How can you buy a dollar? One way is if someone gives it to you. Another way is to exchange it from another currency like pounds or euros. It is the same way you can think of buying cryptocurrency. You are given cryptocurrency units or you exchange units from another currency based on the market value. This blog post will review typical online locations where people exchange fiat money for cryptocurrency units and some suggestions for generating cryptocurrency.
Where to Buy Cryptocurrency: Exchanges
A cryptocurrency exchange is the most popular place to buy cryptocurrencies. Websites like Coinbase, Binance, Bittrex, and 200 others are common destinations for people to purchase and exchange. Some exchanges are global in scope, while others are specialized to a particular region. Do a Google search for the major cryptocurrency currencies in your region.
How do cryptocurrency exchanges work? You have to give a photo ID or be able to verify your identity. Most exchanges accept credit and debit cards as well as bank account transfers. The majority (if not all) of platforms do not take cash or check payments and charge fees for buying, selling, and transferring cryptocurrencies. A site like Cryptoradar.co can help you compare fees among different exchanges. Once you buy cryptocurrencies on an exchange, it’s not recommended to keep them all there. Your funds are subject to theft and the exchange’s security limitations. Two famous security lapses provide reasons for cautionary measures. The Mt. Gox 2014 hack, in which $460 million of equivalent bitcoin was stolen from client accounts; and the Quadriga CX conundrum, in which the company lost $200 million worth of digital cash because only the company’s founder had all of the private keys—and he subsequently died! Before you put money into an exchange, you should research how they protect your money and ask if they have insurance. Make sure to find out how they govern themselves. Better yet, leave the bulk of your cryptocurrencies in a wallet.
Exchanges play an important role in cryptocurrency trading. They allow you to exchange your holdings for another cryptocurrency or fiat currency. For example, you can trade Ethereum for equivalent Bitcoin units at current market rates. Some exchanges enable you to exchange cryptocurrencies with other users, and these networks are called peer-to-peer networks. Some examples of P2P networks are Paxful and LocalBitCoins, which allow people to buy and sell cryptocurrencies among other registered users. Another type of trading exchange is a coin-switcher, which allows the swapping of cryptocurrency coins for another. A few examples are Changelly, Simple Swap, and Swap Zone (a coin-switching comparison site).
An alternative to centralized exchanges is a DEX (decentralized exchange). It allows you to swap cryptocurrency for another without demanding identification. One type of DEX is an Ether swapping platform, which will enable you to trade Ethereum or ERC-20 tokens for another ERC-20 token. Examples of a DEX include Uniswap, 0x, and 1inch.
Where to Buy Cryptocurrency: Apps
Some exchanges also have apps you can download and use on your phone, but that’s not what we’re referring to when we say “apps.” Instead, these apps allow you to buy and sell cryptocurrencies (usually at lower costs than exchanges) but lack other special features.
Two popular apps that provide money management also provide cryptocurrency buying: Robinhood and Cash App. Robinhood allows you to purchase a limited number of cryptocurrencies and doesn’t charge extra fees. Still, the drawback is that your wallet is stuck there, and you can’t transfer cryptocurrencies (the platform is testing a feature to allow the transfer of cryptocurrency funds). Cash App allows you to buy and receive Bitcoin, but it does charge fees. You can send funds to other wallets.
Mobile hot wallets have cryptocurrency buying abilities—bypassing the need for exchanges. Most hot wallets for phones fall under software hot wallets since public and private keys are stored in the software. What’s the difference between hot wallets and Cash App/Robinhood? It’s simple: you don’t own the private key. Hot wallets let you manage your keys and public addresses. But with Robinhood and Cash App, they hold the private key. This fact is vital to know for security considerations. There are many software hot wallets available to choose from. The drawback of hot wallets is their vulnerability to hacking attempts.
Where to Buy Cryptocurrency: ATM
If you’re looking to skip exchanges and don’t want to acquire cryptocurrencies through an app, an ATM might provide a solution. According to CoinATMRadar, ten new cryptocurrency machines are installed per day.
How does a cryptocurrency ATM work? Using Bitcoin as an example, a Bitcoin Teller Machine (BTM) allows you to provide your public address (generated by your wallet). Some BTMs will print a paper with a QR code; you scan the code to get the private key and then use it to access Bitcoins. And, some BTMs will send the QR code to your email or allow you to set a password so you can access an encrypted version of the email (more reading: blog.unocoin.com/how-do-bitcoin-atms-work-b774828bd9ad).
Where to Buy Cryptocurrency: In-person
Finally, another way to buy cryptocurrency is directly from another person. This method isn’t referring to peer-to-peer networks but instead more like classified sites and forums like Craigslist. You meet a person in public, exchange fiat money, and then the other person transfers funds to your wallet via a public address. Safety risks and transfer assurances should be mitigated and decided ahead of the actual meeting.
How to Buy Cryptocurrency with Debit and Credit Cards
It’s not hard to use credit and debit cards to buy cryptocurrency. Most exchanges accept them for payment but may charge a higher fee. Some apps and hot wallets allow you to link them as payment methods.
A new generation of fintech platforms allows you to purchase cryptocurrencies using debit/credit cards and transfer the funds right away without going through an exchange. One of the drawbacks of crypto exchanges is that you must wait 3-10 days before withdrawing crypto into another wallet (amount of days varies according to the service). By utilizing direct purchasing features from two services–Moonpay and Coinify–cryptocurrencies will appear in your wallet within 30 minutes. Here’s how they work:
- You provide your payment details
- You provide your wallet’s public address details
- You may need to provide identification and complete a KYC procedure
- When all the steps are finished, crypto funds will appear in your blockchain wallet
How to Buy Cryptocurrency with Prepaid Cards and Gift Cards
Buying cryptocurrency with prepaid cards and gift cards can be tricky. First, some exchanges outright reject payment methods without a billable address. Second, you can’t link them as payment methods in money apps and wallets. But there are options available.
Some exchanges accept prepaid cards. Usually, the only ones they will take are Visa and Mastercard prepaid cards. However, be prepared to pay higher fees. Coinsutra.com has a list of cryptocurrency exchanges that accept cryptocurrency gift cards.
What about trading gift cards for cryptocurrency? There’s a marketplace for Bitcoin that trades gift cards for bitcoin, and Paxful allows people to exchange prepaid and gift cards for Bitcoin.
How to Buy Cryptocurrency with PayPal
PayPal is accepted at some major exchanges and apps, but don’t expect to see it as a funding option in most places. eToro exchange is one of the major exchanges that accept PayPal deposits. If you insist on using PayPal, your other options are peer-to-peer exchanges and in-person transfers (PayPal and Venmo are possible). The two best-known P2P marketplaces (Paxful and LocalBitCoins) allow Bitcoin buying using PayPal.
If you want to trust PayPal to store your coins and tokens, you can purchase cryptocurrency directly through PayPal’s interface. The platform doesn’t allow you to transfer cryptocurrencies, but you can purchase products or exchange them for fiat money. Just like with Robinhood and PayPal, you don’t own the private key, and you should find out about what happens if theft occurs.
How to Buy Cryptocurrency with Cash
No exchange accepts cash, and therefore your only options are P2P marketplaces, in-person trading, and cryptocurrency ATMs. Peer-to-peer exchanges accept a variety of cash payments, including methods like MoneyGram and Western Union. Marketplaces like Paxful and LocalBitCoins permit various forms of cash payments between users. With cryptocurrency ATMs, you can insert cash and have cryptocurrency sent to your wallet. Finally, you can transfer some money in person with another individual, but you might want to take precautions and make agreements beforehand.
Where to Buy Your First Cryptocurrency
Most new cryptocurrency buyers will start with an exchange, and Coinbase is usually the primary destination for newbies in the United States. It provides a large selection of cryptocurrencies, a user-friendly interface, and two-factor authorization. There’s only been one instance of the platform being hacked, but incidents of SIM swapping (Coinbase uses your mobile phone to confirm logins) are known to occur. Become comfortable with an exchange when you start but begin learning about off-site wallets to secure your funds further.
Where to Earn Cryptocurrency
This section deserves a more extended explanation, but you can earn cryptocurrency units without buying them.
One way to earn cryptocurrency is by mining. And miners earn cryptocurrency by using their machines to verify transactions. Mining for the top cryptocurrencies requires expensive equipment, but less-volume and less popular alternatives could be more affordable for individuals.
You can also earn additional units by staking cryptocurrencies. There are two ways to stake: by providing your machine to a blockchain network to validate transactions or delegating your funds to an existing stake pool and earn a share of rewards in return.
Some platforms offer cryptocurrency for performing tasks. STEEMIT provides tokens to article authors. Brave is a browser that offers BAT tokens for browsing the web and accepting advertisements.
Finally, there’s defi which allows you to earn interest income and dividend units.
There’s a myriad of ways to get started with cryptocurrency. Use the method that’s most comfortable and accessible for you.
