Cryptocurrencies can be purchased from crypto exchanges or platforms that offer access to financial stocks alongside cryptocurrencies such as Robinhood.
For many newcomers to crypto, purchasing cryptocurrencies can get a little confusing with so many different payment methods and crypto exchanges to choose from.
This page will guide you through the process of buying cryptocurrencies and clear any doubts.
What are cryptocurrency exchanges?
Cryptocurrency exchanges offer registered users the ability to purchase cryptocurrencies online. Those looking to invest in crypto may register with a chosen cryptocurrency exchange where they can then create a personal crypto wallet to store their assets in and trade.
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Most crypto exchanges offer low trading fees with advanced dashboards for those who want more options when it comes to trading and investing. Some of the most popular cryptocurrency exchanges include Coinbase, Binance, Gemini and Kucoin.
All the aforementioned exchanges allow users to trade crypto and create crypto wallets, but not all of them have the same trading features or low trading fees.
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Using DeFi to buy cryptocurrency
Decentralised applications allow traders to access decentralised financial services and cryptocurrencies that cannot be bought on exchanges. All cryptocurrency exchanges are CeFi (centralised finance) while DEXs (decentralised exchanges) such as Uniswap and PancakeSwap count as DeFi (decentralised finance.)
- Read more: Will Bitcoin go back up? Let's find out!
The best way to access DEXs, DeFi and decentralised applications (dApps) is to first buy crypto from a CeFi exchange like Binance and send your funds from Binance to a DeFi wallet. After sending money from a centralised exchange to a DeFi wallet, traders can use DEXs to trade cryptocurrencies.
The most popular DeFi wallet (also known as a non-custodial wallet) is Metamask which can be used to access DeFi services on the Ethereum blockchain. Blockchains like Cardano and Terra Luna have their own DeFi wallets such as Phantom and Terra Station.
Other DeFi wallets like Crypto.com’s DeFi wallet, TrustWallet, Coinbase Wallet and Trezor wallet also allow traders to access DeFi services, but users must first sign up with that wallet’s provider and may sometimes need to provide personal identification. Metamask and blockchain-specific DeFi wallets do not require identification and can be accessed by anybody.
How to buy crypto from a cryptocurrency exchange
- Choose a cryptocurrency exchange that you would like to sign up with. It's best to look at currently available exchanges and make a judgement about what's right for you and the type of services you’re looking for when it comes to trading cryptocurrencies.
- Register with your chosen crypto exchange then validate your account with personal identification.
- Once your account is set up you need to deposit money into your exchange wallet. This can be done by linking your bank account or using a debit/credit card.
- When your money arrives in your account you can start purchasing cryptocurrencies. Any crypto you buy will be stored in your exchange wallet. Once you have crypto in your wallet, you can transfer it to a DeFi wallet.
- Read more: Will Bitcoin go back up? Let's find out!
How to trade cryptocurrencies using a DeFi wallet
- Send crypto from your exchange wallet to your chosen DeFi wallet. For example, if you have an account on Binance along with a Metamask DeFi wallet, you can send money from Binance to your Metamask browser wallet by sending crypto to your Metamask wallet’s address.
- When your crypto arrives from an exchange and into your DeFi wallet, head over to a decentralised exchange (DEX) and swap your crypto. On Uniswap you can search for cryptocurrencies to swap to or copy and paste a crypto token's address into the search bar. You can find token addresses on price-tracking websites such as Coinmarketcap and Coingeko.
- Keep in mind that when using DEXs like Uniswap you will need some Ethereum to pay for transaction fees
- Read more: Coinbase exchange beats earnings expectations in Q4 report
Learn more about cryptocurrencies: What is DeFi?, What is Chainlink (LINK)?, What is Polygon (MATIC)?, Quant Network: What is Quant (QNT)?
For more articles like this, take a look at our Planet Crypto page.