Introduction

If you are new to the world of cryptocurrencies, figuring out how to buy bitcoin, dogecoin, ethereum, and other cryptocurrencies can seem daunting at first.

It's pretty simple. You can start investing in cryptocurrencies by following these five easy steps.

Remember: investing in cryptocurrency is purely speculative and your capital is at risk. You may lose some or all of your money.

In addition, cryptocurrency trading in different countries is largely unregulated, and if something goes wrong, for example, the company goes bankrupt, you will not be able to resort to insurance.

Choose a broker or crypto exchange

To buy cryptocurrency, you first need to choose a broker or crypto exchange. While either of them allows you to buy cryptocurrencies, there are key differences between them to keep in mind.

What is a cryptocurrency exchange?

A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types, which can turn off new crypto investors.

Some of the most famous cryptocurrency exchanges are Binance, KuCoin, Probit and others. While the standard trading interfaces of these companies can be overwhelming for beginners, especially those with no stock trading experience, they also offer convenient and easy buying options.

However, convenience comes at a price, as beginner-friendly options cost significantly more than it would cost to buy the same cryptocurrency through each platform’s standard trading interface. To save on costs, you can learn how to use standard trading platforms before you make your first cryptocurrency purchase, or shortly thereafter.

Important Note: As a newbie to cryptocurrencies, you should make sure that the exchange or brokerage you choose allows transfers and purchases in fiat currencies (such as Pounds Sterling and the US Dollar). Some exchanges only allow you to buy cryptocurrency using another cryptocurrency, which means that you will have to find another exchange to buy the tokens your preferred exchange accepts before you can start trading cryptocurrencies on that platform.

What is a cryptocurrency broker?

Cryptocurrency brokers make it easy to buy cryptocurrencies by offering easy-to-use interfaces that interact with the exchanges for you. Some charge higher fees than exchanges. Others claim they are "free" by making money by selling information about what you and other traders buy and sell to large brokerages or funds, or by not making your trade at the best possible market price.

While they are undoubtedly convenient, you should be careful with brokers because you may face restrictions on moving your cryptocurrency assets off the platform. With some, for example, you cannot transfer your crypto assets from your account.

It may not seem like such a big deal, but savvy crypto investors prefer to store their coins in crypto wallets for added security. Some even opt for hardware crypto wallets that are not connected to the internet for even more security.

Create and verify your account

After you choose a cryptocurrency broker or exchange, you can register to open an account. Depending on the platform and the amount you plan to buy, you may need to verify your identity. This is an important step for fraud prevention and regulatory compliance.

You may not be able to buy or sell cryptocurrency until you complete the verification process. The platform may ask you to provide a copy of your driver's license or passport, and you may even be asked to upload a selfie to prove that your appearance matches the documents you submit.

Deposit cash to invest

To buy cryptocurrency, you need to make sure that you have funds in your account. You can deposit money into your crypto account by linking your bank account or by making a payment with a debit card.

Place an order for cryptocurrency

Once you have money in your account, you are ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, from big names like Bitcoin and Ethereum, to more obscure cryptocurrencies like Theta Fuel or Holo.

When you decide which cryptocurrency to buy, you can enter its ticker symbol - for example, Bitcoin is BTC - and how many coins you would like to purchase. On most exchanges and brokers, you can purchase fractional shares of cryptocurrencies, which will allow you to buy a portion of expensive tokens such as Bitcoin or Ethereum, which are otherwise worth thousands of rupees.

Choose a storage method

Cryptocurrency exchanges are not supported by different countries and are at risk of being stolen or hacked. You can even lose your investment if you forget or lose the codes to access your account. This is why it is so important to have a safe place to store your cryptocurrencies.

As noted above, if you are buying crypto through a broker, you may have little to no choice in how you store your crypto. If you buy cryptocurrency through an exchange, you have more options:

Leave the cryptocurrency on the exchange. When you buy cryptocurrency, it is usually stored in a so-called cryptocurrency wallet attached to an exchange. If you don't like the provider your exchange partners work with or want to move it to a safer location, you can move it off the exchange to a separate hot or cold wallet. Depending on the exchange and the size of your transfer, you may have to pay a small fee for this.

Hot wallets. These are crypto wallets that are stored online and run on devices connected to the Internet such as tablets, computers or phones. Hot wallets are convenient, but the risk of theft is higher because they are still connected to the internet.

Cold wallets. Cold wallets are not connected to the internet, making them the most secure option for storing cryptocurrencies. They take the form of external devices such as a USB stick or hard drive. However, you must be careful with cold wallets: if you lose the keycode associated with them, or the device breaks or malfunctions, you can never get your cryptocurrency back. While the same can happen with some hot wallets, some are managed by custodians who can help you get back into your account if you get banned.

Alternative Ways to Buy Cryptocurrency

While buying cryptocurrencies is a major trend right now, it is a volatile and risky investment choice. If investing in cryptocurrencies on an exchange or through a broker doesn't seem like the right choice for you, here are a few options for indirectly investing in bitcoin and other cryptocurrencies:

Wait for Crypto Exchange Traded Funds (ETFs)Exchange-traded funds are popular investments that allow you to buy access to hundreds of individual assets in one fell swoop. This means that they provide immediate diversification and are less risky than single investments.

There is a huge demand for cryptocurrency ETFs that allow you to invest in many cryptocurrencies at once. International investors need to open a global account or invest through brokerage platforms from an RBI approved channel. In order to invest in cryptocurrency ETFs abroad, investors need to transfer money in accordance with the liberalized money transfer route.

Invest in crypto-related companiesIf you prefer to invest in companies with real products or services that are subject to regulatory oversight, but still want access to the cryptocurrency market, you can buy shares in companies that use or own cryptocurrencies and the blockchain they are based on. You will need an online brokerage account to buy shares in public companies such as:

Nvidia (NVDA) This technology company designs and markets the GPUs that underpin the systems used to mine cryptocurrencies.Square (SQ) This small business payment service provider has purchased millions of dollars worth of bitcoin since October 2020. In February 2021, the firm reported that Bitcoin represents about 5% of the cash on its balance sheet. In addition, the Square Cash app allows people to buy, sell, and store cryptocurrencies.

As with any investment, make sure you consider your investment goals and current financial situation before investing in crypto or individual companies that have a large stake in it. Cryptocurrency can be extremely volatile - one tweet can send its price plummeting - and it's still a very speculative investment. This means that you must invest carefully and with care.

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