Cryptocurrencies, especially bitcoin, have gained popularity among traders. For one thing, cryptocurrency has higher volatility compared to more traditional investment methods like stocks or ETFs. cryptocurrency is also decentralized, which means that no institution can really control it. Furthermore, the value of cryptocurrency is recognized worldwide as it can be converted to other fiat currencies.
OK, cryptocurrencies sound great, but how do I start investing in bitcoin? What websites do I need to use and how do I buy cryptocurrencies? find out below
Reading: Bitcoin investment sites
best crypto investment websites
1. currency base
Coinbase is one of the most popular sites for trading cryptocurrencies. As the website claims, “Coinbase is the easiest place to buy, sell, and manage your cryptocurrency portfolio”. The process of trading crypto on this website is similar to trading stocks online: creating an account, linking your account to your credit or debit card, depositing funds, and start trading.
coinbase attempts to secure its funding and account by storing 98% of its customer funds offline. Sensitive data including your bank account is disconnected from the internet to prevent cyber theft. Additionally, data is encrypted and backed up to USB drives and paper backups. these backups are kept in safe deposit boxes and vaults around the world.
To prevent your account from being used by an unauthorized person, Coinbase employs two-step verification, which asks you to verify your account and phone number. You will also need to verify your identity using a government-issued ID. Should coinbase funds be breached, they have an insurance policy that would cover any loss of funds due to this security breach, including physical security, cyber security, and employee theft.
coinbase allows you to trade the “big four” cryptocurrencies: bitcoin (btc), ethereum (eth), bitcoin cash (bch), and litecoin (ltc). When you buy or sell $100 or more worth of crypto, you get $10 worth of BTC on Coinbase. For each transaction you make, you will pay a spread fee of 0.5% and a transaction fee that depends on the total amount of the transaction.
coinbase is a great website for trading cryptocurrencies due to its high liquidity leading to a small margin, a large selection of popular cryptocurrencies, and a security track record of never being breached.
2. etoro
eToro offers a wider selection of cryptocurrencies than Coinbase. There are 15 options for you to choose from: BTC, ETH, BCH, LTC, Ripple (XRP), Dash (DASH), Ethereum Classic (ETC), Cardano (ADA), IOTA (MIOTA), Stellar (XLM), EOS, NEO, TRON (TRX), ZCASH (ZEC), and Tezos (XTZ). Thus, if you want a wider selection of cryptocurrencies, eToro is a better choice than Coinbase.
transactions on the etoro platform are made for a certain amount of dollars instead of per unit of cryptocurrency or asset. this means that you can buy a fraction of a cryptocurrency if you do not have enough funds for the entire unit. For those who don’t have enough money or don’t want to invest in an entire unit of cryptocurrency, buying a fraction of a cryptocurrency is an option. however, there is a $25 minimum per trade and a $50 minimum to deposit funds. deposits are only accepted via online banking or wire transfer as etoro claims these are the best ways to protect clients’ funds and account.
While you can’t use crypto directly as an external payment, etoro has a feature called etoro wallet that allows you to transfer crypto to your own wallet and use it as a direct external payment. Please note, however, that once you transfer cryptocurrency from your wallet to the wallet, that cryptocurrency cannot be transferred back to your etoro wallet.
Etoro trading fees typically range from 0.75% to 2.90% depending on the bid and ask spread of each cryptocurrency.
3. bitfinex
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For those who want a wide variety of cryptocurrencies and tokens, Bitfinex is the perfect website to go to. What makes Bitfinex special is its margin trading feature, which is quite uncommon in the cryptocurrency world and are not offered often by other crypto trading websites. Bitfinex’s margin trading is made possible by its peer to peer margin funding feature, which means users on this website can lend money or asset to other users if they wish. Users can trade with up to 5x leverage thanks to this feature.
How does margin trading work? Margin trading is effectively borrowing someone’s money to invest in an asset. if you make money, you keep the profits and pay interest to the lender. however, if you suffer a loss, you must repay the lender the full amount borrowed plus interest. Due to its risk, margin trading is something beginners should avoid.
bitfinex allows you to trade over-the-counter (OTC), another relatively rare feature. OTC trading is done through a network of brokers, while public trading is listed on a centralized exchange. OTC transactions are suitable for large orders as the merchant does not have to go through public order books and does not have to pay additional fees and/or exchange commissions. If a trader wants to create an otc trade with another specific user on bitfinex, he just has to enter the counterparty’s otc nickname and trade details and wait for the counterparty to reply.
If you are not confident in your trading skills and want to practice, bitfinex offers paper trading feature, which allows you to perform trading simulations. Since this is a simulation, you don’t need to make a deposit.
4. binanza
Binance is another crypto trading website that has a variety of cryptocurrencies to choose from. Compared to some other websites, Binance isn’t as easy to use, thus beginners might have a harder time navigating around. Moreover, Binance doesn’t let you directly deposit fiat currency such as USD into your account, meaning you can’t start trading without some cryptocurrency available. Alternatively, you can directly purchase a number of cryptocurrencies with a credit or debit card, or transfer available cryptocurrencies from another account to your Binance account.
binance offers two different versions for forex trading: basic and advanced. the main difference between these two versions is that the advanced option has deeper technical analysis available to users.
After creating an account, you are considered a level 1 user and do not need to verify your account, although there is a withdrawal limit of 2btc/day for this type of account. To become a Tier 2 user, you must upload a government-issued photo ID to verify your identity and wait for approval from Binance. once you have successfully verified your account, you can withdraw up to 100 btc per day.
binance supports three types of trading orders to buy and sell cryptocurrencies: limit, market, and stop limit orders. These trade orders work similarly to how they would work if you were trading stocks. a limit order is executed only at the limit price or better; for example, if you set the buy limit order to 5btc, your order will not be executed until the price reaches 5btc or less. market orders are executed immediately at the next available price and volume specified by the trader. stop limit orders are executed only when the price reaches the stop amount. the stop amount is the specific price that will trigger the limit order. There are many resources on the internet that can help you better understand how limit, market, and limit orders work.
compared to other websites, binance has the advantage of lower fees; they charge 0.1% for both the buyer and manufacturer sides, although it can be reduced to 0.02% for both sides if trade volume is high. Fees can also be reduced by 25% if you use BNB, Binance’s native cryptocurrency. In addition, they also support margin trading for eligible users so you can buy desired assets even when you are short of cash.
5. cash app
CashApp is a great platform for beginners as it supports peer to peer transfer system (similar to how Venmo and PayPal work) and has an easy-to-use interface. CashApp is very similar to Robinhood: both websites offer stocks, ETFs, and cryptocurrencies, but CashApp also supports P2P transfers, giving it an advantage over Robinhood. However, while Robinhood offers seven cryptocurrencies (BTC, ETH, BCH, LTC, ETC, Bitcoin SV, and Dogecoin), CashApp only offers Bitcoin.
The good thing about cashapp is that you can withdraw bitcoins to your own wallet or transfer them to another account (peer-to-peer transfer system, remember?). however, there is a withdrawal limit of $2,000 in btc per day. robinhood does not currently have this withdrawal feature. The ability to withdraw cryptocurrency to your own wallet is very important to the digital money community, so much so that they identify the inability to withdraw cryptocurrency and spend it as “not your keys, not your currency.” this phrase means that if you don’t have the keys to where the coins are stored, they are not your coins.
as with other websites, cashapp charges a fee for each operation and an additional fee determined by the volatility of the asset price. these rates may change according to market activity. Also, if you plan to send money via a linked credit or debit card, you should know that CashApp charges 3% for this transaction.
6. open
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Abra currently allows you to trade over 100 cryptocurrencies and is available in 150+ countries. To make a deposit to your account, you can either use bank account transfers; credit or debit card; BTC, BCH, or LTC; and the Abra wire program. Depositing funds via a credit or debit card is the fastest method, but it also has the highest fee (anywhere from 4% to 8%). While you’re on the app, Abra has an in-app feature that lets users convert fiat to cryptocurrency.
abra uses a bitcoin-based system, which provides a faster and less expensive way for users to control their money. This means that all of your balances in the app, regardless of currency (except possibly BCH and LTC) are held as BTC. How does this work? Let’s say you have $10,000 in your account, which is the price of one bitcoin. bitcoin price then drops 50% to $5,000. your account will still be worth $10,000, except now you have two btc.
abra allows you to quickly withdraw cryptocurrencies to an external wallet to spend as you wish. alternatively, you can leave your assets in the abra interest account to earn interest on selected cryptocurrencies compounded daily. in fact, you can earn up to 9% interest on cryptocurrencies like paxos, tether, and usd coin, and around 4% on btc and eth.
7. kraken
Kraken offers about 40 cryptocurrencies on its platform for users to choose from. Kraken is not as easy to use as some other websites as it trades in cryptocurrency pairs, thus it might be difficult to beginners navigate around. This design also leaves more room for human errors, especially if you’re new to trading.
To trade assets on kraken, you first need to know what you want to trade, and therefore which pairs you’ll need. cryptocurrency pairs will look something like this: bch/usd. the first currency is the base currency and the second is the quote currency. Let’s keep using the bch/usd pair to explain how the system works. If you are buying, you will pay the quote currency (USD) and receive the base currency (BCH). in other words, you are buying bitcoin cash with usd. If you are selling, you are selling the base currency (BCH) to receive the quote currency (USD). In other words, you are selling bitcoin cash for USD.
For each order on kraken, you can decide whether you want to send it as a market order (executed immediately at the next market price) or a limit order (executed only if the asset reaches a specific price).
kraken allows you to deposit fiat or cryptocurrencies into your account; In the case of fiat, you can do it through a bank transfer since Kraken does not accept credit or debit cards. while there is a deposit limit for fiat, there are no deposit limits for cryptocurrencies. however, before you can deposit digital assets, your account must be verified. While Kraken does not have a wallet service, it does allow you to withdraw fiat and cryptocurrencies into your own wallet.
Interested in trading on margin? everyone can access the kraken margin trading feature, so you can trade with up to 5x leverage on their website.
8. bitmark
Bitstamp trades cryptocurrency pairs just like Kraken. In prior to start trading on Bitstamp, you need to first verify your account then deposit funds. There are three ways to deposit funds into your account (that does not involve crypto): via SEPA, International Wire transfer, or make a direct purchase using a debit or credit card. There is a fee associated with each deposit and withdrawal depending on which method you use, except for SEPA deposits, which are free of charge. Depositing via selected cryptocurrencies is also possible and are often free of charge. Withdrawing cryptocurrencies, however, does come with a fee depending on your specific currency.
bitstamp has one of the lowest trading fees among cryptocurrency trading websites, starting at 0.50% per transaction if your total trading volume is less than $10,000. as the total amount of trading increases, your trading volume, the trading fees will be reduced. the minimum trade amount is 0.001btc for trading pairs denominated in btc and 25 usd/eur/gbp/pax for trading pairs that have these fiat denominations.
When trading with bitstamp, you have 5 options to choose from: instant order, market order, limit order, stop order and trailing stop order. I have explained what the market order and the limit order are in #4. An instant order differs from a market order in that it is usually accompanied by a fixed margin, while the margin of a market order is adjusted during the process. In other words, a market order only specifies volume and takes whatever price becomes available next, while an instant order specifies both volume and price and is only executed (immediately) if the counterparty can satisfy these conditions. a stop order is an order to buy or sell when the price of the asset reaches the stop price; at that point, it becomes a market order. The trailing stop order, in short, allows a position to be opened when it moves in the trader’s favor and stopped if it moves in the opposite direction, either to secure profits or to avoid losses.
Commercial options aside, bitstamp does not provide a wallet function. however, they encourage you to withdraw your crypto to a secure wallet, preferably offline, to avoid cybersecurity attacks.
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