How to Invest In Cryptocurrencies? A Detailed Guide and Essential Tools

Here is you complete guide to investing in cryptocurrencies right from being a beginner to the use of advanced crypto tools. 

Over the last decade the cryptocurrency market has matured with the introduction of new products and services as well as the growing participation of investors. Cryptocurrency exchanges are working on improving their infrastructure while providing better security to the retail investors. 

 

 

Moreover, with the better regulatory clarity, big organisations and institutional players are planning to enter in the crypto market. This could be one of the most opportune times for global retail investors to park their money in the crypto market. 

So if you’re just starting out, here is a detailed guide to investing in cryptocurrencies. Here you will get a complete overview of:

 

1. Different ways of investing in cryptocurrencies 
2. Most popular cryptocurrency exchange and different factors to consider while selecting the best crypto exchange
3. Peer-to-Peer Exchange and Bitcoin ATMs
4. Cryptocurrency Wallets
5. Cryptocurrency Investment tools for advanced users
6. Cryptocurrency loans, cryptocurrency staking, cryptocurrency trading bots
7. Different Mistakes to Avoid While Investing In Cryptocurrencies

 

The most typical ways to invest in crypto for newbies

So that if you are a beginner and want to start investing or trading cryptocurrencies, one of the first places you will land is a cryptocurrency exchange. Choosing the right crypto exchange is one of the most essential steps to participate in the crypto market. 

But before you decide on a cryptocurrency exchange, below are a few factors that you would want to consider. 

 

Factors to Consider While Choosing the Best Crypto Exchange

• Market Reputation: It is very important that you make a thorough research about the crypto exchange you want to use. You must check the market reputation of the cryptocurrency exchange, the number of satisfied customers it currently serves, whether it is properly regulated or not, and several other things.
  
  This is because several exchanges have been hacked or owned by criminals in the past with the customer being the ultimate loser. Thus, you must know the complete history of the exchange before you trust them and deposit your money.
  
  
• Privacy and Safety: These are the two major factors while selecting a crypto exchange. With regulatory concerns, almost all of the reputed crypto exchanges require its users to submit their KYC details. It is important that the crypto exchanges offers the highest level of privacy when you entrust them with all your personal ID details.
  
  Safety is one factor which you certainly don’t want to give a skip. Make sure the crypto exchange you choose has the right infrastructure to combat external threats and hacks. Also, the exchange should provide you with safe storage solutions for your crypto funds.
  
  
• Crypto Exchange Fees: You must be smart in assessing the free structure of your crypto exchange. Compare the fee model for different crypto exchanges. Cryptocurrency exchanges usually share around average 4% for credit card purchases. For banks transfers, the fee is usually 1-1.5% of the traded value.
  
  Don’t make a mistake here! Choosing the crypto exchange with the lowest fee structure is not always the right decision. It is possible that a crypto exchange charging slightly higher invests more in enhancing security and better customer support. This could be beneficial to the investor in the long run.
  
  
• Speed and Availability: With the growing participation of global investors crypto exchanges are often overwhelmed with massive orders. A crypto exchange with robust and efficient infrastructure can execute orders with optimum speed. Besides, note that the mode of payments like credit card or bank transfer can also impact the order execution speed.
  
  Availability to serve the customers is also important. During the times of FOMO or the peak of the crypto mania, the exchange should be able to provide a seamless and hassle-free service to its customers.
  
  
• Limits: Before deciding to join a crypto exchange you need to check if the exchange supports your trading and investing needs. Whether the exchange supports trading or investing in crypto assets in large quantities or not.
  
  On the other hand, exchanges also have withdrawal limits which allow users to withdraw only certain funds at a given time. Usually, customers prefer OTC markets to buy or trade Bitcoins in a large amount. However, some OTC markets may not support altcoins.
  
  

 

The Best Cryptocurrency Exchanges Worldwide

 

Over the last three years, a number of cryptocurrency trading platforms have arrived in the market. Here’s our pick to some of the most popular and widely used crypto exchanges. 

 

1. Binance: Founded in 2017 and based out of Malta, Binance is one of the fastest growing global cryptocurrency exchanges. Binance has nearly 150 cryptocurrencies listed on its platform and emerged as the biggest crypto exchange in 2018, in terms of trading volumes.
   
   The Binance exchange has got the lowest fee structure in the entire crypto industry. It hosts a very simple and easy-to-use interface allowing its users and newbies to easily navigate through different functions.
   
   Binance has also launched its dedicated application on both iOS and Android platforms. The reason behind Binance’s growing popularity is that the platform brings a range of interesting initiatives frequently.
   
   Some of its popular initiatives are the Binance Angel Program and the Community Coin Per Month.
   
   Binance also owns its native cryptocurrency Binance Coin (BNB). The exchange is also emerging as a go-to platform for new crypto projects to launch their token’s through Binance’s Initial Exchange Offering (IEO). 
   
   
2. Coinbase: Founded in 2012, Coinbase is one of the oldest cryptocurrency exchanges based in San Francisco, USA. Coinbase is the world’s largest Bitcoin broker with a presence in over 30 countries like the US, UK, Australia, Canada, and other parts of Europe.
   
   Coinbase provides a fleet of options to purchase cryptocurrencies through debit card, credit card, Paypal, bank transfers, SEPA transfers, etc. Besides the crypto trading facility, Coinbase also offers a “wallet” facility to securely store the cryptocurrencies.
   
   Over the last year, Coinbase has been working its way out to bring institutional players to the crypto market. It has launched its cryptocurrency custodian platform Coinbase Custody to securely store large sums worth of digital assets. Similarly, it has a professional trading platform ‘Coinbase Prime’ for institutional clients.
   
   It also has a professional trading platform for individual traders called the Coinbase Pro. This platform is available only in certain geographies and is completely secured and backed by insurance. The interesting fact about Coinbase Pro is that it is the former GDAX platform.
   
   Coinbase provides massive liquidity and high buying limits to its customers. Moreover, it also facilitates “instant buy” option with a debit card. Another downside is that the bank transfer purchases can take up to five days.
   
   
3. BitMex: BitMex is a high volume crypto trading platform launched in 2017. The platform is led by CEO Arthur Hayes and a team of talented economists, web developers, and high-frequency traders.
   
   BitMex is popular for the trading of Bitcoin and its futures contracts in addition to several other altcoins. BitMex features a highly customizable interface with light and dark themes and several other easy-to-use features.
   
   Being a feature-rich platform, BitMex is more preferred by advanced traders who can leverage the platform’s advanced features to its full potential.
   
   The BitMex exchange provides excellent security and 24 x 7 customer support through email.
   
   
4. Changelly: Changelly is one of the widely used crypto exchanges popular for its fast and convenient services. The exchange currently supports more than 35 cryptocurrencies along with the EUR and USD fiat pairs.
   
   Changelly is one of the easiest exchanges to use and hosts a very friendly user-interface. Once you’re on the Changelly platform, its bots will connect you to some of the busiest crypto exchanges online thereby giving you the best price of purchase.
   
   You just need to mention the cryptocurrency you want to buy and its quantity. The good thing about Changelly is that while other crypto exchanges require you to deposit your money, this is an “instant exchange”.
   
   Keeping your deposits for a longer time with other exchange exposes you to a huge risk of losing your money to the external hacker. The good thing about Changelly is that it has a very small window for funds access. Thus, even if a scammer attacks the platform, it will soon announce about it and all deposits will automatically stop going to Changelly.
   
   
5. Bittrex: This US-based exchange is very popular among cryptocurrency investors and supports over 190 cryptocurrencies on its platform. To ensure the safety and security of user funds and data, the platform operates in compliance with the US regulators.
   
   Bittrex witnesses one of the highest trading volumes among other crypto exchanges in the industry. The crypto exchange gives buyers/sellers the flexibility to decide the rate in which they want to trade. Bittrex charges a small service fee of 0.25% on the total traded value.
   
   To use the Bittrex exchange and services, you just need to register with them using your name and email-ID and you’re set to get going. However, to withdraw the funds, you need to complete the KYC procedure as well as enable two-factor authentication for security verification.
   
   The Bittrex exchange supports two types of accounts: One is the “Basic Account” which offers a withdrawal limit of 3BTC/day. The other is an “Advanced Account” with a withdrawal limit of up to 100 BTC/day.
   
   The Bittrex crypto exchange has an intuitive and easy to use interface and also provides advanced trading tools for regular traders. Note that it is a crypto-only platform and doesn’t allow any FIAT deposits.
   
   

Peer-to-Peer (P2P) Cryptocurrency Marketplace

The peer-to-peer crypto trading platforms are basically decentralized exchanges (DEXs) which just act as a medium connecting the buyer and the seller. Unlike other crypto exchanges which act as third-party intermediaries, the P2P platforms allow the buyers and sellers to trade with each other directly without any other involvement.

It means that the exchange of digital assets on a peer-to-peer trading platform takes place through a pre-programmed software without any human intervention. 

 

How Does Peer-to-Peer Cryptocurrency Platforms work?

All of the popular online exchange as mentioned above serve as an interface between the real world and the crypto world. You can also call them as a gateway giving access to cryptocurrencies you want to buy. 

These centralized exchanges (which aren’t P2P) have a ledger called the ‘order book’ which hold the terms of the deal as mentioned by the buyer and the seller. Before processing any order, these exchanges ask you to deposit equivalent FIAT or crypto funds on their platform. 

The reason is that cryptocurrency blockchain might take a few minutes to a few hours to process a transaction. Like for e.g., the Bitcoin blockchain takes five-to-ten minutes to process a transaction. Thus with several thousand order in place, the exchange act as trusted intermediaries. Thus after getting the client deposits, the exchange performs the trade on behalf of the clients. 

The peer-to-peer exchange works differently. They directly match the buyer and the seller available on the platform. Both the cryptocurrency buyer and the seller put their orders and requirement. Whenever a matching order is found the P2P platform doesn’t execute the trade, unlike the centralized exchanges. Instead, it helps to connect the buyer and seller and leaves to the two to proceed with the deal.   

Thus, just like a blockchain platform, the P2P exchange is capable of matching orders in a decentralized manner.

LocalBitcoins.com is one of the most popular peer-to-pee...