If you are new to crypto, figuring out how to join the crypto world and obtain digital assets can be confusing at first glance. The crypto industry offers numerous ways to take advantage of cryptocurrencies, and multiple gateways for crypto investments.
However, when it comes to becoming a crypto investor, purchasing crypto can be considered the most common way. However, before buying crypto, crypto enthusiasts may want to do their own research to select appropriate assets, and analyze whether or not it can be a good time to enter the crypto market. Once you decide what crypto you want to obtain, follow these five simple steps below to start investing.
1. Selecting a Platform for a Crypto Purchase
The first step in buying crypto consists of choosing a crypto platform. There are a lot of different platforms that offer various services and ways to purchase crypto, however centralized crypto exchanges (CEXs) are typically viewed as the most popular options. This is because centralized crypto exchanges empower users to purchase crypto using fiat currencies, unlike decentralized crypto exchanges (DEXs), and may provide access to multiple crypto services in one place.
When choosing a crypto exchange, pay attention to its reputation, availability in your country, and whether or not it supports your preferred payment methods and cryptocurrency. This will help you form a short list of crypto exchanges that you can use for crypto purchases and trading.
Centralized crypto exchanges have relatively low fees compared to other options. But because CEXs may feature numerous services, they may overwhelm beginners who are trying to find out where to start. If you consider using CEX.IO as your getaway to the crypto world, then you may check out our getting started article.
2. Creating an Account
Once you decide on a crypto exchange, you can register to open an account. In most cases, you may have to go through a verification process to get access to certain services and payment options, or to increase your account limits. The platform may ask you to provide information about your identity and country of residence. This is an essential step to meet regulatory requirements, prevent fraud, and form a secure trading environment.
3. Funding an Account
After the exchange verifies your personal information, you can use a preferred payment method to fund your account. Payment options may differ in terms of fees, processing time, and availability. In order to find the most suitable option, you can compare the limits and specifics of various payment options on the platform, and check what payment methods are supported for your country.
Certain services on crypto exchanges may not require you to fund your account in advance to buy crypto. They can make it look like a single transaction, processing fiat deposits, and crypto purchases together.
4. Making a Crypto Purchase
When you fund your account on the crypto exchange, you are ready to place a cryptocurrency order. For that, you first need to select the market. For example, if you have funded your account with Euro and want to buy bitcoin, you may want to go to the BTC/EUR market to buy crypto directly. It could be useful to check available markets before funding your account to purchase crypto using one direct market. Otherwise, you may place orders on several markets until you finally obtain the preferred crypto.
After choosing the market, you may want to select an order for purchase. Almost all crypto exchanges today offer both market and limit orders. With a market order, you can buy crypto instantly at the best available price in the order book, while a limit order allows you to set a specified price for the crypto purchase. However, a limit order will execute only when a market price reaches a specified level, or when opposite limit orders fulfill your purchase request.
5. Deciding Where to Store Purchased Crypto
When your order executes, purchased cryptocurrency will be sent to your balance on the crypto exchange. After doing that, you have to decide where to store it depending on what you want to do next with your crypto. Ways to store crypto may be divided into two major approaches: leave crypto on the exchange and store crypto in the hot or cold wallet.
If you want to be close to cryptocurrency markets for trading purposes or want to take advantage of certain crypto services such as staking, you may leave your coins on the crypto exchange. However, if you don’t plan to be engaged in crypto markets for a while, you may store crypto on external wallets. Having your crypto in your personal wallet ensures that only you have control over the private key to your funds.
The main difference between hot and cold wallets is that the first ones store information online, while the latter ones are not connected to the internet. Hot wallets are considered more convenient when it comes to regular interaction with cryptocurrencies. On the other hand, cold wallets are typically selected for the higher level of security they provide.
Alternative Ways to Buy Crypto
Although centralized crypto exchanges can be viewed as the most popular choice to buy crypto, it’s still just one of the many ways to join the crypto world. Here are some other common ways to purchase crypto.
ATMs can be described as in-person crypto exchanges. Individuals can put cash into a machine and use it to purchase a preferred cryptocurrency. After the purchase, crypto funds can be transferred to a personal wallet. ATMs have become increasingly popular in recent years, especially in developed countries and areas with bad internet connections. However, ATMs are considered expensive options from the user’s perspective. Quite often, crypto purchases using ATMs have relatively high fees which may include currency conversion, provider commissions, and machine maintenance costs.
Like crypto exchanges, crypto brokerages offer you to buy and sell crypto. Instead of buying assets from other users, you may receive crypto directly from the broker. Furthermore, the price can be set by the broker, and it can be far from the average market price. Some brokers may not provide users the option to move cryptocurrency holdings off the platform after purchase, offering only trading services. In these cases, users may be able to withdraw funds using fiat payment methods only.
Peer-to-peer (P2P) Platforms
Peer-to-peer platforms provide a more direct connection between users than crypto exchanges. If crypto exchanges put all users’ orders in the order book for the further match, peer-to-peer platforms offer users to find a buyer or seller directly and agree on payment methods. After creating an account on the P2P platform, users can post their request to buy or sell crypto and browse through the list of available offers. The P2P platform can act as a guarantor of the transaction between the participants.
Unlike CEXs, decentralized crypto exchanges exist only on-chain, empowering users to exchange cryptocurrencies directly with each other. Typically, DEXs don’t require users to complete verification or provide any personal information, allowing them to remain anonymous. To start trading on DEX, users may need to connect their personal wallets only. However, decentralized exchanges don’t support crypto-to-fiat markets, meaning you may enter them only when you already have cryptocurrencies obtained another way.
Ways to Obtain Crypto Without Investments
As mentioned, crypto purchases can be considered the most common way to obtain different coins and tokens. Nevertheless there are many ways to earn crypto without paying for it which may become an entry point for some crypto enthusiasts. However, “without investments” doesn’t mean it’s free, because you may need to perform certain actions, and spend a lot of time to obtain crypto using these options.
Faucets are known as one of the oldest ways to obtain crypto. The first faucet was created in 2010 and gave away five bitcoins to each new website visitor. Today it may sound unbelievable but at that time it was a way to spread the word about bitcoin, blockchain, and crypto.
Modern faucets are no longer educational and more related to advertising. In most cases, faucets dispense some small amount of crypto for doing easy tasks like completing captcha, clicking banners, visiting websites, viewing ads, or playing browser games. Faucets typically use the so-called claim button that users need to click after a certain period of time to earn a reward. Faucets may open access to withdrawal once a user accumulates a specific amount of coins.
Airdrops and giveaways
There are thousands of crypto projects in the industry that are constantly fighting for the users’ attention. When some new project comes along, it may provide airdrop to raise awareness and get initial support from users. This is not always a completely nocoiner’s way to obtain crypto because in some cases only owners of certain cryptocurrencies may be eligible for an airdrop. But sometimes tokens can be airdropped for joining the platform, or other one-time activities that don’t require having crypto in your account.
In turn, crypto platforms quite often carry out various promotions with random or guaranteed prizes called giveaways. In these one-time events, you may need to do certain promotional actions to increase your chances of winning crypto.
Affiliate and bounty programs
If airdrop and giveaways are more related to one-time events, affiliate and bounty programs provide users options to earn rewards permanently. Affiliate programs empower users to earn rewards for inviting other people to use the platform. The rewards may differ depending on the platform, it could be discounts on the platform or bonuses paid in crypto or fiat.
Bounty programs look similar and typically require users to perform certain tasks on/outside the platform to attract new customers and increase the engagement of existing users.
Tips and payments in crypto
On different forums and social media platforms, crypto enthusiasts may receive tips in crypto from the community for providing interesting and valuable content, answering questions, and helping others. It can be compared with donations to content creators. Typically, such tips are sent using so-called crypto tipping bots. Besides, if you already do a certain full-time job, you may ask people to pay you in crypto, and accumulate funds without investments.
Regardless of what way to obtain crypto you choose, make sure that your current actions in the cryptocurrency market comply with your investment goals. Keep in mind that cryptocurrency prices can be extremely volatile. Therefore, consider using different risk management approaches when joining crypto markets. In addition, don’t mind doing additional research, especially if you see an offer to obtain crypto that seems too good to be true.