6. How can a beginner start trading Cryptocurrencies?
To be able to start trading cryptocurrencies, you need to use fiat money to purchase some cryptocurrencies. As follows are some ways to do that:
1. Buy from people you know
Ask your friends, relatives or family members if they are interested to sell you their cryptocurrencies. You can then meet them up in person (recommended unless you know they can be trusted), or do the trade online giving the seller the public address of your wallet and he will use his private key or digital wallet to transfer his crypto coins. (Read more about wallets) The tricky part about trading one to one online with someone you are not sure if he/she can be trusted, is deciding who will do the transfer first.
2. Trade with folks from Cryptocurrency social media groups or forums
This is the most risky way of asking and buying cryptocurrencies, since messaging online in a public group will reveal to all that you have cash and you want to buy coins. This will increase the risk of yourself being targeted by hackers and scams before, after or during the trades. And worst of all, you know nothing about most of the folks online, so similar to option 1, the tricky part is who will do the trade transfer first? Keep in mind that it is difficult for law enforcement officers to trace majority of crypto coin private transfers due to Cryptocurrency’s technology feature of privacy.
3. Buy from a Cryptocurrency Exchange
The third option is to buy crypto coins from Cryptocurrency Exchange. There are several benefits/advantages of buying from an Exchange as follows:
High Trade Volume – There is a higher chance of getting a better price offer, since trade volume from Exchange is a lot higher and that means more bidders and more options for you to select. The world’s biggest Cryptocurrency Exchange, Binance on average processes $2 bil worth of trade volume daily, there is no way you can find near that amount of volume for selection yourself or through social media groups.
No price negotiations needed – Traders that are not adept at negotiations do not need to haggle for a good price by buying through the Exchange. Especially when the buyer will be placed in a more unfavourable haggling position the very first minute he/she approach anyone to buy coins, instead of being approached.
More secure – Traders do not have to worry about who should transfer the money first in a trade. Exchange will be the middleman and guarantor to complete the transaction as soon as both the buyer and seller agree on the price. Your job will only be to select a reputable and trustworthy Cryptocurrency Exchange. (Read more on how to select Exchange)
Fiat to Cryptocurrency Exchange
There are many Cryptocurrency Exchanges out in the market but not many allow trading of Fiat money to Cryptocurrency. As follows is some of the reputable Fiat to Cryptocurrency Exchanges that you can use to buy crypto coins by registering an account there:
Coinbase GDAX (California,USA) - One of the largest and most popular Fiat (USD) to Cryptocurrency Exchange, Coinbase brokers exchanges of Cryptocurrencies with fiat currencies in around 32 countries. Investors can buy crypto coins using credit card or bank transfer depending on the country they are located in. Click here for Coinbase GDAX Exchange Link. The downside is Coinbase allows only trading of 4 Cryptocurrencies: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Therefore, traders that wish to trade other Crypto coins usually buy one of the 4 coins available in Coinbase using fiat currencies, then transfer the crypto coins to mega exchange for example, Binance. Binance does not allow Fiat to Cryptocurrency trading yet but has dirt cheap transactions fees, many times cheaper than Coinbase and many times higher trade volume, it is better for long term Cryptocurrency trading.
Bithumb (South Korea) - A South Korea Cryptocurrency Exchange, supports English language but fiat currencies are in (KRW) South Korean Won. Click here for Bithumb Exchange Link
Coinhako (Singapore) - A Singapore Cryptocurrency Exchange, supports only Fiat (SGD) Singapore Dollar, Bitcoin, Ethereum and Bitcoin Cash. Click here for Coinhako Exchange Link
Exchange Trading Fees
The downside of using Cryptocurrency Exchange as compared to trading in person is that you will need to pay higher trading fees. Be sure to check out the required fees before making any purchase in any Exchange. You will then need to evaluate if you have other cheaper alternatives, for example knowing someone that is willing to sell you coins direct. If buying from Exchange is your only option, then you can calculate whether the high trading volume and more bidders from Exchange will fetch you better price to cover the higher trading fees, many times it does.