There are numerous ways that decentralized finance can help you build your wealth. Knowing how to buy cryptocurrency is the first step to diversifying your crypto portfolio and achieving your financial goals.
In this article, we’ll address what cryptocurrency is, how to purchase it, and how you can build your wealth through buying crypto.
What Is Cryptocurrency?
Cryptocurrency is surrounded by many misconceptions, like the idea that it’s a money-laundering haven, a scam, or just an average source of payment.
The truth is that this digital currency can be broken down into a few critical elements that make it its own unique concept. Let’s take a closer look at what those elements are.
The decentralization of crypto is a key reason it was created in 2009. This means that crypto transactions are part of a peer-to-peer process that does not require the use of third parties or intermediaries, like banks.
Decentralization benefits users by creating an environment where you don’t have to trust another party to accurately process and record transactions.
Instead, the data available on the crypto ledger — known as the blockchain — is public knowledge and cannot be changed or manipulated, ensuring every transaction is legitimate.
Speaking of transactions, once they are documented on the blockchain, they can only be refunded by the party that received the funds. This helps avoid fraudulent practices such as chargeback fraud.
Because of this structure, if you’re selling crypto, you avoid the typical surcharges associated with electronic payments like credit cards. If you’re purchasing crypto, you can do so at a lower cost, creating a more fair transaction for all parties involved.
Another aspect of cryptocurrency is right in the name. Encryptions help verify transactions by safely transmitting and storing data throughout the blockchain while also retaining certain levels of anonymity.
While “anonymous” is the easier term to use when talking about cryptocurrency, the technical term is “pseudonymous.”
This is an important distinction because anonymity means completely concealing the identity of an individual, while pseudonymity means creating a nickname or code that acts as a user’s likeness.
This highlights one of the main misconceptions surrounding crypto:that it has made money laundering a safe activity.
The fact is cryptocurrency is most certainly traceable. And while pseudonymity provides confidentiality, it does not protect the illegal practices of bad actors. Overall, buying and using crypto better protects you from hackers and offers more user confidence in a financial system.
Of course, you must own coins to reap the benefits of crypto, so let’s look at the steps to purchasing cryptocurrency and begin your wealth-building journey.
How To Buy Cryptocurrency: Getting Started
1) Select A Crypto Exchange
The first step to buying crypto is selecting a crypto exchange, like Vauld. These platforms provide all of the resources you need to buy, sell, trade, invest, and more, so choosing the right one can be the difference between a positive experience and a poor one.
Finding the best option is easy when you know what to look for. An ideal exchange should have:
- Multiple earning options, such as fixed deposits and trading
- Competitive interest rates for earning and borrowing
- An arsenal of security features
- An extensive list of tokens to choose from
- A verifiable list of venture-capital partners
- No hidden or outrageous fees
- Excellent customer service
- Compounded interest and weekly payouts
No two exchanges are the same, but these are a few basic features that ensure you’re partnering with a trustworthy platform that’s proven to help customers safely grow their investments.
2) Create Your Account
Once you’ve chosen the best exchange, you’ll want to create your account. This is usually as simple as providing information that includes a username, email, password, and a form of identification.
3) Set Up Payment
Next, add your preferred payment method for buying crypto. Depending on the exchange, this method may also be used for any disclosed fees from withdrawing funds to maker or taker fees while trading.
4) Choose Your Crypto
One of the more complicated steps is deciding which tokens to buy. With options like more volatile bitcoins to commodity-backed stablecoins, it can be difficult to determine which cryptocurrency is best for you.
An expert tip is to diversify your assets to mitigate risks. To make it easy, our Automatic Investment Plans (AIPs) at Vauld allow you to select a basket of crypto assets or customize your own and then set parameters, such as which intervals to buy at.
Finally, all that’s left to do is make your purchase. If you’ve chosen a customer-focused crypto exchange, you’ll earn as soon as you make your first deposit, gaining access to multiple earning opportunities.
With all of this in mind, here’s a list of the ways you can use cryptocurrency to actively and passively build your wealth.
How To Buy Cryptocurrency: Building Wealth
The first and easiest way to earn using crypto is to save it with a trusted exchange like Vauld. When crypto platforms offer competitive interest rates on basic savings accounts, this means you receive rates currently as high as 9.41%.
Compared to interest options offered through traditional banks, earning interest on your crypto investment is a more lucrative choice. Plus, locking your funds in a fixed deposit raises this rate to as high as 12.68%.
It may seem counterintuitive to buy crypto only to trade it, but this tactic has opened up an entirely new way for people to earn.
Trading cryptocurrencies entails speculating the rise or fall of a specific coin’s value. Utilizing this tactic often means predicting the market to buy low and sell high and ultimately turn a profit.
There are many reasons why trading crypto is such a financially beneficial opportunity. Here are just a few:
- Improved liquidity allows for quicker transactions, better pricing, and more accurate analysis for manual and automated trades
- 24/7 market hours allows for trades to be made any day at any time
- Crypto volatility allows rapid intraday price movements for high returns
- There are trading strategies available for every type of user
Additionally, automatic features, like Instant Swap on Vauld, let you immediately swap between cryptocurrencies. Instant Swap simplifies the day trading process and is perfect for anyone trading in small amounts.
If you feel confident adding more complexity to your wealth-building strategy, then staking crypto may be for you.
When staking crypto, you commit your assets to a blockchain network, locking up a portion of your crypto for a period of time to:
- Verify the transactions that occur
- Support the blockchain
- Earn crypto
There are several things to research and decide when using this method, such as whether you will delegate or validate transactions.
Validators verify transactions before they are added to the blockchain. Delegators assign tokens to a validator candidate’s pool to increase their chances of receiving tasks and creating a block, which allows everyone involved to earn rewards.
While you have an increased potential for earning by staking crypto, the downside is having to lock up assets. During these lock-up periods, you do not have access to your crypto and cannot liquidate your assets.
A major benefit of staking is that the costs of operation mainly stem from the price of the crypto and running a nonstop internet connection. Mining cryptocurrency offers similarly beneficial rewards, but it requires costly equipment.
What exactly is mining?
Since cryptocurrency is decentralized, there is no central party controlling crypto supply as the Federal Reserve does for the U.S. dollar. Therefore, mining crypto is how new coins are put into circulation.
The mining equipment is a sophisticated technology used for solving complex math problems. The user who solves the problem first earns a reward in the form of whichever crypto was mined.
Successfully mining Bitcoin, for example, reaps a reward of 6.25 bitcoins, over $200,000 worth of assets. To earn rewards, most users join a network of miners known as a mining pool. Although this distributes the reward across all participants, it increases the odds of success.
Buy Cryptocurrency And Build Your Wealth With Vauld
With so many ways to buy cryptocurrency and build your wealth, figuring out how to buy cryptocurrency is perhaps the least complicated part. Deciding which coins to purchase and how to invest them is simple when you partner with the right exchange, too.
By partnering with Vauld, you receive an extensive list of cryptocurrencies to choose from and several ways to earn. Whether you intend to trade or lock your funds in a fixed deposit, there’s an option for everyone.
Vauld users also experience quality customer service, optimal security features, and competitive interest rates. Sign up with Vauld today and explore all the ways we can help you perfect your wealth-building strategies.