The Ultimate Guide to Buying Crypto: Platforms and Strategies [2020]
Today, unlike the “old days” of cryptocurrency, there are many places online to buy crypto, with a wide range of different types of payment methods and varying costs.
As a payment method, cryptocurrency’s use cases are growing every month, and as a tool of investment, crypto has never been stronger than it is today.
But while there are many places available for buying crypto, the overload of options can sometimes mean that the best places are overlooked.
While buying cryptocurrency is an important first step, sometimes also not enough consideration may be given to the most profitable way to use cryptocurrency once it has been bought.
We’re going to take a deep dive into buying crypto in 2020, including looking at what crypto is and why it even has value, the best brokerages and exchanges to purchase cryptocurrency at, and how to make money by buying crypto.
What is Crypto and Why Does it Have Value?
Cryptocurrency is one of a handful of technologies today that are on the cutting-edge of global societal changes, as well as being largely responsible for the revolutionization of the business world.
Cryptocurrency is a term that was coined in the Bitcoin whitepaper in 2008, with that being the first time it was publicly used.
The author or authors of the paper known only as “Satoshi Nakamoto” outlined a new technologically-based form of currency, including the concepts of cryptocurrency in general, of the underlying technology that make cryptocurrencies possible called “blockchain”, and of the first incarnation of this new technology known as “Bitcoin”.
Unlike fiat currencies such as the USD, EUR, and CNY, cryptocurrencies are not controlled by a central bank or other authority. The main tenet of cryptocurrencies is that they are decentralized in nature, both as the way that they are controlled and as the way that value and ownership of the network is shared.
Cryptocurrencies using blockchain use consensus mechanisms to manage the transactions within the network, and to incentivize others to want to help with running the network.
Where a central bank would normally create fiscal policy and decide whether to release more or less of currency into the economy, cryptocurrencies have mathematical algorithms and cryptographic puzzles that work in-sync to fairly distribute new crypto and to manage which transactions are added to the blockchain.
Value is derived from the unique ways that cryptocurrency can be used, and while cryptocurrencies are not perfect financial vessels, they have some clear advantages in comparison to the options available before their creation.
Anonymity is a big drawcard for cryptocurrency users. Although often people jump to thinking that criminals and terrorists are the only parties that would care about anonymity, there are many groups and individuals that have suffered persecution who have turned to crypto-assets in the past.
Also as technological developments are reaching a point where the use of artificial intelligence, big data, and the internet of things may lead to ever more invasive surveillance, many normal citizens of the world are conscious of the use of privacy-supporting technologies like cryptocurrency.
Outside of anonymity, the other major advantage of cryptocurrency is the lack of trust being required to make transactions.
Never before have humans been able to make transfers of value to anyone in the world, without the need for permission from any authority, and without the need to trust either the person being transacted with or with a 3rd party media.
Bitcoin made this possible for the first time just over a decade ago, and today there is no need to use services like banks, Paypal or Western Union in order to transfer funds to anyone.
Places to Buy Crypto: Brokerages
PrimeXBT
PrimeXBT is one of the largest crypto brokerages in the world, averaging up to $400 million per day in trading volume.
The platform lists a wide range of cryptocurrencies like BTC, ETH, LTC, EOS and XRP, as well as many of the leading forex pairs, commodities and stock indices, and provides traders with a clean, intuitive interface to managing a range of trading strategies.
Features like the ability to fund trading accounts using credit cards and hundreds of different cryptos via the platform’s Changelly integration, as well as 30-second, no KYC signups that only require an email address have contributed to the huge growth of the platform throughout much of the past 12 months.
PrimeXBT’s fees are substantially lower than much of the industry as well, which goes to show just how much additional revenue many platforms scalping from traders unnecessarily. The platform has a flat rate of 0.05% across all assets.
PrimeXBT’s trading engine can execute up to 12,000 trades per second, and provides a reliable trading experience where ideal entry and exits can be secured, and without some of the glitches we’ve experienced on other platforms.
eToro
eToro is an Israel-based social trading platform that was launched in 2007 and has grown to become one of the more well-known trading platforms online via their extensive marketing campaigns.
Social trading is a group of processes that include “copy-trading”, or the act of one trader sharing their upcoming trades to other traders in exchange for some of the profit of any of the successful trades.
eToro primarily provides CFDs, but stocks and crypto-assets are also available on the site.
While the platform is one of the global leaders in social trading, their support systems are renowned for providing a low-quality service, and they are known for having outages of service because of glitches in their trading engine.
Coinbase
Coinbase is a cryptocurrency brokerage that provides quite a limited number of assets, however with their platform being known for being safe to use.
Coinbase set up its operations when cryptocurrency was still quite young, and today a good percentage of global crypto trading runs through their platform.
This is largely as a result of the platform being popular with institutional investors, while high fees on the site coupled with a fairly poor customer service system meaning that the same appeal isn’t found as much with retail traders.
Saying this, Coinbase has provided a useful service to the cryptocurrency industry for many years, and allows for quick purchases of cryptocurrency on their site.
Places to Buy Crypto: Exchanges
Binance
Binance is one of the more well-known cryptocurrency exchanges online, and has created a niche by focusing solely on crypto-assets and excluding fiat currency all together from their platform.
Traders may use the native “Binance Coin” in order to reduce fees, however even though the reduction knocks 25% off fees, the platform is still more expensive than some of the others here like PrimeXBT.
Binance has run since 2017 without serious incident until early 2019 when the platform was hacked to the tune of $40 million of their client’s cryptocurrency.
This hack damaged the reputation of the security at the site, however, the management were able to organize the repayment of the $40 million to their users.
Kraken
Kraken is one of the “old boys” of the cryptocurrency industry, originally being launched in 2013 by 2 of the security consultants called in to audit the recently defunct mega-exchange, Mt. Gox.
As a result of having security experts for founder, Kraken has a clean slate when it comes to hacks. To date, no hacker has gained access to the site, and this is especially impressive considering that it’s been around for 3 or 4 times longer than 90% of other trading platforms.
Saying this, the platform has struggled with its own demons — including its sluggish trading engine which throughout 2016/2017 would stop functioning at critical moments regularly.
Today upgrades to the back and front ends of the site have made Kraken a much more appealing proposal.
Bitfinex
Bitfinex is another of the older cryptocurrency exchanges still in operation, and the site has gotten a bad rap over the years because of its involvement with the Tether stable coin.
Tether is the most widely used stable coin, which functions by apparently being backed by USD.
Investigations over the past few years have found reasons to believe that Tether is possibly not back by USD at all — a revelation that if true would utterly destroy the value of the currency.
However, as no proof has been found this has remained as a rumour which has tarnished the otherwise good reputation of one of the larger platforms in the industry.
Bitfinex provides listings of a wide range of different cryptocurrencies, and its interface is very clean and easy to use.
Can Money be Made by Buying Crypto in 2020?
In one word, “absolutely”.
Although people tend to focus on the profits that early investors made in cryptocurrency, today there is a myriad of different opportunities available for anyone wanting to make money from cryptocurrency.
The cryptocurrency industry is worth hundreds of billions of dollars today, and each day more traders are moving into cryptocurrency markets and generating revenue from them.
Outside of trading cryptocurrency, there are also a number of different options available for people looking to make money with cryptocurrency, but without necessarily wanting to trade directly.
Saying this, trading is by far the most popular method of making money with cryptocurrency, and even within itself comes in many different types.
Here are some of the more common ways that people are making money with cryptocurrency today.
Manual Trading
Manual trading is extremely common amongst retail traders and is the process of manually logging into a trading platform, inspecting and analyzing charts, selecting an asset, and then making trades through the interface provided.
Manual trading requires a knowledge of how markets move, and an understanding of cryptocurrencies in particular, as trading cryptocurrency can be very different from trading traditional assets.
Successful traders can generate good profit margins, and this can be a very profitable way to interact with cryptocurrency markets.
Trading with Bots
By its very nature, trading with cryptocurrency bots, or “algorithmic trading”, can be more lucrative than manual trading.
This is a result of the ability to execute a wider range of strategies because essentially any strategy that can be done by a human can be done by a bot, but this is not true the other way around.
Certain strategies such as high-frequency trading (HFT) can be very profitable, with small profit being made on each trade, but thousands of trades each day, plus lucrative rebates from trading platforms, meaning that overall significant sums of revenue can be generated.
Obviously trading with bots requires some kind of technical proficiency, and deep knowledge of manual trading principles can help to design better bots.
Crypto Referral Programs
Crypto referral programs are some of the most profitable referral programs online, and this really is a direct result of the high potential value of each trader.
Platforms provide popular referral programs, such as PrimeXBT’s 4-tier affiliate program in which direct referrals and 3 levels deep of their resulting referrals all generate revenue for affiliates.
With the top 3 affiliates generating over $1 million in revenue in 2019, PrimeXBT’s program has grown exponentially over the past 12 months.
Crypto referral programs are simply the process of generating exposure and new clients for crypto trading platforms, and then either making a one-off payment for each new sign up or an ongoing percentage of all trading fees generated by those that are referred.
Referral programs are now one of the most common ways that crypto users make money online.
Crypto Mining
Although there was certainly more money to be made by mining cryptocurrencies in the past, there is still a range of opportunities to buy some mining equipment, set up a rig in your spare room, and start making money.
Mining is the process of connecting a computer to the internet and downloading the relevant mining software for a cryptocurrency and then running the computer 24/7 with the aim of winning rewards.
Bitcoin was the first cryptocurrency that could be mined, but today there are dozens that are available. Bitcoin is also today impossible to make any kind of real money mining unless a large amount of investment is involved.
Currencies like Monero, Grin, and Electroneum are today the best to mine, and present opportunities to generate revenue with either a CPU (consider Electroneum) or with GPUs (consider Grin).
In Summary
Deciding to buy crypto can be as simple as making a single purchase and then hodling for a few years, or as complex as designing a trading bot to make 1,000 trades an hour.
Taking the time to fully research which strategies can be most profitable is definitely prudent while searching for crypto trading platforms that provide more unique and powerful features, and keep the costs of trading low for investors can save a large sum of money over time.
This guide should act as the first step to DYOR (“doing-your-own-research”) into the platforms mentioned above, and the strategies that can be profitably executed on them.
We’ve compiled the best information that we could find, but the only true way to know if a platform is right is to go there and inspect their systems for yourself.
