Are you ready to purchase your first cryptocurrency? If you are, you have made the right decision. The increasing value of digital currencies such as bitcoin has attracted the attention of countless individuals from around the world. There is no doubt that digital currencies are among the most lucrative assets to invest in at the moment and this is why so many people are rushing in to own them.
You can buy cryptocurrencies in numerous ways. However, exchanges seem to offer one of the safest and efficient ways to buy them. So here’s is your step by step guide to exchanges. Through this post, you can learn how to buy and own cryptocurrencies. Let’s get started.
Exchanges – How they work?
Crypto exchanges are similar to how stock exchanges work. All the cryptocurrency exchanges which have been established around the world offer popular digital currencies like Bitcoin, Litecoin and Ethereum. But the number of cryptocurrencies they offer and the types they offer varies from exchange to exchange. They also have their own rules when it comes to buying and selling cryptocurrencies.
When buying at an exchange, one thing that you must keep in mind is that there is not a fixed price at which you can buy them. Different exchanges will offer different rates depending on the supply and demand. Sometimes, you may even see huge differences between the prices that you find in different exchanges.
The aim of an exchange is to match a buyer with a seller. So the true market value of the cryptocurrency you are willing to buy will only be reflected in a large exchange. This means that the bigger the exchange is, the better the services and the truer the prices.
Exchanges match orders from buyers and sellers. Buyers will offer their prices and sellers will offer theirs. So the role of the exchange is to match the orders and execute the trade on behalf of both the buyers and sellers.
You must also keep in mind that the exchange will charge you a fee for the trades you execute. And, if you are looking to purchase other cryptocurrencies, the exchange may require you to have Ethereum or Bitcoin as a base for trading.
Types of Exchanges
It is always good to have an idea of the type of exchanges which are available for buying and selling cryptocurrencies. These include:
- Decentralized exchanges
- Centralized exchanges
- Hybrid exchanges
- Instant exchanges
How to Buy Cryptocurrencies?
There are few things that you must know before you buy at a cryptocurrency exchange. firstly, they have a verification requirement that you must meet. This requirement has been put in place so the exchange can know their customer and determine their eligibility for buying and selling. It also helps the exchange find out if the customer has been ever been involved in any cases related to corruption, money laundering and bribery. The requirements may differ between exchanges and the process may take a couple of days to be completed.
How to Fund Your Account?
Depending on the exchange you have chosen, you will be offered a variety of options for making payment. You can choose from bank wire transfer and debit/credit card payments. You must verify your account through a series or debits and credits that the exchange will make. Once your funding account is set up, you will be able to buy cryptocurrencies. There will be fees associated as well so having this knowledge is important before you start with the buying process. You can check with your exchange regarding the amount they charge per transaction.
How to Make Withdrawals?
The options they offer for withdrawals will also vary. Some may allow wire transfer options and some may allow PayPal transfers. Some exchanges may also charge a small fee to process withdrawals. The length of time it takes for the process to be complete also varies between exchanges. You must be aware of the costs, processing time and procedure when you are looking to make withdrawals.
Using Fiat Cash to Purchase Crypto
It is also possible to use fiat currencies to buy cryptocurrencies. But for this, you will have to make sure that the exchange offers a gateway for fiat currencies. In addition to exchanges, other services that allow you to use fiat currency to buy crypto include investment platforms, peer to peer exchanges and cryptocurrency ATMs.
What To Look for in an Exchange?
It is not easy to choose an exchange if you are a complete beginner and are looking to make your first purchase of cryptocurrencies. Different exchanges have different rules and regulations and the range of services they offer may also vary. However, you must also be mindful of the fact that exchanges are vulnerable to hacking and it is possible for clients to lose their cryptocurrencies when dealing with them.
Some exchanges are also not very reliable and you could suffer a lot of problems if you end up with the wrong one. So before you sign up with any exchange, it is important that you consider these factors. These factors will help you choose the right one.
- Their reputation
- Any records of previous hacking or theft
- Volume and liquidity
- Any restrictions they have in place
- Withdrawal and payment options
- Fee structure
- Any guarantees they offer
The exchange you choose must have a solid reputation. They should not have any previous records of thefts or hacking. In addition, they must offer convenient and flexible means of deposits and payments. Their fee structure must also be reasonable.
If you feel that the exchange has excessive fees and lots of restrictions in place, then you may want to look at another one. Your safety and security should be of utmost importance and you should under no circumstances be willing to risk your safety or security when dealing with crypto exchanges.