Introduction
When you buy cryptocurrency, how to store it is one of the most crucial things to think about. You are in charge of the crypto storage as the owner. The basics of cryptocurrency investment are clear to most of the buyers. This is because it is similar to buying traditional assets like stocks or mutual funds in many ways.
However, as with any investment, it is a good idea to begin by spending some time learning about cryptocurrency. This blog will let you know its unique qualities, and how it fits into your overall investment strategy.
How to Buy Cryptocurrency (5 Steps)
You can follow the below steps to buy a cryptocurrency as per your needs:
1. Select a broker or cryptocurrency exchange
Picking a broker or cryptocurrency exchange is the first step in getting cryptocurrency. While both let you buy crypto, there are a few variations between them to be aware of.
- What are Cryptocurrency Exchanges?
It is a platform for crypto investment and trading. Exchanges usually provide minimal costs. However, their complex user interfaces, several trading types, and performance charts can be confusing to new investors. Some popular examples of cryptocurrency exchanges include Zebpay, WazirX, and UnoCoin.
However, simplicity comes at a price and the beginner-friendly options are much more expensive. They cost more than using each platform's standard trading interface for cryptocurrency to invest in. Thus, to cut costs, you could try to gain enough knowledge to use the common trading platforms. So, learn about it before or soon after you buy your first cryptocurrency.
- What is a cryptocurrency broker?
Cryptocurrency brokers ease the process of buying cryptocurrencies. They offer user-friendly interfaces that communicate with exchanges on your behalf. Some may also implement costs that are higher than exchanges. Others make claims to be "free" while profiting by failing to execute their trade at the best available market price. They can also make a profit by selling information about what you and other traders are buying and selling to huge brokerages or funds.
Although brokers are practical, you should also pay attention to the details of the best cryptocurrency to invest in. This is because you may face restrictions while removing your crypto holdings from the platform. Furthermore, some smart crypto investors prefer to store their assets in crypto wallets for further security. For more security, some people select physical cryptocurrency wallets that are not connected to the internet.
2. Create a New Account and Verify It
You can register to open an account after selecting a broker or exchange. This is a crucial action to avoid fraud and satisfy legal requirements before you buy cryptocurrency. Depending on the platform and how much you are buying you may have to verify your identity.
You may not be able to purchase or sell cryptocurrencies before completing the verification process.
3. Deposit Cash to Invest
You must make sure you have money in your account to get cryptocurrency. You can also link your bank account to your cryptocurrency account or use a debit card to make a payment.
4. Order Your Cryptocurrency
You are ready to make your first crypto order after depositing the amount into your account. You can pick from several cryptocurrencies and find the best crypto to buy right now. There are many options from well-known ones like Bitcoin and Ethereum to less well-known ones like Holo.
5. Choose a Storage Option
Exchanges for cryptocurrencies are at risk of theft and hacking. So, if you lose or forget the codes to access your account, you may lose your money. Because of this, you must have a safe location to keep your cryptocurrency. We will discuss more on this, in the next section.
How to Store Cryptocurrency?
How to store crypto safely is one of the first things you need to think about as a beginner. Before clicking the "buy" button, you must know the best methods and locations for storing your cryptocurrency. This will also prevent you from facing an early loss. Hardware devices, software programs, and even plain paper are a few of the ways to store cryptocurrency. You can select the wallet to protect your cryptocurrency once you have information about each storage option.
- Storing Cryptocurrency in a Custodial Wallet
It acts as a default method for storing cryptocurrency. Your cryptocurrency remains there for you by a third party using either cold (offline) storage, hot (online), or a mix of the two. Most of the time, coins you buy via cryptocurrency exchanges, apps, or stock brokers stay in a wallet under their custody. You can move it to your personal hot or cold wallet if you want to keep it there.
However, not all cryptocurrency platforms support this. Some apps and stock brokers only allow you to buy cryptocurrency and sell it. But, you cannot transfer it elsewhere. The wise option in that situation is to make use of their custody wallet.
- Storing Cryptocurrency in a Cold Wallet
It is an offline cryptocurrency wallet and the best way to store crypto for many investors. For example, you can make your free paper wallet. However, hardware wallets are the most common kind of cold wallet. Small devices or hardware wallets connect to your computer and store cryptocurrencies. When transferring and receiving cryptocurrencies, they connect to the internet. But they keep your funds offline the rest of the time.
- Storing Cryptocurrency in a Hot Wallet
A hot wallet stores cryptocurrency online. They usually appear as desktop and mobile apps, but they are also accessible via the web. Moreover, the recovery phrase for hot wallets is the same as for hardware wallets. It is helpful if you ever lose access to the hot wallet. In such a situation, you can use this phrase to get back and use cryptocurrency.
Hot wallets run the danger of hacking because they hold cryptocurrency online. But there are fewer chances of this happening and many investors use hot wallets without incident.
- Storing Cryptocurrency Using a Physical Wallet
A paper wallet is another kind of cold storage also popular as a paper wallet. It is a printout of public and private keys. This can be in the form of both a string of characters and scannable QR codes. You perform your cryptocurrency transactions using these keys. So, with public keys, you get crypto with a paper wallet. However, you need to scan the public and private keys to send cryptocurrency from the wallet.
Paper wallets also have the advantage of offering security by keeping your cryptocurrency offline. These are the best place to store crypto if you want maximum security at the lowest possible cost. This is because it is almost free to create your own. The drawback is that paper wallets are a less practical way to store cryptocurrencies.
Where and How to Use Cryptocurrency?
1. Easily transfer money across borders
Cryptocurrency is an effective option for people supporting family members abroad. This is because anyone can hold and use it. Moreover, Blockchain technology makes cryptocurrency transactions ideal for cross-border payments. It improves transactions by making them easier, quicker, and even cheaper.
2. Buy something from a store
Cryptocurrency is also useful for online transactions via digital wallets. You can buy cryptocurrency and do as much shopping since merchants choose to accept cryptocurrencies in many ways. They accept it either directly or indirectly through a service provider.
Businesses that accept cryptocurrency payments can reach a worldwide client base. Furthermore, they can reduce transaction costs, and offer their goods and services.
3. Buy and sell digital money
A blockchain ecosystem allows for the native exchange of cryptocurrency for money. Every autonomous blockchain has its native cryptocurrency. There are also many blockchains projects that are built on top of other blockchains. For example, Ethereum supports its digital currencies.
4. Use yield farming to increase your profits.
Yield farming is a high-risk decentralized finance method. Yield farming or liquidity mining allows users to maximize interest revenue after they buy cryptocurrency. These farmers migrate their crypto assets continuously to the blockchain networks. They also pay the highest interest rates using smart contracts. These contracts are blockchain-based contracts that may execute automatically.
5. Paying your employees
Paying money to contractors and employees is another use of cryptocurrencies. Companies with a multinational workforce or those who possess large Bitcoin holdings may use these payment methods. Employees can accept digital payments in their currency or use cryptocurrencies.
Conclusion
The uses for cryptography seem to be growing especially at the individual level. Additionally, you must keep it in a crypto wallet instead as you can't store it in a bank. Thus, you need to pick a storage solution that is both safe and easy to access. Furthermore, the use cases for cryptocurrencies have a wide range. You can use them from new, completely crypto-native operations to more effective payment mechanisms. Moreover, you can buy cryptocurrency in many ways as discussed in this blog.
Frequently Asked Questions
Q.Can you buy crypto with a credit card?
Ans.You can buy cryptocurrencies using various payment methods, including bank transfers, credit/debit cards, PayPal, and cash, depending on the exchange and your location. The specific options may vary.
Q.What is the best strategy for buying crypto?
Ans.The best strategy for buying crypto is to research, diversify your portfolio, use dollar-cost averaging, and practice risk management.