The 3 Best Cryptocurrency Trading Sites and Bitcoin Investment Sites
As cryptocurrency trading is getting more popular among the masses, new traders and cryptocurrency beginners need to know which platform is the best bitcoin investment platform and crypto exchange.
Cryptocurrencies are the new kids on the block to sweep the finance world, with Bitcoin (ticker: BTC) dominating the headlines while Dogecoin (DOGE) nails the punchlines. Its popularity is even making Billionaires like Elon Musk and Mark Cuban faithful disciples of the Crypto.
As the number of cryptocurrencies on the market continues to increase, investors and crypto enthusiasts have more options than ever before to exchange their hard-earned cash for decentralized digital money. But how do you go about trading your favorite cryptocurrency?
The internet is filled with scary stories of hackers swindling traders of their profits from poorly protected cryptocurrency exchanges, making it all the more important to carefully choose a secure cryptocurrency investment company or crypto trading platform before you make your investment. That said, which of the many cryptocurrency exchanges is the best choice for you?
There are innumerable factors that will influence your decision: security measures, ease of use, customer support, trading fees, and the number of coins available for trading all play a part in helping you determine the top crypto exchange for you. To help you find the cryptocurrency trading platform that meets your needs, here are three options to choose from that will suit a variety of cryptocurrency investors:
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Bitcoininvestmentrex accepts Bitcoin, Ethereum, and Bitcoin Cash.
As the leading mainstream cryptocurrency exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. Coinbase offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors, and its own U.S. dollar stable-coin.
Coinbase was founded in 2012 and is a fully regulated and licensed cryptocurrency exchange supporting all U.S. states except Hawaii. Coinbase initially only allowed for Bitcoin trading but quickly began adding cryptocurrencies that fit its decentralized criteria.
Its list expanded to include Ethereum, Litecoin, Bitcoin Cash, XRP, and many others with the promise of more as long as its requirements are met.
Coinbase users can purchase crypto using market orders that experience high fees compared to other exchange options out there. With that in mind, Coinbase wanted to create a free option for Coinbase users to graduate to when they were a bit more practiced. With Coinbase Pro, users can place market, limit, and stop orders with lower commission fees. Coinbase Pro also has the option of margin trading and has significantly fancier charting capabilities.
Another popular crypto trading site, Binance has only been around for the last four years but has quickly taken the crypto market by storm.
Based out of Hong Kong, Binance is an international exchange that supports more than 500 different cryptocurrencies. The website is very intuitive and straightforward, allowing users to switch between a basic and advanced version of the site at will as they progress in their crypto trading careers. While new cryptocurrency traders will find Binance simple to use, ultimately it might be best for crypto day traders — low trading fees, strong charting tools, and an easy-to-use mobile app allows for fast, simple cryptocurrency trading. With all these strong features, it’s not hard to understand why Binance has become one of the largest cryptocurrency exchanges in the world.
The sheer volume of cryptocurrencies available is why Hill says Binance may not be best suited to beginners. “Often, when investors are starting out and familiarizing themselves with the market, less is more,” he says. “That being said, Binance is the better choice for those familiar with cryptocurrency lingo and investing options.”
Note that Binance doesn’t allow you to exchange U.S. dollars for cryptocurrency, though it does accept credit and debit cards — there’s a U.S. site for American users, but it offers more limited options than the main site. In addition, Binance has been hit by cyberattacks in the past, most recently in 2019 — though the site does have an insurance fund to cover any losses. That said, Binance is a secure trading platform that offers several powerful tools for users who want to invest in different digital currencies on the blockchain.
HOW TO BUY BITCOIN
Investing in Bitcoin can seem complicated, but it is much easier when you break it down into steps. Buying Bitcoin is getting easier by the day, and the legitimacy of the exchanges and wallets are growing as well.
Before You Buy Bitcoin
There are several things that every aspiring Bitcoin investor needs. A cryptocurrency exchange account, personal identification documents if you are using a Know Your Customer (KYC) platform, a secure connection to the Internet, and a method of payment. It is also recommended that you have your own personal wallet outside of the exchange account. Valid methods of payment using this path include bank accounts, debit cards, and credit cards. It is also possible to get Bitcoin at specialized ATMs and via P2P exchanges. However, be aware that Bitcoin ATMs have increasingly required government-issued IDs as of early 2020.
Privacy and security are important issues for Bitcoin investors. Even though there are no physical bitcoins, it is usually a bad idea to brag about large holdings. Anyone who gains the private key to a public address on the Bitcoin blockchain can authorize transactions. Private keys should be kept secret; criminals may attempt to steal them if they learn of large holdings. Be aware that anyone can see the balance of a public address that you use. That makes it a good idea to keep significant investments at public addresses that are not directly connected to ones that are used for transactions.
Anyone can view a history of transactions made on the blockchain — even you. And though transactions are publicly recorded on the blockchain, identifying user information is not. On the Bitcoin blockchain, only a user’s public key appears next to a transaction — making transactions confidential but not anonymous. In a sense, Bitcoin transactions are more transparent and traceable than cash, but the cryptocurrency can also be used anonymously.
That is an important distinction. International researchers and the FBI have claimed that they can track transactions made on the Bitcoin blockchain to users’ other online accounts, including their digital wallets. For example, if someone creates an account on Coinbase, they must provide their identification. Now, when that person purchases Bitcoin, it is tied to their name. If they send it to another wallet, it can still be traced back to the Coinbase purchase that is connected to the account holder’s identity. This should not concern most investors because Bitcoin is legal in the U.S. and most other developed countries.
Step One: Choose an Exchange
Signing up for a cryptocurrency exchange will allow you to buy, sell, and hold cryptocurrency. It is generally best practice to use an exchange that allows its users to also withdrawal their crypto to their own personal online wallet for safer keeping. For those looking to trade Bitcoin or other cryptocurrencies, this feature may not matter.
There are many types of cryptocurrency exchanges. Because the Bitcoin ethos is about decentralization and individual sovereignty, some exchanges allow users to remain anonymous and do not require users to enter personal information. Such exchanges operate autonomously and are typically decentralized, which means they do not have a central point of control.
Though such systems can be used for nefarious activities, they are also used to provide services for the world’s unbanked population. For certain categories of people — refugees or those living in countries with little to no infrastructure for government credit or banking — anonymous exchanges can help bring them into the mainstream economy.
Right now, however, the most popular exchanges are not decentralized and do require KYC. In the United States, these exchanges include Coinbase, Kraken, Gemini, and Binance.US, to name a few. Each of these exchanges has grown significantly in the number of features they offer.
Coinbase, Kraken, and Gemini offer Bitcoin and a growing number of altcoins. These three are probably the easiest on-ramps to crypto in the entire industry. Binance caters to a more advanced trader, offering more serious trading functionality and a better variety of altcoin choices.
An important thing to note when creating a cryptocurrency exchange account is to use safe internet practices. This includes using two-factor authentication and a password that is unique and long, including a variety of lowercase letters, capitalized letters, special characters, and numbers.
Step Two: Connect Your Exchange to a Payment Option
After you have chosen an exchange, you will need to gather your personal documents. Depending on the exchange, these may include pictures of a driver’s license or Social Security number, as well as information about your employer and source of funds. The information you may need can depend on the region you live in and the laws within it. The process is largely the same as setting up a typical brokerage account.
After the exchange has ensured your identity and legitimacy, you will then be able to connect a payment option. At most exchanges, you can connect your bank account directly or you can connect a debit or credit card. Though you can use a credit card to purchase cryptocurrency, it is generally something that should be avoided due to the volatility that cryptocurrencies can experience.
Though Bitcoin is legal in the United States, some banks do not take too kindly to the idea and may question or even stop deposits to crypto-related sites or exchanges. It is a good idea to check to make sure that your bank allows deposits at your chosen exchange.
There are varying fees for deposits via a bank account, debit, or credit card. Coinbase is a solid exchange for beginners and has a 1.49% fee for bank accounts, with a 3.99% fee for debit and credit cards. It is important to research the fees associated with each payment option to help choose an exchange or to choose which payment option works best for you.
Exchanges also charge fees per transaction. This fee can either be a flat fee (if the trading amount is low) or a percentage of the trading amount. Credit cards incur a processing fee in addition to the transaction fees.
Step Three: Place an Order
When you have chosen exchange and connected a payment option, you can now buy Bitcoin and other cryptocurrencies. In recent years, cryptocurrency exchanges have slowly become more mainstream. They have grown significantly in terms of liquidity and their breadth of features. The operational changes at cryptocurrency exchanges parallel the change in the perception of cryptocurrencies. An industry that was once thought of as a scam or one with questionable practices is slowly morphing into a legitimate one that has drawn interest from all the big players in the financial services industry.
Now, cryptocurrency exchanges have gotten to a point where they have nearly the same level of features as their stock brokerage counterparts. When you have found an exchange and connected a payment method, you are ready to go.
Crypto exchanges today offer a number of order types and ways to invest. Almost all crypto exchanges offer both market and limit orders and some also offer stop-loss orders. Of the exchanges mentioned above, Kraken offers the most order types. Kraken allows for the market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders.
Aside from a variety of order types, exchanges also offer ways to set up recurring investments, allowing clients to dollar-cost average into their investments of choice. Coinbase, for example, lets users set recurring purchases for every day, week, or month.
Step Four: Safe Storage
Bitcoin and cryptocurrency wallets are a place to store digital assets more securely. Having your crypto outside of the exchange and in your personal wallet ensures that only you have control over the private key to your funds. It also gives you the ability to store funds away from an exchange and avoid the risk of your exchange getting hacked and losing your funds.
How to buy Bitcoin with PayPal
It is also possible to buy Bitcoin through the payment processor PayPal. There are two ways to purchase Bitcoin using PayPal. The first and most convenient method is to purchase cryptocurrencies using your PayPal account. The second option is to use the balance of your PayPal account to purchase cryptocurrencies from a third-party provider. This option is not as convenient as the first because very few third-party sites allow users to purchase Bitcoin using the PayPal button.
Four cryptocurrencies — Bitcoin, Ethereum, Litecoin, and Bitcoin Cash — can be purchased directly through PayPal. With the exception of those who live in Hawaii, residents of all states can either use their existing PayPal accounts or set up new ones.
To set up a crypto account with PayPal, the following information is required: name, physical address, date of birth, and tax identification number. There are a number of ways in which you can buy Bitcoin through PayPal.
Some of them are:
The existing balance in your PayPal account
A debit card linked to your PayPal account
A bank account linked to your PayPal account
It is not possible to use a credit card to purchase Bitcoin using PayPal. During the purchasing process, PayPal will display a price. However, the inherent volatility of cryptocurrency prices means that those prices are subject to change quickly. You should make sure that you have sufficient funds in your account to make the purchase.
When you buy Bitcoin directly from PayPal, it makes money off the crypto spread or the difference between Bitcoin’s market price and the exchange rate between USD and the cryptocurrency. The company also charges a transaction fee for each purchase. These fees depend on the dollar amount of the purchase. For example, a flat fee of $0.50 is charged for purchases between $100 to $200. Thereafter, the fee is a percentage of the overall dollar amount. For example, a fee of 2% of the total amount is charged for crypto purchases between $100 to $200.
One disadvantage of purchasing cryptocurrencies through PayPal is that you cannot transfer the crypto outside the payment processor’s platform. Therefore, it is not possible for you to transfer cryptocurrencies from PayPal’s wallet to an external crypto wallet or your personal wallet.
The other disadvantage of using PayPal is that very few exchanges and online traders allow the use of the payment processor to purchase payment. eToro is among the few online traders that allow the use of PayPal to purchase Bitcoin on its platform.
How to buy Bitcoin with a credit card
The process for purchasing Bitcoin with credit cards is similar to the one for buying cryptocurrency with debit cards or through automated clearing house (ACH) transfers. You will need to enter your credit card details with the exchange or online trading firm and authorize the transaction. In general, however, it is not a good idea to purchase Bitcoin with credit cards. There are a couple of reasons for this.
First, not all exchanges allow Bitcoin purchases using credit cards due to associated processing fees and the risk of fraud. Their decision to do so may work out in the best interests of customers. This is because credit card processing can tack additional charges onto such transactions. Thus, in addition to paying transaction fees, you will end up with processing fees that the exchange may pass onto you.
The second reason is that credit card purchases can be expensive. Credit card issuers treat Bitcoin purchases as cash advances and charge hefty fees and interest rates on such advances. For example, American Express and Chase both count purchases of cryptocurrencies as cash advance transactions. Thus, if you purchase $100 worth of Bitcoin using an American Express card, you will pay $10 (current cash advance fee for such transactions) plus an annual percentage fee of 25%.
An indirect method of purchasing Bitcoin using a credit card is to get a Bitcoin Rewards credit card. Such cards function like your typical rewards credit card except they offer rewards in the form of Bitcoin. So, they invest the cashback earned from purchases into Bitcoin. An example of a Bitcoin Rewards card is the BlockFi Bitcoin Rewards Credit Card.4 Beware, however, that the annual fee on these cards may be steep and there may be additional costs associated with the conversion of fiat currencies into crypto.
Alternate Ways of Buying Bitcoin
Though exchanges like Coinbase or Binance remain some of the most popular ways of purchasing Bitcoin, they are not the only method. Below are some additional processes Bitcoin owners utilize.
Bitcoin ATMs act like in-person Bitcoin exchanges. Individuals can insert cash into a machine and use it to purchase Bitcoin that is then transferred to a secure digital wallet. Bitcoin ATMs have become increasingly popular in recent years; Coin ATM radars can help to track down the closest machines.
Unlike decentralized exchanges, which match up buyers and sellers anonymously and facilitate all aspects of the transaction, there are some peer-to-peer (P2P) exchange services that provide a more direct connection between users. LocalBitcoins is an example of such an exchange. After creating an account, users can post requests to buy or sell Bitcoin, including information about payment methods and prices. Users then browse through listings of buy and sell offers, choosing those trade partners with whom they wish to transact.
LocalBitcoins facilitates some of the aspects of the trade. Though P2P exchanges do not offer the same anonymity as decentralized exchanges, they allow users the opportunity to shop around for the best deal. Many of these exchanges also provide rating systems so that users have a way to evaluate potential trade partners before transacting.
How to Sell Bitcoin
You can sell Bitcoin at the same venues where you purchased the cryptocurrency, such as cryptocurrency exchanges and peer-to-peer platforms. Typically, the process of selling Bitcoin on these platforms is similar to the process used to purchase the cryptocurrency.
For example, you may only be required to click a button and specify an order type (i.e., whether the cryptocurrency should be sold instantly at available prices or whether it should be sold to limit losses) to conduct the sale. Depending on the market composition and demand at the venue, the offering price for Bitcoin may vary. For example, exchanges in South Korea traded Bitcoin at a kimchi premium during the run-up in its prices back in 2018.
Cryptocurrency exchanges charge a percentage of the crypto sale amount as fees. For example, Coinbase charges 1.49% of the overall transaction amount as fees.
Exchanges generally have daily and monthly withdrawal limits. Therefore, cash from a large scale may not be immediately available to the trader. There are no limits on the amount of cryptocurrency you can sell, however.