How To Buy Cryptocurrency Crypto Premier Guide

In this “how to buy cryptocurrency crypto premier guide” blog, we are going to mention types of cryptocurrencies, where to buy them and how to store them.

Just for heads up, cryptocurrency is a digital currency that is not issued or controlled by any government. It is secured by blockchain cryptography.

Why Invest in Cryptocurrencies?

Cryptocurrency has become quite popular since the previous decade with an ever-increasing user base.

Potential investors wonder why cryptocurrencies are lucrative and why they should invest in them. To answer this question:

High Returns

The major and most common reason for investing money anywhere is expecting high returns. Bitcoin alone at the time performed much better than any other traditional investing option and made many investors rich.

Diversity of Portfolio

Cryptocurrency is one of the most lucrative markets to diversify investments in because its ups and downs are not dependent on the stock market, which makes it potentially life-saving in case someone loses in the stock market.

Independence of Choice

It’s up to the investor to decide the mode of investing he wants to use, whether to go with a centralized exchange or do-it-yourself with a decentralized exchange. Both have their advantages.

Accessibility

Unlike the stock market, which operates only at specified times of day and month.

The crypto market is accessible 24/7 around the year.

Mainstream

One of the deciding factors in profitability in the crypto market is how many investors are associated with different coins. Fortunately, the adoption rate is good enough.

Future-Proof

The recent G20 also laid out a framework to set regulations and rules in cryptocurrency, which also has a chance to lure more investors who were skeptical about it being unregulated.

Types of Cryptocurrency

In this dynamic and volatile market, various cryptocurrencies keep on being introduced and some have been gone. Each cryptocurrency has its own weight of benefits and disadvantages.

Note: Cryptocurrency and crypto tokens are two different sides of the same coin; cryptocurrency is a native asset of the blockchain, and tokens are secondary assets.

1. Bitcoins: The one that started all the craze about cryptocurrencies, are also market dominant. It all started in 2009 by Satoshi Nakamoto and still uses an old proof-of-work mechanism to operate.
2. Altcoins: The publicity and dominant status of “Bitcoin” gave birth to the term “altcoin,” where this term refers to all the cryptocurrencies other than Bitcoin, like Ethereum (ETH), Solana (SOL), Binance Coin (BNB), etc.
3. Stablecoins: These coins are designed to overcome the highly volatile nature of the market because they are tied to fiat currencies like US dollars. Some examples include Tether (USDT), USD Coin (USDC), Binance USD (BUSD), etc.
4. Decentralized Finance (DeFi): As the name suggests, these tokens aim to remove middlemen, i.e., centralized institutions, in exchange for using a peer-to-peer (person-to-person encrypted) process. It also offers a variety of financial services like trading, lending, buying, selling, insurance, and much more. Some examples include wrapped Bitcoin, Uniswap, Aave, etc.
5. Utility Tokens: These tokens act as a voucher to access services inside the blockchain itself. They are made to lure potential customers with discounts and offers.
6. Security Tokens: Represent the total value of the company’s value as an asset; they are generally bought by angel investors or authorized investors, who also provide the rights and dividends.

How to Buy Cryptocurrency and Start Trading?

One needs to open an account on a crypto exchange to start investing and trading in cryptocurrencies.

Three Main Types of Crypto Exchanges.

1. Centralized-A facilitating medium which is owned by corporate entities act as middleman through which users can trade cryptocurrencies.
2. Decentralized-Users themselves have to deal with everything related to crypto trading.
3. Hybrid-This aims to combine the pro’s of both centralized and decentralized exchanges to benefit investors.

But to keep things simple at first, Centralized exchange is recommended for beginners because it’s user-friendly and convenient to use.

It also gives users much-needed experience in the crypto world to deal with advanced things later on.

The Process to Open an Account on a Crypto Exchange

• Selection: This is a personal preference, which should be done through thorough research and studying all aspects of the crypto exchange, like ratings, security, liquidity, etc.
• Account: The next step is opening the account, and for centralized exchange, it’s important to give KYC (Know Your Customer) in the form of a government-issued ID, which should contain all accurate information.
• Security: It’s important to create a unique password that you don’t use anywhere else at the same time enable 2-factor authentication.
• Action: Now we can start trading in cryptocurrencies, but it’s always recommended to not get carried away and start with small amounts only.

Where and How to Store Cryptocurrency?

Crypto wallet is where we can safely store passkeys for cryptocurrency,

These wallets automatically assign passkeys, or nowadays, seed phrases that allow users to send, receive, and spend crypto coins.

It’s easy to get a crypto wallet, as the user may opt for a custodial wallet from the crypto exchange he already has an account on or look for hardware wallets on e-commerce sites to purchase them according to preference and budget.

Crypto Wallet Come in Two Categories

Custodial Wallet

This wallet is provided by crypto exchanges themselves; custody of passkeys is held by the exchange authority, hence the name. Some names include Binance, Bitmax, and Bitgo.

Non-Custodial

This wallet is held by the user himself, meaning all digital assets including passkeys are under the user’s control without any third-party involvement. That’s why they are used when dealing in decentralized exchange.

Three Types of Non-Custodial Wallets.

Hardware Wallet

As the name says, this is a physical device that resembles a “pen drive” that is used to store passcodes or seed phrases in it.

The most commonly used hardware wallets are Ledger and Trezor, which come with their own unique features.

Software Wallet

The most popular one is that they are always connected to the internet, which allows seamless connectivity when required.

However, this pro is also its con meaning the chances of being hacked are quite high because of the internet.

Examples of software wallets include browser extension wallets, mobile wallets, and desktop wallets.

Paper Wallet

The old-school method still works. this is a piece of paper where passcodes are directly printed on it or even as a scannable QR code.

But damage or losing paper is the most common risk it comes with.

Also it can get hectic to write down long strings of passkeys as Bitcoin has 256-bit strings.

What About Hot and Cold Wallets?

Everyone must have heard these two terms when searching for a crypto wallet and wondering why there are so many categories and subcategories of crypto wallets.

1. 1. Hot Wallet: This simply refers to a wallet that can be connected to the internet, like custodial and software wallets.
   2. Cold Wallet: Means wallet that cannot be connected to the internet like paper.

Fact: A wallet can belong to both hot and cold wallets. like a hardware wallet that only connects to the internet when plugged into the computer; otherwise, it remains offline when unplugged.

Security and Risk Assessment

It’s very important to research everything when it comes to investing money because slight mistakes can prove very costly.

• Research: Basic step before making a plan. which requires going through articles on every term, YouTube tutorials, and help from close friends or family who already deal in cryptocurrency.
• Selection: As earlier mentioned, the selection of a crypto exchange or wallet should be done after thorough research with factors including ratings, reviews, fees, services, and customer support, to name some.
• Small-Step: It is always recommended to start investment with small amounts only and not get carried away with greed, word of mouth from others, pressure, etc.
• Monitor: Managing and monitoring are also important to keep on profiting. The analytical tools to do so are provided in a centralized exchange or custodial wallet. otherwise, it has to be done by the user themselves in the case of a decentralized exchange or non-custodial wallet.

Conclusion

We have covered the topic “How to buy cryptocurrency crypto premier guide” by knowing the types of crypto coins, where to start investing, and where to store crypto coins, crypto wallet, and various terms under it.

FAQs

Q1: How to buy cryptocurrency?

A1: You can buy cryptocurrency from online platforms called exchanges, like Coinbase, Binance, WazirX.

Q2: Do I need a lot of money to buy cryptocurrency?

A2: No, you can buy small fractions of cryptocurrency, starting with even USD 10 or INR 100.

Q3: Is it safe to buy cryptocurrency online?

A3: Yes, but choose reputable exchanges, set strong passwords, and enable 2-factor authentication.

Q4: How do I create a software crypto wallet?

A4: To create a crypto wallet, download a reputable wallet app and follow the setup instructions.

Q5: How do I store cryptocurrency in a wallet?

A5: You store cryptocurrency in a wallet by transferring it from an exchange or another wallet to your own.

Q6: How do I send/receive cryptocurrency using a wallet?

A6: To send/receive cryptocurrency, provide the recipient’s wallet address and follow wallet-specific instructions for the transaction.