When Bitcoin’s value reached over $50,000 in early 2021, nearly everyone had heard the term “crypto.” In fact, the thought of buying cryptocurrency has crossed many people’s minds, but there are still questions about how to purchase crypto and what the benefits are.
In this article, we will discuss all of that and more.
How To Buy Cryptocurrency
Purchasing crypto can be done in just a few easy steps and offers advantages that might surprise even the most skeptical investor. To get started, let’s look at how to buy cryptocurrency.
1) Choose A Crypto Exchange
The first step is to partner with a crypto exchange, like Vauld. These digital marketplaces allow users to buy and trade crypto and can be found all across the internet, but not every platform should be trusted with your funds.
When searching for an exchange to partner with, be sure to watch out for red flags and ask questions such as:
- Does the site seem credible?
- Are there verifiable sources to back up the exchange?
- Do they list their founders on their website?
- Are they transparent about company practices and values?
- Do they offer insurance in case of a security breach?
- Are their partners publicly listed on their site?
If an exchange feels unreliable, then it is best to trust your instincts and reach out to others before signing up and depositing funds. Even if an exchange seems trustworthy in every other way, a lack of insurance means that should a breach take place, your funds will disappear.
Some reliable platforms will also offer benefits that help them stand apart from others. To get the best crypto experience, be sure to look for:
- Competitive interest rates
- Fixed-term deposits and compounded interest
- An extensive list of tokens to choose from
- No hidden fees
- Multiple crypto opportunities, such as trading and borrowing
2) Create Your Account
Once you’ve chosen the right crypto exchange with ideal security features, you will need to create an account. This might entail creating a username and password, agreeing to the exchange’s terms and conditions, and verifying your identity for security purposes.
To keep your account secure, it is not uncommon for an exchange to ask for documents such as a driver’s license or social security number (SSN). A platform with good security measures might also have you set up multi-factor authentication (MFA) to protect against cyberthreats.
3) Deposit Funds
The next step in buying cryptocurrency is to verify a payment option for purchasing tokens. On most exchanges, this is as simple as linking a bank account or a credit card.
It is important to note that different tokens come at different costs. Connecting a credit card with a low purchase limit if you intend to purchase larger amounts of Bitcoin or Ethereum may not be ideal due to that limit. Choosing a bank account is typically a better option.
4) Determine Which Crypto To Buy
With so many choices available, buying cryptocurrency is a great way to diversify investments. But when you make your first purchase, it is recommended to start small and focus on finding a token that works best for your interests.
Stablecoins like DAI are a great option for users interested in crypto but hesitant of its volatility. With stablecoins, the value of the token is derived from an external asset, such as precious metals or the U.S. dollar.
More volatile options like Bitcoin offer a greater return on investment, and users are not required to purchase one full token at a time. Instead, buying fractions of a token is a great way to invest in more popular crypto without immediately spending $50,000.
5) Store Your Crypto
Finally, all that’s left to do is securely store your crypto assets. Users can store tokens in their own crypto wallet apart from the exchange, but most platforms will allow tokens to be stored on their exchange in a company-provided wallet.
There are benefits to storing crypto in different ways. For example, cold wallets allow users to take their assets offline to avoid cyber attacks. Some of the greatest benefits of buying cryptocurrency, however, are received by storing assets with a crypto exchange, like Vauld.
Benefits Of Buying Cryptocurrency
While not every token can increase in value the way Bitcoin has, there are still notable benefits that every crypto holder can experience from owning any number of tokens. Read below for a few examples of the advantages of buying cryptocurrency.
Better Interest Rates
Earning interest on investments such as Certificates of Deposits (CDs) at traditional banks has become an arduous, uphill battle. A financial opportunity that used to offer interest rates of over 8% has plummeted to around 0.5%.
Buying cryptocurrency allows you to once again earn rates upwards of 13% on certain tokens, and platforms that let users borrow against tokens also offer significantly lower borrowing rates for taking out a personal loan in fiat currency.
Just as you would diversify investments in the stock market to increase profits and manage risk, market exposure to the industry of decentralized finance can help offset volatility while building your wealth.
An added benefit of diversifying your portfolio with cryptocurrency is access to a 24/7 market. With traditional stocks, trades and purchases are limited to a strict window of time during the day. But buying cryptocurrency can be done at any time and on any day during the year.
The continually rapid growth of crypto has provided multiple ways for users to benefit financially. Setting Bitcoin aside, the potential for any token to grow exponentially increases daily.
Ethereum (ETH), for example, increased to $4,800 during the fourth quarter of 2021. Litecoin (LTC), Cardano (ADA), and others have similar potential to take off in upcoming years.
Rather than relying on banks or other intermediaries to complete transactions, the decentralization of cryptocurrency allows for peer-to-peer (P2P) transactions.
Removing intermediaries from the equation means avoiding the setbacks that come with traditional finance. This gives you more power and provides a quick, safe, and reliable way to complete transactions between individuals.
Global Payment Opportunities
With traditional finances, sending funds to different countries is a time-consuming and sometimes costly conversion process. But exchanging crypto across the globe means avoiding penalties and stress associated with international trade.
Crypto offers an even greater advantage for those living in a country with historically unreliable or corrupt banking services connected to a nation’s government.
For example, if a bank wrongfully blocks a citizen or group from receiving funds, those people have no way to withdraw their assets. With cryptocurrency, the government is unable to restrict access to these funds, which can be used globally.
Expert Tips For Buying Cryptocurrency
The steps for buying cryptocurrency and understanding the benefits of owning crypto assets are critical for investing in decentralized finance, but they are not the only things to keep in mind during the process.
To ensure a successful purchase each time, here are a few expert tips to make the most of your crypto endeavors.
Develop A Strategy
When regularly buying cryptocurrency, developing a strategy adds consistency and mitigates overall risk. This might include setting strict price points for when to purchase or buying and selling certain tokens on the same day for a short-term investment.
Manage Your Risk
Buying cryptocurrency comes with inherent risks, so knowing how to manage these risks allows you to focus on earning.
Diversifying your portfolio and developing a strategy are great ways to do this. It is also important to stay cautious of red flags and avoid emotion-based trades that result from media coverage of certain tokens that have quickly grown in popularity.
Build Wealth Automatically
Knowing which crypto to purchase and when to buy can be stressful. Regardless of market knowledge or constant monitoring of charts, the volatility of crypto can make it impossible to predict what the best course of action might be.
Automated trading features offered by exchanges like Vauld allow you to make the most of your trades without stress.
Our Automatic Investment Plans (AIPs) allow you to select a basket of crypto assets or customize your own, then set parameters such as which intervals to buy at or when to use our “buy the dip” function.
Using algorithmic technology, AIPs know the best times to buy and sell crypto so you can still get the best prices without spending unnecessary time on research.
Buy Crypto With Confidence
Although buying cryptocurrency is a relatively simple process, developing a strategy, managing risk, and utilizing resources offered by your exchange are the best ways to ensure financial success while investing.
Find out the difference a customer-focused platform can make by signing up with Vauld today.