Published: Sep 8, 2022, 10:33am
If you’re new to the world of crypto, figuring out how to buy Bitcoin, Dogecoin, Ethereum and other cryptocurrencies can be confusing at first.
Thankfully, it’s pretty simple to learn the ropes. You can start investing in cryptocurrency by following these five easy steps.
Remember: investing in cryptocurrency is purely speculative, and your capital is at risk. You might lose some or all of your money.
Further, cryptocurrency trading is largely unregulated in India, and if something goes wrong – for example, a company goes out of business – you will have no recourse to compensation.
To buy cryptocurrency, first you need to pick a broker or a crypto exchange. While either lets you buy crypto, there are key differences between them to keep in mind.
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 and advanced performance charts, all of which can make them intimidating for new crypto investors.
Some of the most well-known cryptocurrency exchanges are WazirX, CoinDCX, Zebpay and UnoCoin. While these companies’ standard trading interfaces may overwhelm beginners, particularly those without a background trading stocks, they also offer user-friendly easy purchase options.
The convenience comes at a cost, however, as the beginner-friendly options charge substantially more than it would cost to buy the same crypto via each platform’s standard trading interface. To save on costs, you might aim to learn enough to utilise the standard trading platforms before you make your first crypto purchase – or not long after.
An important note: as someone new to crypto, you’ll want to make sure your exchange or brokerage of choice allows fiat currency (such as sterling and INR) transfers and purchases made with sterling. Some exchanges only allow you to buy crypto using another crypto, meaning you’d have to find another exchange to buy the tokens your preferred exchange accepts before you could begin trading crypto on that platform.
Related: Best Crypto Exchanges
Cryptocurrency brokers take the complexity out of purchasing crypto, offering easy-to-use interfaces that interact with exchanges for you. Some charge higher fees than exchanges. Others claim to be “free” while making money by selling information about what you and other traders are buying and selling to large brokerages or funds or not executing your trade at the best possible market price.
While they’re undeniably convenient, you have to be careful with brokers because you may face restrictions on moving your cryptocurrency holdings off the platform. With some, for example, you cannot transfer your crypto holdings out of your account.
This may not seem like a huge deal, but advanced crypto investors prefer to hold their coins in crypto wallets for extra security. Some even choose hardware crypto wallets that are not connected to the internet for even more security.
Once you decide on a cryptocurrency broker or exchange, you can sign up to open an account. Depending on the platform and the amount you plan to buy, you may have to verify your identity. This is an essential step to prevent fraud and meet regulatory requirements.
You may not be able to buy or sell cryptocurrency until you complete the verification process. The platform may ask you to submit a copy of your driver’s license or passport, and you may even be asked to upload a selfie to prove your appearance matches the documents you submit.
To buy crypto, you’ll need to make sure you have funds in your account. You might deposit money into your crypto account by linking your bank account or making a payment with a debit card.
Once there is money in your account, you’re ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.
When you decide on which cryptocurrency to purchase, you can enter its ticker symbol – Bitcoin, for instance is BTC – and how many coins you’d like to purchase. With most exchanges and brokers, you can purchase fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that otherwise take thousands of rupees to own.
Cryptocurrency exchanges are not backed by the Reserve Bank of India, and they’re at risk of theft or hacking. You could even lose your investment if you forget or lose the codes to access your account. That’s why it’s so important to have a secure storage place for your cryptocurrencies.
As noted above, if you’re buying cryptocurrency via a broker, you may have little to no choice in how your cryptocurrency is stored. If you purchase cryptocurrency through an exchange, you have more options:
While buying cryptocurrency is a major trend right now, it’s a volatile and risky investment choice. If investing in crypto on an exchange or via a broker doesn’t feel like the right choice for you, here’s are a few options to indirectly invest in Bitcoin and other cryptocurrencies:
Exchange traded funds are popular investments that let you buy exposure to hundreds of individual holdings in one fell swoop. This means they provide immediate diversification and are less risky than selecting individual investments.
There is a huge appetite for cryptocurrency ETFs, which allow you to invest in many cryptocurrencies at once. Investors from India need to open a global account or invest via brokerage platforms from a RBI-approved channel. To invest in cryptocurrency ETFs overseas the investors need to transfer the money under the Liberalized Remittance Scheme route.
If you’d rather invest in companies with tangible products or services and that are subject to regulatory oversight—but still want exposure to the cryptocurrency market—you can buy shares in companies that use or own cryptocurrencies and the blockchain that powers them. You’ll need an online brokerage account to buy shares in publicly-listed companies such as:
As with any investment, make sure you consider your investment goals and current financial situation before investing in cryptocurrency or individual companies that have a heavy stake in it. Cryptocurrency can be extremely volatile – a single tweet can make its price plummet – and it’s still a very speculative investment. This means you should invest carefully and with caution.
Kat Tretina is a freelance writer based in Orlando, FL. She specializes in helping people finance their education and manage debt.
John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight. His work has appeared in CNBC + Acorns’s Grow, MarketWatch and The Financial Diet.
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