When Bitcoin came out, we thought anyone who bought into it was absolutely crazy. Now those who invested even a small amount would be millionaires. That’s not a joke. Just $100 of Bitcoin at its starting point would be worth $48 million today. Those crazy people were clearly brilliant.
Cryptocurrency becomes more popular every day, and new types of cryptocurrency have emerged since Bitcoin’s big debut. It really went mainstream when PayPal launched its own cryptocurrency wallet, allowing you to buy in through its app. Tap or click here for an even deeper dive into Bitcoin.
Even if you want to invest in cryptocurrency, it can be complicated to know where to begin. Here’s the down-low on how and where to buy cryptocurrency, so even complete beginners can enter their own crypto journey.
How do I buy cryptocurrency and what are exchanges?
To buy cryptocurrency, you need to exchange one money for another. There are two types of exchanges, fiat to crypto and crypto to crypto. Fiat money is defined as government-issued currency, so for us, that means the U.S. dollar.
For the sake of this beginner’s guide, we will only discuss fiat to crypto exchanges. An exchange is a service that allows you to exchange your hard-earned money for crypto or exchange crypto into hard-earned money.
There are many on the market. The most established being Coinbase. Using an exchange is just the first step in the process, and it is pretty simple:
- Pick an exchange and open up an account.
- Verify your identity.
- Deposit USD into the exchange.
Here are some popular exchanges to buy cryptocurrency.
- The most popular exchange on the market.
- Buy and sell more than 30 cryptocurrencies.
- Higher fees than other exchanges, 0.5% to 4.5%.
- Insured, in case hackers get to your money.
- Buy and sell 15 types of cryptocurrencies.
- High account minimum, $50 to start.
- Low fees, 0.75% to 2.9%.
- Not available in every state.
- Buy and sell seven cryptocurrencies.
- A popular investing app that many people are already comfortable with.
- No fees and no account minimum!
SoFi Active Investing
- Currently allows you to buy and sell three types of cryptocurrencies, Bitcoin, Ethereum and Litecoin.
- No fees and no account minimums.
- Special promotions for new investors.
- Newer in the crypto market.
- Buy and sell the four most popular cryptocurrencies, Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
- No fees and no account minimums.
- Get two free stocks when you open an account.
- Limited assistance.
What about PayPal?
You might be reading this and thinking, but hey, what about PayPal? PayPal shocked the masses when it announced its new service allowing PayPal users to buy and sell cryptocurrency directly on its established payment platform in 2020.
Its move into the digital currency market brought Bitcoin mainstream and gave its reputation quite a boost. You can now buy four types of cryptocurrency with your PayPal account, Bitcoin, Bitcoin Cash, Litecoin and Ethereum.
It comes with the same security features you already had, just expanded to include your digital currency. A word of caution, however, crypto bought on PayPal stays in PayPal. Tap or click here for more information on PayPal’s move into digital currency.
Where do I store my cryptocurrency and what is a wallet?
Once you buy cryptocurrency, you need to put it somewhere. In theory you can leave your money in the exchange, but it’s a terrible idea. While some exchanges are fairly trustworthy, hacks happen.
The smartest decision is to move your crypto into a wallet. There are two types of wallets, hot and cold. It doesn’t sound easy, but it is.
Hot wallets are for people who want to use their cryptocurrency often, and cold wallets are for long-term storage. Hot wallets are attached to the internet, so think like an app on your phone. This is convenient because you can use it to pay for things like you would your credit card.
Nowadays, more and more places accept crypto as payment. There are dozens of different types of wallets, including apps, paper wallets, and hardware, but let’s keep it simple. Here are a few app wallets you can download on your phone to hold your crypto.
- Storage only for Bitcoin Cash and Bitcoin.
- Available on Apple’s App Store and Google Play Store.
- Includes InstantPay for an easy way to pay with Bitcoin.
- Provides a free live price chart for Bitcoin Cash and Bitcoin as the price fluctuates.
- Allows for easy swap between Bitcoin and Bitcoin Cash.
- Available on Apple’s App Store, Google Play Store and Windows.
- Great security features.
- Easy pay feature.
- Only allows storage of Bitcoin.
- Allows for storage of Bitcoin and Ethereum.
- No maximum daily or monthly limits.
- Limited assistance when you have issues. Mycelium is just a relay and never physically touches your money.
- High-end security.
The importance of your password
With crypto and any online trading, security is a huge factor and also a huge problem. Hackers are smart, and as crypto becomes more valuable, they target it more and more.
Exchanges and wallets have established two-factor authentication (2FA), key phrases, seed phrases and a variety of other technologies to keep your money and information safe. Still, they all come with one giant caveat.
Lose your password, and you’ll likely lose your money. Sometimes you can recover your money if the wallet has a backup. But if you lose the backup, that’s all, folks. So be sure to write down your information somewhere or use something you know you won’t forget.
Keeping track of the market
There is a reason that most economists and investors warn against putting money into digital currency. It’s unstable at best. While sometimes cryptocurrency climbs to staggering rates, other times it takes a huge jump off the high-dive and people have lost their life savings.
If you do invest, it is smart to keep track of the fluctuations in the market. CoinMarketCap is a great resource to keep up with prices and changes.
Some final thoughts on cryptocurrency
Digital currency has been around for a while, and though it may not be a sure investment, neither are stocks. Crypto should be considered just another option in a long list of ways to diversify your portfolio, if and only if you have money to invest.
Remember this golden rule: Don’t invest any money in crypto that you can’t afford to lose.
Note: This is not intended as financial advice, and we’re not endorsing any method, app or particular cryptocurrency. Any investments you make are made at your own risk.