies. Also, be aware of the fees that they charge.
Other sources from where you can buy cryptocurrencies, especially if you are interested in investing in Bitcoin, the most popular form of it, include:
- Bitcoin ATMs
- Peer-to-peer owners and tools like Bitquick, Bisq, and others (with extreme caution) and
- Bitcoin futures (if you are a pro and not amateur).
You can also use funds of any digital currency asset manager available in your region to buy and manage cryptocurrencies, and not need to worry about wallets and storage.
These agencies usually trade publicly over the counter. This means that you can make a purchase from any discount broker. However, check their trading fees because in most of the cases they trade at a premium.
Keep all Information Handy
The next step to follow is to get knowledgeable before you create your crypto account, which is a necessity for buying cryptocurrencies.
You should have all the relevant information handy that is necessary to create your crypto account and start making such an investment. Such information will help you to set up your trading account in minutes. It includes:
- Your Social Security Number
- The number to your bank account
- Debit card or credit card to fund your account.
You may also need to provide a photo ID depending on the requirements of the providers. Also, keep a record and protect the passwords for your cryptocurrency account and digital wallet.
Use of Credit Card
While making your purchase, try not to use your credit card for it, even though the provider allows using it. It is never a good idea at all to invest in a risky product by borrowing money from a high-interest source like a credit card.
This is because Bitcoin and other forms of cryptocurrency investments are not insured by the Securities Investor Protection Corporation. This means that your investment is not protected against theft, technical glitches, or exchange failures.
Yes, there are a few specific cryptocurrency exchanges such as Coinbase that offer private insurance, but this will not provide full coverage especially for any individual online breaches such as someone hacking your account or stealing your password.
Therefore, use your credit card at your own risk.
Use Secure Internet Connection
It is always advised that you use a private internet connection while buying cryptocurrencies through your crypto account.
This will be most secure and is an important aspect to consider whenever you make any financial decisions online.
Buying cryptocurrencies from your hotel room or while being in a coffee shop using public internet connections is not safe at all and therefore is not recommended to link your digital wallet to the crypto exchange.
Decide the Amount
The final step to follow while buying cryptocurrencies is to know how much of the digital asset you really want and afford to buy.
Never be tempted by the high price and promise of returns. Be wise and start investing initially by buying fractional shares. This will keep your investment quite low and therefore minimize the risks.
Once you gain experience in crypto trading and have confidence in your transactions made through the online platform, you can raise the bar gradually. Know the reasons why crypto prices are going up.
It is always prudent to be wise and cautious while buying cryptocurrencies. The above ways will help you to plan ahead and be ready to deal with the complex tax situation that your investments in crypto and returns on it will create.