A Quick Recap
Crypto has grown to become one of the major means of investment in the last 10 years. As crypto becomes more mainstream, more places are starting to offer crypto. Although this is a great thing for the industry, and a shift from the previous issue of inaccessibility; it may be intimidating to new adopters as they are overwhelmed with different options. Here are the four easiest ways for beginners to purchase crypto.
Stock Brokerages and Apps
Many stock brokerages and apps such as Robinhood, Paypal, and Wealthsimple have started to offer a couple of large cryptocurrencies to their users. It is one of the simplest and easiest ways for beginners to capitalize on the rise of crypto. If you already have an account on brokerage or app, they will not require any additional information. Purchasing crypto on these brokerages or applications is also instantaneous with low to no fees making them even more attractive to new users.
However, brokerages such as Robinhood do not allow you to have control over your own keys — effectively you don’t own the crypto you bought. Your account may be hacked or frozen or become inaccessible due to an issue with the brokerage or app that you are using. You are also unable to withdraw the crypto to your own wallet. Furthermore, brokerages and apps offer a very small selection of coins, limiting the options available to users.
Traditional exchanges such as Binance and Coinbase have and continue to be the most popular ways to invest in cryptocurrencies. They are relatively simple to use and offer a wide selection of coins and tokens. Any crypto bought on these exchanges are able to be withdrawn to a hardware or any personal wallet. With fairly low fees (Less than 5%) they can also be used as a bridge between blockchains. These exchanges are also relatively secure compared to brokerages and apps as they almost all require 2-factor authentication.
Depending on which country you reside in, there will be KYC (Know Your Customer) laws in place. This will require you to confirm your identity which can take from minutes to days and may also intrude on your privacy. Another issue with exchanges is that the exchange has custody when buying crypto and many people leave their crypto on exchanges defeating the goal of decentralization.
Crypto ATMs are a growing option to new crypto investors, some ATMs you may come by are CoinFlip, Coin Depot, and Coin Cloud. These options require very little information from the user as there are fewer KYC restrictions. There are also no holding periods, no custody, and is the quickest way to buy crypto directly. You can directly deposit the crypto from ATMs into a hardware wallet and they are also the only option that offers the exchange from cash to crypto.
Although they are a great option for buying crypto, they offer a small selection and have high fees (average of 10%).
Buying crypto on DEXes (decentralized exchanges)such as Sushiswap, Uniswap, and Raydium is the best way to buy crypto with crypto. There are low fees (0.3%) and they also collect no personal information. Decentralized exchanges also provide noncustodial transactions while being trustless, making them very secure.
The one caveat with DEXes is that they require the user to already own crypto to use them as they do not accept fiat currency. They also cost an additional gas fee which if on the Ethereum network can be quite expensive depending on how crowded the network is at the time of transacting. Swapping on decentralized exchanges also takes more time than centralized options as all transactions run on the network. Finally, DEXes can run into liquidity problems restricting transacting some cryptos.
All these options are viable for beginners trying to invest in crypto. However, if you are interested in crypto and want to do crypto investing right, we suggest using an exchange or ATM to purchase your crypto; then store it in your own wallet and use DEXes for any other transactions.