Cryptocurrencies are forms of digital currency that are built using a technology known as cryptography. In the past decade, these coins have grown in popularity around the world. Some of the most popular cryptocurrencies are Bitcoin, Ethereum, and Ripple. Here are some of the best ways to buy crypto.
Using a centralized exchange (CEX)
The most popular method of buying crypto is using a centralized exchange. These are companies that provide a platform where people can buy, sell, and store their coins. They work by matching buyers and sellers of digital coins in a single environment.
Centralized exchanges have also added other services to their ecosystems. Most of them now provide advanced tools to trade spot and crypto futures. Others have introduced crypto derivatives like perpetual futures and tokenized coins.
Buying crypto through a safe exchange is a relatively easy process. All you need to do is create an account, verify your details, deposit funds, and then buy the coins you want. After this, you can decide to store your coins in the exchange’s wallet or transfer them to your cold storage.
A cold storage wallet is one that is not linked to the internet. These wallets are usually safer than hot wallets, but they are a bit inconvenient.
Use a decentralized crypto exchange (DEX)
A DEX is an exchange that leverages smart contracts and decentralized liquidity to facilitate the transfer of cryptocurrencies. They are built on top of other layer-1 or layer-2 blockchains like Ethereum, Solana, and Cardano.
A DEX is significantly different from centralized exchanges. For example, decisions in a DEX are made by community members who own their respective tokens. Trading profits in a DEX are distributed to the token holders.
DEXes have become increasingly popular in the past few months. Data from CoinMarketCap shows that DEXes like Uniswap, PancakeSwap, and dYdX handle billions of transactions every day.
Decentralized exchanges are ideal for experienced crypto investors and traders because they tend to be a bit complicated. Further, unlike CEX exchanges, they don’t have customer service where you can follow up on queries.
Buying crypto CFDs
Another way to buy cryptocurrencies is through a forex or CFD broker. A “contract for difference” is a financial asset that pays the difference between the settlement and closing price. These products make it possible for one to buy cryptocurrencies in a derivative format.
As such, buying Bitcoin’s CFD gives you exposure to its price movement without owning the real coin. CFDs are ideal for traders and not investors since they come with leverage. A key disadvantage is that these brokers tend to offer only a limited number of crypto CFDs on their platforms.
Companies offering online wallets have also made it possible for users to buy cryptocurrencies. They have achieved that by partnering with blockchain infrastructure companies like Paxos. Some of the most popular wallets that have crypto features are PayPal, Skrill, and Cash App.
Buying cryptocurrencies using these companies is a relatively easy process. Account holders should just navigate to the crypto section and select the coin they are buying. After that, the app will deduct the funds from the account balance or from the linked bank account. Like CFD brokers, online wallets provide just a small number of cryptocurrencies on their platforms.
You can also buy popular cryptocurrencies like Bitcoin and Ether directly from their holders. This is made possible by P2P exchanges that provide a safe place for people to trade coins. You just need to create an account and then find sellers.
After finding a well-rated seller, you will initiate a transaction, and the coin will be sent to an escrow account. The coin will be released to you once you make the payment. Examples of peer-to-peer exchanges are Paxful and Binance P2P.
Buying cryptocurrencies is a relatively easy process these days. For most people, it is possible to do it in less than five minutes. After buying your coins, consider placing them in cold storage to prevent them from being stolen.