What to look for when investing in cryptocurrency

10.06.2019
10.06.2019
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what to look for when investing in cryptocurrency

5 Things to Consider Before Investing in Cryptocurrency · 1. Never invest more than you can afford to lose · 2. Conduct your own research · 3. Use. It's not meant to serve as a cheerleader for cryptocurrencies, and instead works as an informational tool on what you need to know about the coins and how you. We suggest that clients who are interested in cryptocurrency approach them as speculative investments and consider their goals as well as the risks involved. what to look for when investing in cryptocurrency

What is cryptocurrency copy trading and is it worth the risk for beginners?

This shows that cryptocurrencies are extremely volatile. The cryptocurrency market thrives on speculation. Investors place speculative bets that cause a sudden influx of money or a sudden outgo, leading to high volatility.

Additionally, the crypto market is seen as a way to earn quick profits. Part-timers come with a hope of making quick gains but sometimes when that does not happen, they lose patience and withdraw from it, what to look for when investing in cryptocurrency. This recurring involvement and withdrawal contribute to the volatility of digital what to look for when investing in cryptocurrency it a legal tender in India?

At the moment, there is no legislature that covers cryptocurrencies in India. But this doesn’t mean what to look for when investing in cryptocurrency owning cryptocurrencies is illegal.

Meanwhile, India is yet to table the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will lay down the regulatory framework for the launch of an “official digital currency”, it was to be introduced in Parliament’s Budget session, but was held up as the government continues discussions with stakeholders. So far, only a few countries have accepted cryptocurrencies as legal tender and the list is expected to remain small.

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Buying digital currencies like Bitcoin, Dogecoin, and Cardano is now a simple and burden-free process.

All you need to do is open an account with a trusted cryptocurrency broker that offers low fees – make a deposit, and decide how many tokens you wish to buy.

In this beginner’s guide, we explain how to buy cryptocurrency in great detail – covering the step-by-step investment process alongside an overview of the best exchanges to consider.

How to Buy Cryptocurrency – Quick Guide

✅ Step 1: Open an eToro account
eToro is the best place to buy cryptocurrency in terms of fees, SEC regulation, and low minimums. Open an account with eToro to get the process started.
💳 Step 2: Deposit Funds
When you deposit USD at eToro – no fees apply using debit/credit cards, e-wallets, or bank transfers. The minimum deposit is just $10.
🔎 Step 3: Search for Cryptocurrency
eToro supports over 40+ cryptocurrency assets. You can use the search bar at the top of the page to find the cryptocurrency you what to look for when investing in cryptocurrency to buy.
🛒 Step 4: Buy Cryptocurrency
Finally – in the ‘Amount’ box, what to look for when investing in cryptocurrency, you need to specify the size of your cryptocurrency investment, before clicking on ‘Open Trade’.

In the following sections of this guide, we explain the process of how to buy crypto in a more detailed way.

Where to Buy Cryptocurrency

It goes without saying that in order to buy cryptocurrency online, you need to have an account with a broker or exchange.

When deciding where to buy cryptocurrency – your chosen platform should offer low fees, your preferred payment method, small account minimums, and of course – a strong regulatory framework. So, whether you’re looking to buy the Graph, XRP, or Ethereum, you’ll need to choose an exchange or broker that matches your trading needs and financial goals.

Below, we review a selection of top-rated platforms that allow you to buy cryptocurrency safely and cost-effectively.

1. eToro – Overall Best Platform to Buy Cryptocurrency in 2022

what to look for when investing in cryptocurrency won’t find a better online broker to buy cryptocurrency than eToro – which offers a safe, low-cost, and budget-friendly way to invest. First, this innovative social trading platform is regulated by several tier-one licensing bodies – which include the SEC in addition to the FCA, ASIC, and CySEC. Moreover, what to look for when investing in cryptocurrency, eToro is a member of FINRA.

You only need to deposit $10 to open an account at this broker – which is ideal for those wishing to invest small amounts of money, what to look for when investing in cryptocurrency. Similarly, the minimum cryptocurrency purchase permitted at eToro is also $10. Supported cryptocurrencies are plentiful at eToro, with more than 50+ digital assets available to buy. Therefore you can buy Dogecoin on eToro as well as other popular altcoins with low fees.

This covers large-cap tokens as well as several DeFi coins. For instance, you could buy Solana or you could buy Axie Infinity with a tight transaction fee of just 1% on eToro.

etoro platform screenshot

eToro really stands out when it comes to fees. For instance, US clients can deposit funds without paying any fees at all – which covers debit/credit cards, e-wallets, and bank transfers. When you buy and sell cryptocurrency here, you only need to cover the spread – which starts at just 0.75%. Furthermore, USD withdrawals are also free.

If you’re interested in cryptocurrency but have little experience in this space – eToro offers a Smart Portfolio that manages your investments on your behalf. The portfolio in question will cover more than a dozen digital assets – which will be rebalanced regularly by the eToro team.

Alternatively, you can choose to copy top crypto traders on the eToro platform. The copy trading tool allows you to instantly copy the portfolios of any crypto trader on the platform, and you can access in-depth statistics on their performance all for no extra what to look for when investing in cryptocurrency Finally, eToro also offers a top-rated mobile app – which is available on both iOS and Android. This means you can gain exposure to the crypto market directly from your smartphone device and buy Celo and other exciting new altcoins with tight spreads and low fees.

Buy Crypto on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

2. Coinbase – Good Place to Buy Cryptocurrency for Beginners

Launched in 2012, Coinbase is a large cryptocurrency exchange and broker based in the US. With millions of customers using Coinbase to buy and sell cryptocurrency – the platform is often the preferred provider for beginners. This is because Coinbase is simple to use and it supports small investments.

On the other hand, Coinbase is expensive – especially when it comes to debit/credit card payments. That is, what to look for when investing in cryptocurrency, by using your Visa or MasterCard to buy cryptocurrency instantly, Coinbase will charge you almost 4%. Standard commissions at this platform are also pricey at 1.49% per slide.

coinbase platform screenshot

On the flip side, you can deposit US dollars via ACH without paying any fees. Moreover, Coinbase offers a relatively broad selection of cryptocurrencies to choose from – you can diversify well here. We also like that Coinbase is regulated – and that it keeps 98% of client digital funds in cold storage.

Buy Crypto on Coinbase Now

Cryptoassets are a highly genuine websites to make money online unregulated investment product. No UK or EU investor protection.

3. Binance – Popular Place to Buy Bitcoin for Asset Diversity

Binance is larger than Coinbase – with what to look for when investing in cryptocurrency global user base of over 100 million clients. The platform is also the biggest in terms of daily trading volume. As such, Binance is popular with those seeking high levels of liquidity and a wide selection of digital currency markets.

If you’re based in the US, you will have access to a dedicated US version of Binance. This gives you access to over 50+ currencies – all of which you can buy with a debit/credit card. Much like Coinbase, the fees what to look for when investing in cryptocurrency are expensive – with Binance charging 4.5% to use Visa or MasterCard, in addition to a buy commission of 0.5%. This means you could buy Polkadot with a small commission of 0.5%.

binance platform screenshot

With that said, if you are able to deposit funds with ACH or a domestic wire transfer, you will not be charged any fees. When it comes to trading commissions, Binance is very competitive. In fact, you’ll pay a maximum commission of 0.10% per slide to trade crypto-crypto pairs. If you’re a seasoned investor, Binance offers advanced trading tools and OTC services.

Buy Crypto on Binance

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

4. Webull – Buy Cryptocurrency From Just $1

Webull is one of the most popular brokerage sites in the US, with the platform offering thousands of stocks, ETFs, and even options. However, Webull is also known for offering low-cost cryptocurrency services. What to look for when investing in cryptocurrency fact, you can buy cryptocurrency here at a minimum of just $1 – which is ideal for casual traders.

When it comes to fees, Webull does not charge any commissions when you buy or sell cryptocurrency. You do, however, need to be aware that cryptocurrency spreads here start from 1%. You how to invest in penny stocks on robinhood trade a variety of digital currencies here – including but not limited to Bitcoin, Chainlink, Uniswap, Zcash, Bitcoin Cash, Litecoin, Ethereum, and more.

webull platform screenshot

Webull also offers a fully-fledged trading app that gives you access to your investment account on the move. You can deposit funds at this brokerage without needing to meet a minimum. Although you won’t be able to deposit via a debit/credit card, you can fund your account with ACH or bank wire. The latter comes with a deposit/withdrawal fee of $8/$25 respectively.

Buy Crypto on Webull Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

5. Gemini – Solid Cryptocurrency Exchange for Seasoned Investors

Gemini offers one of the most secure places to buy cryptocurrency – especially if you are a large-scale investor. The platform is authorized and regulated by the New York State Department of Financial Services and is structured as a trust company. Moreover, in addition to institutional-grade security – Gemini has also secured $200 million of cold storage insurance.

Although Gemini offers a rock-solid place to buy cryptocurrency safely, the platform does charge a rather pricey commission of 1.49% per slide. Nevertheless, when it comes to supported markets, you will have access to over 70+ cryptocurrencies at Gemini. This includes a wide selection of large caps, ERC-20s, and DeFi coins.

gemini platform screenshot

Another top-rated feature at Gemini is its crypto interest offering. In a nutshell, by depositing your idle digital tokens into the Gemini exchange, you will be paid a rate of interest – which will depend on the respective asset. For example, you can earn 8.05% APY on the Gemini Dollar and 4.03% on Bitcoin Cash, what to look for when investing in cryptocurrency.

Should I Buy Cryptocurrency?

When learning how to buy cryptocurrency for the first time – you will quickly figure out that this marketplace is extremely volatile.

For example, across the 12 months prior to writing this guide, Bitcoin has experienced 52-week lows and highs of $29,000 and $69,000 respectively.
In simple terms, this amounts to a volatility spread of over 80%.

Taking this into account, it’s important to do plenty of research before you buy Bitcoin.

On the flip side, and as we cover in more detail shortly, it is important to note that 10 years prior to writing, Bitcoin was available to buy at just $1 per token. This means that the cryptocurrency has since grown by over 7 million percent.

And, don’t forget that Bitcoin isn’t the only cryptocurrency that you can buy.
On the contrary, CoinMarketCap now lists over 17,000 different digital currencies – all of which freely trade online.

Crucially, some cryptocurrencies have performed significantly better than Bitcoin in recent years.

Examples include the likes of Dogecoin, Shiba Inu, Ethereum, Binance Coin, and Solana – all of which have outperformed Bitcoin since each respective project was launched.

Beginner crypto traders often find choosing which altcoin to buy what to look for when investing in cryptocurrency how much to invest in very challenging. Something that could potentially help is to use the best crypto signals. Crypto signals do exactly what they say on the tin. Simply put, what to look for when investing in cryptocurrency, they’re trading ideas from experienced cryptocurrency traders indicating whether you should buy or sell specific cryptos at a certain time and price.

You could also consider trading crypto CFDs with a Bitcoin robot such as Bitcoin Prime. Trading via a Bitcoin bot means you’ll be speculating on the price movements of crypto CFDs and will not gain ownership of the underlying assets.

Benefits of Buying Cryptocurrency

The most important thing to consider when learning how to buy cryptocurrency is whether or not this volatile and speculative asset class is right for your financial goals.

If you’re still undecided, below we discuss some of the main benefits of buying cryptocurrency in 2022.

Monumental Price Increases

Before we give some examples of just how successful some cryptocurrencies have been since they were launched – it is important to note that not all digital assets have performed well, what to look for when investing in cryptocurrency. On the contrary, many tokens have seen huge losses in terms of their token value.

Nevertheless, it goes without saying that the overwhelming majority of people will look to buy cryptocurrency because of the huge returns that have been generated in recent years.

For example:

When BNB was launched in 2017, it carried a token price of just $0.011
Fast forward to 2022 and BNB has hit highs of $530
This means that in just over five years, early BNB investors have made returns of over 480,000%
In other words, had you invested just $1,000 into BNB when it was first launched, your portfolio would now be worth over $4.8 million

In another example:

When Ethereum – which is the world’s second-largest cryptocurrency in terms of market capitalization, was first launched in 2015 – it was trading at approximately $0.75.
Towards the end of 2021, Ethereum hit highs of just under $4,900.
This means that in just over six years, the value of Ethereum grew by more than 653,000%
As such, an initial investment of $1,000 in 2015 would have since grown to over $6.5 million

Although the above examples are just two of many – the key point here is that in buying cryptocurrency for your portfolio, what to look for when investing in cryptocurrency, you stand the chance of making sizable returns. Of course, you also stand the chance of losing money – so bear this in mind.

Diversification

Another benefit of buying cryptocurrency is that it is really easy to diversify. This is because of two key reasons.

First and as noted earlier, you can now choose from more than 17,000 tradable digital assets. As such, to reduce the risk of being overexposed to one or two cryptocurrencies, you could invest in a large basket of tokens.

Second, all cryptocurrencies can be fractionated into tiny units. For example, you don’t need to buy one full Ethereum token for several thousands of dollars. Instead, you can invest any amount of your choosing – even a couple of dollars.

This diversification strategy is particularly effective when you use a low-cost cryptocurrency broker that supports small investments. At eToro, for instance, you can diversify across more than 40 digital currencies at a minimum investment of just $10 per asset.

Limited Supply

Some, but not all, cryptocurrencies have a limited supply that is determined by immutable mathematical code.

For example, the total supply of Bitcoin will never surpass 21 million tokens – which is expected to happen by the year 2140.

Crucially, this framework ensures that cryptocurrencies cannot be manipulated by central banks or governments – which is the case with all fiat currencies in circulation.
For instance, the US Federal Reserve has printed trillions of dollars out of thin air since COVID-19 came to fruition.

Another benefit of investing in a cryptocurrency that has a limited supply is that finite assets typically perform well over the course of time.

Gold is a prime example here, its finite characteristics ensure that demand will always surpass supply.

Perfect for Cross-Currency Payments

If you have ever transferred money overseas – especially if the beneficiary was based in an emerging or third-world country, then you will know that the process can be both slow and expensive.

Cryptocurrencies, however, offer a real solution to this problem, not least because the underlying blockchain is not restricted by jurisdictional borders.
For example, if you were to buy XRP and transfer it – the transaction would take less than 5 seconds to process, regardless of where the sender and receiver are located.
Furthermore, the transaction would cost you a small fraction of a cent in fees.

These benefits are not exclusive to XRP what to look for when investing in cryptocurrency but many other digital currencies that are currently in circulation.

Hedging Against Inflation and Stagnant Stock Markets

One of the biggest economic consequences that countries around the world are now facing as a result of COVID-related stimulus packages is that inflation levels are rising rapidly.

In simple terms, what to look for when investing in cryptocurrency, this means that the value of your money becomes weaker – as prices for goods and services increase.
To counter the very real threat of rising inflation, some investors are turning to stores of value like Bitcoin.
After all, when you compare Bitcoin to broader inflation levels, the former has performed excellently as a hedging tool.

Additionally, cryptocurrency can also be a useful tool in hedging against the wider stock markets. For example, over the prior five years, the S&P 500 has grown by nearly 90%. Bitcoin, however, has increased in value by over 3,000% during the same period.

When to Buy Cryptocurrency

When you consider that cryptocurrency is a volatile asset class – you might be tempted to try and time the market in terms of when to buy and sell.

As noted earlier, in the 52 weeks prior to writing this guide, Bitcoin has carried a volatility spread of 80% – which is huge.

On the one hand, what to look for when investing in cryptocurrency the cryptocurrency markets correctly is no easy feat – as the industry is both volatile and unpredictable.

With that said, there are a couple of proven strategies that you can take to ensure that you enter the cryptocurrency market at the most favorable time possible.

Buy the Dip

The first strategy that you might consider in your attempt to time the cryptocurrency markets is to ‘buy the dip’. This is a strategy widely used in the traditional stock trading industry and it simply means that you will buy cryptocurrency when it goes through a market dip.

For example, moving into 2022, what to look for when investing in cryptocurrency, Bitcoin was priced at approximately $46,000.
Just over three weeks later, Bitcoin was valued at $33,000
This means that in buying this market dip, you can buy Bitcoin at a huge discount of 25% – compared to its price three what to look for when investing in cryptocurrency prior

The overarching concept here is that while inexperienced investors are fraught with fear and panic when cryptocurrency prices decline, seasoned traders will view this as an opportunity to increase their holdings by purchasing more tokens but at a discounted price.

Dollar-Cost Averaging

Various researchers argue that buying the dip is not a viable strategy in the long-term – at least in the traditional stock markets.

The reason for this is that by only buying the dip, you are missing out on prolonged upward pricing swings. With that in mind, what to look for when investing in cryptocurrency, you might instead consider a dollar-cost averaging strategy.

The main concept here is that you will engage in a long-term investment strategy that will see you buy cryptocurrency at fixed amounts, at specific intervals.

For example:

Let’s suppose that you have $100 to invest in digital currencies every Friday
This means that on Friday, you will buy cryptocurrency at a different price – baring in mind market fluctuations
Over the course of time, your cost price will average out in line with the broader markets
In other words, when prices are going down – you get to buy cryptocurrency at a lower cost
And, when prices are going up, you will buy cryptocurrency during an upward trend

The key point here is that dollar-cost averaging removes the need to try and time the market. Instead, you will slowly but surely build your what to look for when investing in cryptocurrency through systematic investments. In doing so, you should have little interest in shorter-term pricing swings.

Which is the Best Cryptocurrency to Buy 2022?

So now that we have covered investment strategies and market timing, we can now talk about which cryptocurrency to buy in 2022.

Once again, you’ve got thousands of options to choose from – so independent research is crucial.

We, however, will discuss five of the best cryptocurrencies to buy right now, as per our own subjective analysis.

Bitcoin – Best Crypto to Buy Now for Beginners

Out of more than 17,000 digital currencies listed on CoinMarketCap – more than 40% of all cryptocurrency investments are held in Bitcoin. This clearly highlights that across the board – Bitcoin is the most popular cryptocurrency.

Bitcoin is also the de-facto cryptocurrency in terms of market capitalization and mass awareness. Taking these points into account, Bitcoin is arguably the best cryptocurrency to buy for beginners.

Although it trades for tens of thousands of dollars, what to look for when investing in cryptocurrency, you can invest in Bitcoin in fractional amounts. At eToro, you only need to invest $10. In terms of growth, we mentioned earlier that Bitcoin was worth just $1 a decade prior to writing this guide.

Buy Bitcoin on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

BNB – Top Cryptocurrency to Buy for Long-Term Growth

The next cryptocurrency that we like is BNB – which is a top digital asset to consider for long-term growth. This digital asset is backed by Binance – the largest cryptocurrency exchange globally.

When the token was first launched in 2017 – its primary purpose was to allow users of the Binance exchange to reduce their trading commission. But, since then, BNB has grown to a whole new level.

For example, the digital token is now the primary currency of the Binance Smart Chain. This decentralized blockchain network is home to tens of thousands of cryptocurrencies – and most transaction fees are paid in BNB.

Buy BNB on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Decentraland – Great Cryptocurrency to Buy to Invest in the MetaVerse

Another cryptocurrency to consider buying for your investment portfolio is Decentraland – which is focused on creating a global MetaVerse via its decentralized 3D gaming world. Players within the Decentraland virtual world can build characters, wearables, and even real estate.

These digital products can then be traded with other users – with MANA the native digital currency backing the Decentraland project. To illustrate how lucrative this game can be, a virtual plot of land was sold for over $2 million in late 2021 – with the transaction settled in MANA.

In terms of performance, MANA was priced at just 0.025 in 2017. When the token last hit all-time highs of 2021, MANA surpassed a value of $5.20. This means that in just over three years of trading, Decentraland and its MANA token grew by more than 20,000%.

Buy Decentraland on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Ethereum – Leading Cryptocurrency to Buy for Smart Contracts

Ever wondered if you should buy Ethereum right now? As noted earlier, Ethereum is the second-largest cryptocurrency for market capitalization – behind Bitcoin. This project was launched back in 2015 and it dominates the smart contract niche. These are pre-programmed blockchain contracts that facilitate trustless agreements.

On the one hand, there are actually better-performing smart contract blockchains in this space – namely Neo and Solana. This is in terms of transaction speed, fees, and scalability. However, Ethereum is getting close to its 2.0 migration – which will see it move to Proof-of-Stake.

And, in doing so, Ethereum 2.0 will take its smart contract blockchain to the very next level. Not only in terms of lower fees and even faster transactions – but being able to scale on a much larger level. As such, Ethereum is still one of the best cryptocurrency to buy in 2022.

Buy Ethereum on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Yearn.finance – Promising Cryptocurrency to Buy for Decentralized Financial Services

Another area of the cryptocurrency arena that is growing in prominence is the availability of decentralized financial services. More specifically, there are platforms in existence that allow users to engage with traditional financial products on a peer-to-peer basis.

One of the best decentralized platforms in this regard is Yearn.finance. In a nutshell, the Yearn.finance protocol allows users to take out loans – in return for putting up a percentage of the financing agreement as collateral.

At the other end of the agreement are investors. That is, those holding idle cryptocurrencies can loan their funds to borrowers. And, as a result, investors will earn interest. The YFI token – which backs Yearn.finance, what to look for when investing in cryptocurrency, is, therefore, a top cryptocurrency to keep an eye on this year.

Buy Yearn.finance on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Guides to Investing in Cryptocurrency

Are you looking for guidance on buying cryptos, the best exchanges, or how to invest in NFTs? Check out our expert guides below.

Risks of Buying Cryptocurrency

Now that we have talked about the benefits of buying cryptocurrency, we need to discuss some of the main risks that need to be considered.

The most pressing risks of buying cryptocurrency are outlined below.

Volatility

We have mentioned several times throughout this guide that cryptocurrencies are extremely volatile. This means that the value of your investment can go up or down by a large percentage in a very small period of time.

For example, had you bought Dogecoin at the start of 2021 and sold just seven months later, your investment would have increased in value by more than 10,000%.

On the other hand, if you had bought Dogecoin in July 2021 and held on until the start of 2022 – you would be looking at losses of over 75%.

As a result, before you buy cryptocurrency for your portfolio – you must be prepared for rapid pricing swings.

Oversaturated Market

The next risk that you need to consider when learning how to buy cryptocurrency is that this marketplace is now oversaturated.

As noted, what to look for when investing in cryptocurrency, more than 17,000 cryptocurrencies are listed on CoinMarketCap – and even more that are yet to be added to the platform.

This means that outside of the top-100 projects, the cryptocurrency market is extremely fragmented. In simple terms, this means that the total amount of money being injected into the markets is now being allocated across a huge number of tokens.

As such, your chosen cryptocurrency might struggle to make an impact when you consider the amount of competition in this space.

Hacks and Security

Another major risk to consider is that over the course of the past few years – billions of dollars worth of digital assets have been stolen from cryptocurrency exchanges. If you had funds at one of these platforms, you might have had your tokens stolen with nowhere to turn.

As such, it is crucial that you stay away from unlicensed platforms and only buy cryptocurrency from a regulated exchange or broker – of which there are very few, what to look for when investing in cryptocurrency. Additionally, if you are looking to store your cryptocurrency tokens in a private wallet – further risks are at play.

This is because if you lose your private keys and do not back your wallet up with a recovery passphrase, your funds will be lost forever. Moreover, if your cryptocurrency wallet is hacked, what to look for when investing in cryptocurrency, this will also result in a loss of funds.

Ways of Buying Cryptocurrency

The next thing to consider when learning about digital asset investments is the many ways to buy cryptocurrency.

By this, we mean the specific payment method that you will use to fund your cryptocurrency purchase.

The best ways to buy cryptocurrency in 2022 are geld verdienen thuis below.

Buy Cryptocurrency With Paypal

You can buy cryptocurrency with Paypal at a very select number of online exchanges and brokers. In most cases, you will be charged a premium – as Paypal offers users the ability to execute a chargeback request.

This is, of course, a big risk for exchanges and brokers – which is why fees are typically high. With that being said, if you are depositing funds in US dollars, eToro allows you to buy cryptocurrency with Paypal on a fee-free basis.

If you’re using an alternative currency – then you will simply pay an FX fee of 0.5%.

Buy Cryptocurrency With Credit Card or Debit Card

The best way to buy cryptocurrency online is with a debit or credit card, what to look for when investing in cryptocurrency. This is because your purchase will usually be completed instantly.

For instance, if you buy crypto with a debit card at eToro, you will not only benefit from an instant deposit, but USD payments are fee-free.

This is what to look for when investing in cryptocurrency the case with credit cards, but the respective issuer might charge a premium – so be sure to check this yourself.

Buy Cryptocurrency With Neteller or Skrill

Another way to buy cryptocurrency online is with an e-wallet like Neteller or Skrill. You can use both of these popular e-wallets at eToro at a fee of just 0.5%. Or, if you’re funding your account in USD, this fee is waived.

Buy Cryptocurrency with Bank Transfer

Many exchanges and brokers allow you to buy cryptocurrency with a bank transfer – not least because this option is more cost-effective for platforms to process.

From your perspective, you will likely be able to deposit funds via ACH for free – albeit, the transaction might take a few days to arrive. Bank wires are usually supported too – but some platforms will charge a small fee.

How to Buy Cryptocurrency Safely

The most important part of this guide is the safety aspect of buying cryptocurrency. Not only in terms of staying away from unregulated platforms but how you intend to store your tokens.

With this in mind, below we explain the fundamentals of how to buy cryptocurrency safely.

Regulated Brokers

When you buy cryptocurrency from a broker that is regulated by a tier-one licensing body – you can be confident that you are using a trusted provider.

For instance, eToro is regulated by the SEC and registered with FINRA.
eToro is also licensed by the FCA, ASIC, and CySEC.

At the other end of the scale, you have Binance. Although Binance is the largest cryptocurrency exchange for volume and registered users, the platform is currently being investigated by a number of national regulatory bodies for operating without the required approval.

Avoid Peer-to-Peer Trades

You might be tempted to buy cryptocurrency on a peer-to-peer basis. This means that you will be purchasing your chosen digital currencies directly from the seller – as opposed to going through a centralized exchange.

Peer-to-peer cryptocurrency trades are extremely risky, especially for buyers – as you will be required to pay for your purchase before you receive the tokens. As such, you should never buy cryptocurrency from a peer-to-peer website.

Check Fees

Another thing to consider when learning how to buy cryptocurrency safely is to make sure that you have a firm understanding of what fees you are paying.

As an example, there are now thousands of Bitcoin ATMs scattered around the world.
These are targeted at the Average Joe who wishes to buy Bitcoin in exchange for cold-hard cash.
However, buyers are often unaware that Bitcoin ATMs charge huge fees – which will oftentimes average 10-20%.
The fee is often not shown in percentage terms.
Rather, you are shown how many BTC tokens you will receive for the amount of cash you are looking to invest.

For those without knowledge of cryptocurrency prices – this can be difficult to recognize.

On the other hand, if you buy cryptocurrency from an online broker like eToro -which is regulated by the SEC – you can be sure that the platform is transparent in what it charges.

In fact, at eToro, you only need to cover the difference between the buy and sell price – which starts at just 0.75%.

Cryptocurrency Wallets

When it comes to keeping your cryptocurrency funds safe, you generally have two options, what to look for when investing in cryptocurrency. First, many investors will look to withdraw their tokens to a private wallet – perhaps on their mobile phone or desktop device.

These private wallets are typically non-custodial – which means that you are 100% responsible for keeping your tokens safe.

You then have custodial wallets, which are usually offered by online brokers and exchanges. On the one hand, what to look for when investing in cryptocurrency, trusting an unlicensed exchange with your tokens is not a good idea.

However, in using a regulated broker like eToro, Coinbase, or Gemini – you can be sure that the platform has a range of institutional-grade security tools in place to keep your cryptocurrency safe.

How to Buy Cryptocurrency – Tutorial

This ultimate guide on buying cryptocurrency has covered each and every metric that you need to consider before you proceed with an investment.

If you have considered the risks involved and decided which digital asset interests you – then we are now going to walk you through the step-by-step process of how to buy cryptocurrency at eToro.
In using this SEC-regulated broker in our tutorial, this will allow you to buy cryptocurrency on a spread-only basis from just $10 – and you can deposit funds instantly with a debit/credit card.

Here’s’ what you need to do:

Step 1: Open an Account

The first part of the process will require you to visit the eToro website and open an account.

This will take you less than a couple of minutes and will simply require the following information from you:

First and Last Name
Email Address
Cell Phone Number
Home Address
Date of Birth
Social Security Number

etoro signup instructions

Next, you will need to confirm your cell phone number. You can do this by entering the PIN that eToro sends to your phone via SMS.

Step 2: Upload ID

The final part of the registration process will require you to upload some ID.

This is standard across all regulated brokers – as eToro is required to comply with AML laws set out by its licensing bodies.

To complete this step near-instantly, you can upload a copy of your passport or driver’s license.

Step 3: Deposit Funds

Now you will need to add some capital to your eToro brokerage account. US clients only need to deposit $10 and no transaction fees will be charged.

You can choose from a what to look for when investing in cryptocurrency wire, ACH, Paypal, Skrill, Neteller, or a debit/credit card.

Step 4: Search for Cryptocurrency

Assuming that you already know which cryptocurrency to buy for your portfolio – you can now complete the investment process.

To get the ball rolling, enter the name of the digital asset into the search box at the top of the page.

etoro market range

In our example above, we are searching for ‘Decentraland.’ When we see the relevant token pop up – we click on ‘Trade’.

Step 5: Buy Cryptocurrency From $10

The final step is to create an order. As you will see from the image below, we are looking to buy $75 worth of Decentraland (MANA) tokens.

etoro crypto order

However, you can invest any amount of your choosing – from just $10 upwards. Once you have entered your investment stake – you can complete your cryptocurrency purchase by clicking on the ‘Open Trade’ button.

Buy Crypto on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Conclusion

This beginner’s guide on how to buy and sell cryptocurrency online has covered every nut and bolt that you need to know to start your investment journey safely.

To recap, it’s important to do plenty of research before proceeding – both in terms of the cryptocurrency you decide to add to your portfolio and the exchange or broker you plan to open an account with.

If you’re ready to buy cryptocurrency today – eToro is a safe and regulated platform that allows you to invest from just $10 across more than 40+ digital assets.

Buy Crypto on eToro Now

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

Frequently Asked Questions on How to Buy Cryptocurrency

How do I buy cryptocurrency?

You can buy cryptocurrency online through an exchange or broker that lists your preferred token. You’ll need to open an account, and if depositing in fiat money – upload some ID. Then, after making a deposit, you can proceed to buy your chosen cryptocurrency.

What is the best site to buy cryptocurrency?

If you’re wondering where to buy cryptocurrency, we found that eToro offers a top-rated service – in terms of low fees, regulation, small account minimums, accepted payment types, and supported tokens, what to look for when investing in cryptocurrency.

Is buying cryptocurrency a good investment?

This depends. If you enter the market at a favorable price and hold onto your tokens for a sufficient number of months or years – there is every chance that you will make a return on your principal investment. However, cryptocurrencies are high risk – so you can also lose some, or all, of your money.

What is the best cryptocurrency to buy now?

Many investors choose to stick with Bitcoin. However, there are thousands of other cryptocurrencies to buy – many of which could offer a better upside than BTC. As such, it’s worth doing lots of research to find the right digital asset for you.

What is the cheapest cryptocurrency to buy?

In terms of token value, the likes of Dogecoin, Shiba Inu, Stellar, XRP, and The Graph can all be purchased at less than $1.

What are the best cryptocurrency stocks to buy?

The only true cryptocurrency stock in the market right now is Coinbase – which is a large US-based exchange listed on the NASDAQ.

Where can I buy cryptocurrency for what to look for when investing in cryptocurrency platforms charge fees to buy cryptocurrency. However, eToro came out as one of the most cost-effective platforms in the market – as you only need to pay the spread.

What is the best app to buy cryptocurrency?

The best app to buy crypto is offered by SEC-regulated broker eToro – which is available to download for free on iOS and Android.

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The best trading tactics often come from years of investing in cryptocurrency markets.

With this handy guide any beginner can learn how to come up with the best trading strategies and avoid common cryptocurrency mistakes.

In this article, we will explain:

Related guides:Should you invest in bitcoin? and What is cryptocurrency?

Six cryptocurrency tips

If you want to invest in cryptocurrencies, what to look for when investing in cryptocurrency, here are six tips:

1. Have a strategy for crypto trading

It isn’t easy to separate genuine cryptocurrency recommendations from the scams; there are lots of sharks out there waiting to take your money.

Reports of crypto investment scams surged to 7,118 in the first nine months of 2021. This was up 30% on the whole of 2020, according to Action Fraud, with the average loss per victim at £20,500.

So when you’re confronted with a lot of information about a cryptocurrency, take a step back from the hype.

Try to look critically at the project or what to look for when investing in cryptocurrency. How many users does it have? What problem does it solve? Avoid coins that promise the Earth what to look for when investing in cryptocurrency haven’t delivered anything tangible.

2. Manage risk

Some people offering crypto trading tips might not have your best interests at heart. Sodon’t get stung making the same mistakes as others.

Set limits on how much you invest in a particular digital currency and don’t be tempted to trade with more money than you can afford to lose.

Cryptocurrency trading is a high-risk business and more traders lose money than don’t.

We explain the highs and lows of the digital currency.

3. Diversify your crypto portfolio

It doesn’t pay to have too much invested in one single cryptocurrency. Or as they say: don’t put all your eggs in one basket.

As with stocks and shares, what to look for when investing in cryptocurrency, spread your money out among different digital currencies.

This means you don’t risk being over-exposed should one of them plummet in value – especially as the market prices of these what to look for when investing in cryptocurrency are highly volatile.

There are thousands to choose from, so do your research. Examples include worldcoin and safemoon.

4. Be in it for the long term

Prices can rise and fall quite dramatically day to day, and novice traders are often duped into panic selling when prices are low.

Cryptocurrencies are not going to go away. Leaving your money in the crypto market for months or years at a time could offer you the best rewards.

5. Automate purchases

Just as with regular stocks and shares, it can help to automate your crypto purchases to take advantage of pound-cost averaging.

Most cryptocurrency exchanges, including Coinbase and Gemini, allow you to set up recurring buys.

This is where crypto investors tell the platform to purchase a fixed amount of their preferred cryptocurrency every month – for example, £100 worth of bitcoin. It means they get a bit less of the currency when prices are high, and a little more when prices are low.

That takes the stress out of trying to time the market by either buying a currency at what you think is the lowest possible price or selling at the highest price. It’s something that even market professionals struggle to get right.

6. Use trading bots

Trading bots can be useful in some circumstances, but they aren’t recommended for beginners looking for crypto investment tips. Often, they are just scams in disguise.

If real algorithm existed that timed your buy and sell trades to perfection, everyone would be using them!

The market prices of cryptocurrencies are highly volatile

Five common crypto mistakes

The latest research from UK regulator the Financial Conduct Authority showed that about 2.3m Brits own cryptocurrency in one form or another.

It’s very easy to get caught up in the hype of news headlines. Crypto mistakes are startlingly common, and below we list some of them.

1. Buying just because the price is low

Low prices do not always represent bargains. Sometimes prices are low for a reason! Watch out for cryptocurrencies with falling user rates.

Often, too, developers leave a project and it stops getting properly updated, making the cryptocurrency insecure.

2. Going ‘all-in’

Some of the more suspect trading platforms suggest you should maximise your money by betting as much as possible. This is a quick way to the poor house.

Better crypto investment tips would be to only use a certain proportion of your investing capital — say 5% — and always keep an emergency cash fund in an easy access savings account that never gets invested in the market.

3. Thinking crypto is ‘easy money’

There’s nothing easy about making money through trading any kind of financial asset, whether stocks and shares or commodities like silver and gold. The same can be said for cryptocurrency.

Anyone who says different is probably trying to trick you into making crypto mistakes.

4. Forgetting your crypto keyphrase

If you have a hardware wallet for storing your crypto offline, forgetting your keyphrase is like losing the keys to a bank vault.

Without your keyphrase, all your cryptos will be irretrievable.

5. Falling for scams

Be very wary of crypto deals that sound too good to be true. We outline four common crypto scams you could be careful of:

Cloud multiplier scams

Fraudsters sometimes contact victims by email or text with an “investment opportunity”. They promise to give investors double or triple the amount they have put into bitcoin if they send their cryptocurrency to a particular digital wallet.

REMEMBER: Offers of free money should always be viewed with great scepticism

Pump and dump

Criminals can easily inflate or deflate the price of very small or unknown cryptocurrencies, sometimes sendingthe value of these currencies skyrocketing.

Sometimes criminals will own a lot of a particular cryptocurrency (through pre-mining much of it before it is available to the general public).

When unwitting traders rush in to try and grab a piece of the action, the criminals wait for the price to increase before selling all their coins and causing the price to crash.

They can pump up the price by promoting it on social media, before selling it at the higher price.

Malicious wallet software

The best crypto tips will tell you to stick with big name crypto wallets, such as Ledger, What to look for when investing in cryptocurrency, Exodus or MetaMask, what to look for when investing in cryptocurrency.

Dodgy or unknown wallets that you find on Google Play or the App Store can steal your crypto funds with dodgy code.

Fake coins

With so many cryptocurrencies on the market, it can be difficult to tell what’s real and what’s not.

When you invest in fake coins, criminals can steal your identity and often your hard-earned money.

Don’t take anyone else’s word for it and use as many sources as possible to do your own research on coins before you buy them.

Know your crypto lingo

There is a lot of jargon out there in crypto land and often it can be difficult to decipher.

Use this helpful list to make the most of the best crypto tips and dodge common cryptocurrency mistakes that could blow up your trading account.

Altcoin: a portmanteau of “alternative” and “coin”, altcoin refers to any cryptocurrency other than the original one, bitcoin.
Cryptocurrency exchanges: just like regular stock exchanges, the likes of Coinbase, Binance, Gemini and Bitstamp allow traders and investors to buy and sell — except that here they are trading cryptocurrencies. Unlike standard stock markets, cryptocurrency exchanges are online-only and are open 24 hours a day, seven days a week.
Limits: most exchanges do not set limits or restrictions on the number of cryptocurrency trades their users can make in a day. How to invest in us stock market from abroad turbulent trading days, when cryptocurrency prices are moving up or down very quickly, some brokers may put a short-term halt on people depositing funds on their platforms.
Shorting: “shorting” cryptocurrency means betting on the price going down rather than up.
Forks: a cryptocurrency fork is a split in a blockchain where two separate blockchains are created. This is sometimes because of a disagreement between developers as to how the blockchain should be organised. In 2017, bitcoin forked into two separate blockchains: bitcoin and bitcoin cash.
ICO: this is an initial coin offering where new cryptos are sold to investors for the first time. It’s similar to an initial public offering (IPO) in the stocks and shares world.
Margin trading: when platforms talk about margin trading, they mean investors borrow money to increase their bet on a cryptocurrency. Be very careful, though, because margin trading can dramatically exacerbate losses if a trade doesn’t go your way.
Fiat: a fiat currency is one that is backed by a sovereign government. For instance, sterling, US dollars or Indian rupees.
Cloud mining: people can “mine”, or create, cryptocurrencies to compete for rewards in the form of newly minted crypto. Cloud mining uses remote data centres with shared processing power, like the kind that powers Google software, to pool resources and cut the cost of mining.

Be extremely wary, as many cloud mining companies are just scams. An incredible amount of computing power is needed to mine the top cryptocurrencies. Anyone offering easy cloud-mining rewards is likely to be a charlatan.
Bull markets and bear markets: these are phrases borrowed from traditional stock markets. A bull market means traders are confident in the prospects for a particular investment, what to look for when investing in cryptocurrency, meaning they will keep buying and prices will keep rising – whereas in a bear market, traders are nervous and prices will generally fall.
Sell orders: a sell order is an instruction given by traders to a platform to sell cryptocurrency that they own when the price hits a certain level. In traditional markets, this is referred to as a “stop loss”.

More information

There are many more guides on Times Money Mentor to steer you through cryptocurrency markets and help you make the most of your money. These include:

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Nine Things to Know Before Investing in Cryptocurrency

What to Know Before Investing in Crypto

Are you itching to buy Bitcoin, but know little about how cryptocurrencies work? Stop right there! Digital currencies can be an exciting investment opportunity, but new investors risk losing their capital if they are lured by scammers or back a new cryptocurrency without a track record.

Here, we'll go through nine things to know before investing in the cryptocurrency market.

1. Timing Is Everything

Digital assets are extremely volatile — and cryptocurrencies such as Bitcoin and Ethereum can fluctuate wildly with little notice. Generally, crypto investors try to "buy the dip," meaning that they'll purchase more of an altcoin when its price falls.

2. You Can Buy BTC With Old-Fashioned Money

Cryptocurrency exchanges such as Coinbase and Binance are tailored to new investors. They allow you to buy virtual currencies using your debit card, credit card and bank account. Financial institutions such as PayPal are also planning to get involved, if you believe the well-reported rumors.

3. Watch Out for Scammers

On social media, you may see a lot of hype around an investment strategy that promises huge returns from obscure crypto assets. Others make exaggerated claims about how the price of Bitcoin will rise. Sadly, there are some dishonest actors in the crypto world — and billions have been lost to Ponzi schemes and exit scams. CoinMarketCap’s blog has a short guide on how to avoid a crypto scam and another here on keeping your crypto safe.

4. Build an Investment Strategy

Successful investors devise a plan for their cryptocurrency assets, what to look for when investing in cryptocurrency. This can involve setting a limit order that means their Bitcoin will be automatically sold when prices hit a certain level. Some crypto exchanges also allow you to copy the moves of established traders in the crypto market. CoinMarketCap and DataDash teamed up to give you a guide to swing trading cryptocurrencies that you can check out here.

5. Is It Too Good to Be True?

Scammers often thrive on creating a sense of FOMO, a fear of missing out. Think carefully before making a cryptocurrency investment, and remember: if something seems too good to be true, it probably is. The cryptocurrency industry is full of impartial reviews and fiercely independent news sites that can help you make an informed decision.

6. ICOs? Do Your Own Research

Initial coin offerings, where companies create and sell new cryptocurrencies, were very popular in 2017. Although the market has cooled, some investment opportunities still exist. This can be extremely risky — and if you're going what to look for when investing in cryptocurrency the ICO route, make sure you read white papers thoroughly, and examine whether their business actually has a need for blockchain technology. You'd be surprised at how many startups try to jump on the bandwagon.

7. Beware of FOMO

In a bull market, popular cryptocurrencies can see their prices rise sharply and quickly. Proceed with caution — buying into BTC at high prices could lead to nasty losses if it corrects.

8. Pick a Good Crypto Exchange

Look for a crypto exchange with strong levels of liquidity, what to look for when investing in cryptocurrency, an array of crypto assets, resilient security measures, and reliability. CoinMarketCap has a page for those buying Bitcoin for the first time which ranks exchanges by their ease of purchasing crypto and provides more information about their regulation and accepted methods of payment. You can find it here!

9. Protect Your Private Keys

Last but not least, remember that you need to keep your cryptocurrency safe. One of the best ways to do this is through a hardware wallet, as this will mean your crypto assets are held securely — and far, far away from an internet connection.

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Should you invest in cryptocurrency? What to know about digital currencies and investing safely

Cryptocurrency may have once seemed like a niche interest or a passing fad, but it’s moving quickly into the mainstream.

Matt Damon, LeBron James and Larry David promoted cryptocurrency platforms in a series of Super Bowl ads, which were so popular that they caused one cryptocurrency app to crash after the game.

What's more, the Staples Center in Los Angeles was recently renamed the Crypto.com Arena, after Crypto.com reportedly paid more than $700 million for the naming rights.

There’s a lot of hype surrounding cryptocurrency these days, but what exactly is it, and is it right for the average consumer or investor?

Reporting for TODAY, NBC’s senior consumer investigative correspondent Vicky Nguyen breaks down what cryptocurrency is, how to know whether it’s trustworthy, what to look for when investing in cryptocurrency, and red flags to be aware of before diving in.

What is cryptocurrency?

Cryptocurrency is a virtual currency that is stored on a kind of digital ledger called a blockchain.

Some cryptocurrencies can be used like money to purchase goods. Other cryptocurrencies are handled more like stocks that are traded, meaning their value can fluctuate.

There are more than 17,000 cryptocurrencies, but some of the most popular include Bitcoin, Ethereum, Tether, and Binance Coin. Cryptocurrencies are traded on digital platforms or exchanges, what to look for when investing in cryptocurrency, such as Coinbase, Gemini, and Crypto.com.

The “crypto” in the name refers to the fact that transaction details are encrypted on the blockchain, with cryptocurrency owners holding a digital “key” that proves that they own the currency.

What’s the point of cryptocurrency?

Why use cryptocurrency at all, as opposed to sticking with traditional money or stocks?

Some people like the fact that cryptocurrency is not regulated by a centralized government or agency. Rather, the virtual currency is stored securely on digital blockchains, which are hosted by a decentralized network of computers around the world.

Many people believe this gives cryptocurrency owners more security, privacy and autonomy.

Other proponents of cryptocurrency are interested in the potential future applications of the blockchain, the digital network where cryptocurrency is stored.

For example, the blockchain could serve as a network for transmitting different kinds of information, according to the accounting firm PricewaterhouseCoopers — such as sharing patients’ healthcare information securely, or even gathering votes in an election.

How to buy trustworthy cryptocurrency

If you’re interested in buying cryptocurrency, stick to credible platforms like Coinbase or Binance. The website CoinMarketCap lists established cryptocurrencies, as well as industry news, what to look for when investing in cryptocurrency, so you can do your research before buying.

Be wary if someone tries to solicit crypto payments from you online, especially on social media.

Transactions made with cryptocurrency are not reversible, so it’s crucial to be alert to potential fraud and scammers.

This week, President Biden is expected to issue an executive order that will task government agencies with investigating the risks of trading in cryptocurrencies.

What you should be aware of before investing?

Investing in cryptocurrency is a risk for what to look for when investing in cryptocurrency reasons. First, the value of cryptocurrencies, like traditional stocks, can fluctuate dramatically.

“You have to be prepared for wild volatility,” Mike Bisaro, president and CEO of StraightLine Financial, told Nguyen.

Also “there is virtually no regulation about any of these players or about the industry in general,” Bisaro said. “You have to, what to look for when investing in cryptocurrency, I believe, what to look for when investing in cryptocurrency, look at it as more or less speculation.”

The IRS now also requires you to report any financial gains from cryptocurrency investments on your taxes, so make sure your crypto exchange platform allows you to access your tax documents.

In short, while cryptocurrency can present some interesting opportunities, investing in this kind of digital asset should not be viewed as a get-rich-quick scheme.

“The slow, diversified approach really does tend to win,” Bisaro said. “It just doesn’t tend to make for real exciting headlines and real good Super Bowl commercials.”

Lindsay Lowe

Lindsay Lowe has been a regular contributor to TODAY.com since 2016, covering pop culture, style, home and other lifestyle topics. She is also working on her first novel, a domestic drama set in rural Regency England.

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What Is Cryptocurrency? Here’s What Investors Should Know

What is cryptocurrency?

A cryptocurrency (or “crypto”) is a digital asset that can circulate without the need for a central monetary authority such as a government or bank. Instead, cryptocurrencies are created using cryptographic techniques that enable people to buy, sell or trade them securely.

Bitcoin and most other cryptocurrencies are supported by a technology known as blockchain, which maintains a tamper-resistant record of transactions and keeps track of who owns what. The creation of blockchains addressed a problem faced by previous efforts to create purely digital currencies: preventing people from making copies of their holdings and attempting to spend them twice.

Individual units of cryptocurrencies can be referred to as coins or tokens, depending on how they are used. Some are intended to be units of exchange for goods and services, others are stores of value, and some are mostly designed to help run computer networks that carry out more complex financial transactions.

One common way cryptocurrencies are created is through a process known as mining, which is used by Bitcoin. Mining can be an energy-intensive process in which computers solve complex puzzles in order to verify the authenticity of transactions on the network. As a reward, the owners of those computers can receive newly created cryptocurrency. Other cryptocurrencies use different methods to create and distribute tokens, and many have a significantly lighter environmental impact.

For most people, the easiest way to get cryptocurrency is to buy it, either from an exchange or another user.

» Ready to invest? Here are our picks for best cryptocurrency exchanges.

How to buy cryptocurrency safely

Buying cryptocurrencies securely involves four basic steps:

1. Decide where to buy it

There are many ways to buy cryptocurrency safely, though the most accessible method for beginners is likely to be a centralized exchange. Centralized exchanges act as a third party overseeing transactions to give customers confidence that they are getting what they pay for. These exchanges typically sell crypto at market rates, and they make money on fees for various aspects of their services.

If you're more accustomed to traditional brokerage accounts, what to look for when investing in cryptocurrency, there are a few online brokers that offer access to cryptocurrencies as well as stocks. Of the online brokers reviewed by NerdWallet, these include Robinhood, Webull, SoFi Active Investing and TradeStation. If you're looking for an exchange that operates solely within the cryptocurrency world, look for pure-play crypto exchanges, what to look for when investing in cryptocurrency. These platforms, such as Coinbase, Gemini and Kraken, won't give you access to core assets like stocks and bonds, but they typically have a much better selection of cryptocurrencies, and more on-platform crypto storage options.

Though centralized exchanges are relatively easy to use, they also can be an attractive target for hackers given the volume of crypto that flows through them.

For more advanced users, there are decentralized exchanges whose fees can be lower than those charged by centralized platforms. Those can be more difficult to use and demand more technical know-how, but they may also offer some security benefits because there is no single target for a cyberattack. Cryptocurrencies can also be traded through peer-to-peer transactions.

2. Choose how you'll pay

While there are thousands of cryptocurrencies being traded around the world, you'll find that the most popular options are widely available for purchase in fiat currencies such as the U.S. dollar. If you're a first-time buyer, you'll very likely have to use regular money to buy cryptocurrency.

If you're a more experienced investor, you may want to trade some of your existing crypto holdings for another type of cryptocurrency — for instance Bitcoin for Ethereum.

3. Add value to your account

Depending on how you choose to pay, what to look for when investing in cryptocurrency, you may have to fund your account before purchasing any crypto. If you're using fiat currency, most exchanges allow debit and bank transfers. Some also allow you to fund a purchase with your credit card, though this can be a risky move with a volatile asset like cryptocurrency because interest costs can deepen your losses if your investments decline in value.

If you already own cryptocurrency, you can transfer it into your account from a digital wallet or another platform, then use it to trade. Just be sure to verify that your crypto exchange allows trading between the assets you're looking at. Not all cryptocurrencies can be directly traded for one another, and some platforms have more trading pairs than others.

Another thing to note is that exchanges’ fees vary depending on what you're buying and how you're buying it, so review these details carefully.

4. Select a cryptocurrency

There are many options for cryptocurrency investors, though there are none that are likely to be right for everyone. Before you buy, ask yourself what your goals are for this investment. Are you hoping it will increase in value? Are you interested in carrying out transactions using cryptocurrency? Are you interested in using the underlying technology via decentralized apps? These may help you make your decision.

NerdWallet has created guides to some widely circulated cryptocurrencies, including Bitcoin and some Bitcoin alternatives:

Bitcoinis the first and most valuable cryptocurrency.
Ethereumis commonly used to carry out financial transactions more complex than those supported by Bitcoin.
Cardano is a competitor to Ethereum led by one of its co-founders.
Solana is another competitor to Ethereum that emphasizes speed and cost-effectiveness.
Dogecoin began as a joke but what to look for when investing in cryptocurrency grown to be among what to look for when investing in cryptocurrency most valuable cryptocurrencies.
Stablecoins are a class of cryptocurrencies whose values are designed to stay stable relative to real-world assets such as the dollar.

» Learn more: What is blockchain, and how does it work?

Best cryptocurrencies by market capitalization

More than 18,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a bitcoin investors dies update research website. And what to look for when investing in cryptocurrency continue to proliferate. The total value of all cryptocurrencies on March 8, 2022, what to look for when investing in cryptocurrency about $1.7 trillion, having fallen substantially from an all-time high above $2.9 trillion late in 2021.

If that weren't enough to navigate, there are millions of NFTs — or nonfungible tokens — which are based on similar technology and offer ownership of content such as pictures and videos.

» Learn more:How to invest in Bitcoin


NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.	NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.	NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
Learn More	Learn More	Learn More
Fees 0.5% - 4.5% varies by type of transaction; other fees may apply	Fees 0.5% - 3.99% depending on payment method and platform

Keeping crypto safe

Once you've decided to buy crypto and determined which cryptocurrencies you want to invest in, your next decision will be how you want to store it safely.

This is an important choice. Crypto assets require a private key, which proves ownership of cryptocurrencies and is necessary for carrying out transactions. If you lose your private keys, you've lost your cryptocurrency. If someone gets your private keys, they can dispense with your cryptocurrencies however they want.

Crypto owners use digital wallets to store their holdings securely. There are multiple options to consider when it comes to digital wallets.

On-platform storage: Some people choose to keep their cryptocurrency on the exchange or platform where they got it. This has some advantages. It outsources the complexities to a third-party that brings some expertise to the table. You don't have to keep track of your own private keys; all the information is right there when you log in. The drawback is that if the provider has a security breach outside of your control, or if someone hacks your individual credentials, your cryptocurrency could be at risk, what to look for when investing in cryptocurrency. On-platform storage is often used by people who think they might want to trade their crypto soon, or who want to participate in exchanges' staking and rewards programs.

» Compare: Best exchanges to store your cryptocurrency

Noncustodial wallets: Because of the threat of hacking, it can be risky to leave large balances on crypto exchanges for longer than necessary. If you're what to look for when investing in cryptocurrency to dive into storing your own crypto, there are many options on the market. They are generally divided into two categories: hot wallets and cold wallets. Hot wallets have some online connectivity, which may make them easier to use but could expose you to some security vulnerabilities. Cold wallets are offline, physical devices that would be unreachable to anyone who does not have them in their material possession.

» Learn more: How to choose a crypto wallet

Pros and cons of cryptocurrency

Cryptocurrency inspires passionate opinions across the spectrum of investors. Here are a few reasons that some people believe it is a transformational technology, while others worry it's a fad.

Cryptocurrency pros

Supporters see cryptocurrencies such as Bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable.
Some supporters like the fact that cryptocurrency removes central banks from managing the money supply since over time these banks tend to reduce the value of money via inflation.
Other advocates like the blockchain technology behind cryptocurrencies, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems.
Some speculators like cryptocurrencies because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.
Some cryptocurrencies offer their owners the opportunity to earn passive income through a process called staking. Crypto staking involves using your cryptocurrencies to help verify transactions on a blockchain protocol. Though staking has its risks, it can allow you to grow your crypto holdings without buying more.

Cryptocurrency cons

Many cryptocurrency projects are untested, and blockchain technology in general has yet to gain wide adoption, what to look for when investing in cryptocurrency. If the underlying idea behind cryptocurrency does not reach its potential, long-term investors may never see the returns they hoped for.
For shorter-term crypto investors, there are other risks. Its prices tend to change rapidly, and while that means that many people have made money quickly by buying in at the right time, many others have lost money by doing so just before a crypto crash.
Those wild shifts in value may also cut against the basic ideas behind the projects that cryptocurrencies were created to support. For example, people may be less likely to use Bitcoin as a payment system if they are not sure what it will be worth the next day.
The environmental impact of Bitcoin and other projects that use similar mining protocols is significant. A comparison by the University of Cambridge, for instance, said worldwide Bitcoin mining consumes more than twice as much power as all U.S. residential lighting. Some cryptocurrencies use different technology that demands less energy.
Governments around the world have not yet fully reckoned with how to handle cryptocurrency, so regulatory changes and crackdowns have the potential to affect the market in unpredictable ways.

Managing cryptocurrency risk

Cryptocurrency is a relatively risky investment, no matter which way you slice it, what to look for when investing in cryptocurrency. Generally speaking, high-risk investments should make up a small part of your overall portfolio — one common guideline is no more than 10%. You may want to look first to shore up your retirement savings, pay off debt or invest in less-volatile funds made up of stocks and bonds.

There are other ways to manage risk within your crypto portfolio, such as by diversifying the range of cryptocurrencies that you buy. Crypto assets may rise and fall at different degrees, and over different time periods, what to look for when investing in cryptocurrency, so by investing in several different products you can insulate yourself — to some degree — from losses in one of your holdings.

» Learn more: How to diversify your crypto holdings

Perhaps the most important thing when investing in anything is to do your homework. This is particularly important when it comes to cryptocurrencies, which are often linked to a specific technological product that is being developed or rolled out. When you buy a stock, it is linked to a company that is subject to well-defined financial reporting requirements, which can give you a sense of its prospects.

Cryptocurrencies, on the other hand, are more loosely regulated in the U.S., so discerning which projects are viable can be even more challenging. If you have a financial advisor who is familiar with cryptocurrency, it may be worth asking for input.

For beginning investors, it can also be worthwhile to examine how widely a cryptocurrency is being used. Most reputable crypto projects have publicly available metrics showing data such as how many transactions are being carried out on their platforms. If use of a cryptocurrency is growing, that may be a sign that it is establishing itself in the market. Cryptocurrencies also generally make "white papers" available to explain how they'll work and how they intend to distribute tokens.

» Learn more: 3 questions to ask before you buy cryptocurrency

If you're looking to invest in less established crypto products, here are some additional questions to consider:

Who’s heading the project? An identifiable and well-known leader is a positive sign.
Are there other major investors who are investing in it? It’s a good sign if other well-known investors want a piece of the currency.
Will you own a portion in the company or just currency or tokens? This distinction is important. Being a part owner means you get to participate in its earnings (you’re an owner), while buying tokens simply means you're entitled to use them, like chips in a casino.
Is the currency already developed, or is the company looking to raise money to develop it? The further along the product, the less risky it is.

It can take a lot of work to comb through a prospectus; the more detail it has, the better your chances it’s legitimate. But even legitimacy doesn’t mean the currency will succeed. That’s an entirely separate question, and that requires a lot of market savvy. Be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to bilk investors.

» Beyond Bitcoin: What are altcoins, and how do they work?

Cryptocurrency legal and tax issues

There’s no question that cryptocurrencies are legal in the U.S., though China has essentially banned their use, what to look for when investing in cryptocurrency, and ultimately whether they’re legal depends on each individual country.

The question of whether cryptocurrencies are legally allowed, however, is only one part of the legal question. Other things to consider include how crypto is taxed and what you can buy with cryptocurrency.

Legal tender: You might call them cryptocurrencies, but they differ from traditional currencies in one important way: there's no requirement in most places that they be accepted as "legal tender." The U.S. dollar, by contrast, must be accepted for "all debts, public and private." Countries around the world are taking various approaches to cryptocurrency. El Salvador in 2021 became the first country to adopt Bitcoin as legal tender. Meanwhile, China is developing its own digital currency. For now, in the U.S., what you can buy with cryptocurrency depends on the preferences of the seller.
Crypto taxes: Again, the term "currency" is a bit of a red herring when it comes to taxes in the U.S. Cryptocurrencies are taxed as property, rather than currency. That means that when you sell them, you'll pay tax on the capital gains, or the difference between the price of the purchase and sale. And if you're given crypto as payment — or as a reward for an activity such as mining — you'll be taxed on the value at the time you received them.

» Learn more:Understanding crypto and Bitcoin taxes

Frequently asked questions

How does a blockchain work?

Most cryptocurrencies are based on blockchain technology, a networking protocol through which computers can work together to keep a shared, tamper-proof record of transactions. The challenge in a blockchain network is in making sure that all participants can agree on the correct copy of the historical ledger. Without a recognized way to validate transactions, it would be difficult for people to trust that their holdings are secure. There are several ways of reaching "consensus" on a blockchain network, but the two that are most widely used are known as "proof of money makin mitch lyrics and "proof of stake.”

What does proof of work mean?

Proof of work is one way of incentivizing users to help maintain an accurate historical record of who owns what on a blockchain network. Bitcoin uses proof of work, which makes this method an important part of the crypto conversation. Blockchains rely on users to collate and submit blocks of recent transactions for inclusion in the ledger, and Bitcoin's protocol rewards them for doing so successfully. This process is known as mining.

There is stiff competition for these rewards, so many users try to what to look for when investing in cryptocurrency blocks, but only one can be selected for each new block of transactions. To decide who gets the reward, Bitcoin requires users to solve a difficult puzzle, which uses a huge amount of energy and computing power. The completion of this puzzle is the "work" in proof of what to look for when investing in cryptocurrency lucky miners, the Bitcoin rewards are more than enough to offset the costs involved. But the huge upfront cost is also a way to discourage dishonest players. If you win the right to create a block, it might not be worth the risk of tampering with the records and having your submission thrown out — forfeiting the reward. In this instance, spending the money on energy costs in an attempt to tamper with the historical record would have resulted in significant loss.

Ultimately, the goal of proof of work is to make it more rewarding to play by the rules than to try to break them.

» Learn more:How does Bitcoin work?

Proof of stake is another way of achieving consensus about the accuracy of the historical record of transactions on a blockchain. It eschews mining in what to look for when investing in cryptocurrency of a process known as staking, what to look for when investing in cryptocurrency, in which people put some of their own cryptocurrency holdings at stake to vouch for the accuracy of their work in validating new transactions. Some of the cryptocurrencies that use proof of stake include Cardano, Solana and Ethereum (which is in the process of converting from proof of work).

Proof of stake what to look for when investing in cryptocurrency have some similarities to proof of work protocols, in that they rely on users to collect and submit new transactions. But they have a different way of incentivizing honest behavior among those who participate in that process. Essentially, people who propose new blocks of information to be added to the record must put some cryptocurrency at stake. In many cases, your chances of landing a new block (and the associated rewards) go up as you put more at stake. People who submit inaccurate data can lose some of the money they've put at risk.

How do you mine cryptocurrency?

Mining cryptocurrency is generally only possible for a proof-of-stake cryptocurrency such as Bitcoin. And what to look for when investing in cryptocurrency you get too far, what to look for when investing in cryptocurrency, it is worth noting that the barriers to entry can be high and the probability of success relatively low without major investment.

While early Bitcoin users were able to mine the cryptocurrency using regular computers, the task has gotten more difficult as the network has grown. Now, most miners use special computers whose sole job is to run the complex calculations involved in mining all day every day. And even one of these computers isn't going to guarantee you success. Many miners use entire warehouses full of mining equipment in their quest to collect rewards.

If you don’t have the resources to compete with the heavy hitters, one option is joining a mining pool, where users share rewards. This reduces the size of the reward you'd get for a successful block, but increases the chance that you could at least get some return on your investment.

How do you pull your money out of crypto?

Just like with buying cryptocurrencies, there are several options for converting your crypto holdings into cash. While decentralized exchanges and peer-to-peer transactions may be right for some investors, many choose to use centralized services to offload their holdings.

With a centralized exchange, the process is basically the reverse of buying. But one advantage if you own crypto is that you probably already have everything set up. Here are the steps:

Connect the wallet that holds the cryptocurrencies that you want to sell, and make sure the exchange you’ve chosen supports both that wallet and the asset in question.
Move your cryptocurrency onto the exchange.
Sell your cryptocurrency.
Transfer the proceeds back to your bank account.

Every exchange will handle such transactions differently, so you’ll want to look up the fees and processes for your specific provider. Also, remember that you may be creating crypto tax liability when you sell your digital assets.

How does a blockchain work?

Most cryptocurrencies are based on

blockchain technology

, a networking protocol through which computers can work together to keep a shared, tamper-proof record of transactions. The challenge in a blockchain network is in making sure that all participants can agree on the correct copy of the historical ledger. Without a recognized way to validate transactions, it would be difficult for people to trust that their holdings are secure. There are several ways of reaching "consensus" on a blockchain network, but the two that are most widely used are known as "proof of work" and "proof of stake.”

What does proof of work mean?

Proof of work is one way of incentivizing users to help maintain an accurate historical record of who owns what on a blockchain network. Bitcoin uses proof of work, which makes this method what to look for when investing in cryptocurrency important part of the crypto conversation. Blockchains rely on users to collate and submit blocks of recent transactions for inclusion in the ledger, and Bitcoin's protocol rewards them for doing so successfully. This process is known as mining.

There is stiff competition for these rewards, so many users try to submit blocks, but only one can be what to look for when investing in cryptocurrency for each new block of transactions. To decide who gets the reward, Bitcoin requires users to solve a difficult puzzle, which uses a huge amount of energy and computing power. The completion of this puzzle is the "work" in proof of work.

For lucky miners, the Bitcoin rewards are more than enough to offset the costs what to look for when investing in cryptocurrency. But the huge upfront cost is also a way to discourage dishonest players. If you win the right to create a block, it might not be worth the risk of tampering with the records and having your submission thrown out — forfeiting the reward. In this instance, spending the money on energy costs in an attempt to tamper with the historical record would have resulted in significant loss.

Ultimately, the goal of proof of work is to make it more rewarding to play by the rules than to try to break them.

» Learn more:

How does Bitcoin work?

What is proof of stake?

Proof of stake is another way of achieving consensus about the accuracy of the historical record of transactions on a blockchain, what to look for when investing in cryptocurrency. It eschews mining in favor of a process known as staking, what to look for when investing in cryptocurrency, in which people put some of their own cryptocurrency holdings what to look for when investing in cryptocurrency stake to vouch for the accuracy of their work in validating new transactions. Some of the cryptocurrencies that use proof of stake include Cardano, Solana and Ethereum (which is in the process of converting from proof of work).

Proof of stake systems have some similarities to proof of work protocols, in that they rely on users to collect and submit new transactions. But they have a different way of incentivizing honest behavior among those who participate in that process. Essentially, people who propose new blocks of information to be added to the record must put some cryptocurrency at stake. In many cases, your chances of landing a new block (and the associated rewards) go up as you put more at stake. People who submit inaccurate data can lose some of the money they've put at risk.

How do you mine cryptocurrency?

Mining cryptocurrency is generally only possible for a proof-of-stake cryptocurrency such as Bitcoin. And before you get too far, it is worth noting that the barriers to entry can be high and the probability of success relatively low without major investment.

How do you pull your money out of crypto?

With a centralized exchange, the process is basically the reverse of buying. But one advantage if you own crypto is that you probably already have everything set up. Here are the steps:

Connect the wallet that holds the cryptocurrencies that you want to sell, and make sure the exchange you’ve chosen supports both that wallet and the asset in question.
Move your cryptocurrency onto the exchange.
Sell your cryptocurrency.
Transfer the proceeds back to your bank account.

Every exchange will handle such transactions differently, so you’ll want to look up the fees and processes for your specific provider. Also, remember that you may be creating

crypto tax

liability when you sell your digital assets.

Disclosure: The author held no positions in the aforementioned investments at the original time of publication.

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