Best Places To Invest In Cryptocurrency: A Guide

Investing in cryptocurrency is risky, but it can also be rewarding. If you're thinking of investing in cryptocurrency, you'll need to know the basics, including how to get started, the best platforms to use, and the different types of cryptocurrency.

How to Invest in Cryptocurrency

To invest in cryptocurrency, you'll need to choose a broker or a crypto exchange, create and verify your account, deposit cash to invest, place your cryptocurrency order, and select a storage method.

Best Platforms to Invest in Cryptocurrency

Some of the most well-known cryptocurrency exchanges include Coinbase, Gemini, Binance, Uphold, Kraken, Bitstamp, and eToro.

Different Types of Cryptocurrency

There are thousands of cryptocurrencies, including Bitcoin, Ethereum, Tether, Binance Coin, Solana, U.S. Dollar Coin, XRP, Dogecoin, Toncoin, and TRON.

Crypto exchanges

When choosing a crypto exchange, it is important to select a reputable, well-known platform with a large selection of currencies. You will need to provide personal information and verify your identity to create an account. Before you can buy any crypto, you will need to fund your exchange account with another currency, such as U.S. dollars.

It is worth noting that crypto exchanges may only support certain cryptocurrencies, so it is important to ensure that the exchange you choose supports the cryptocurrency you want to buy. Additionally, crypto exchanges may charge transaction fees, which can vary widely among currencies. Therefore, it is crucial to pay attention to these fees when making crypto purchases.

Coinbase

Coinbase is one of the most popular and beginner-friendly crypto exchanges. It allows users to invest directly with USD and offers a wide selection of coins and tokens, including Bitcoin, Ethereum, and Litecoin. Coinbase also provides a high level of security and trustworthiness. However, it charges high fees unless you use Coinbase Pro. Additionally, the user does not control the private keys in the wallet, and Coinbase has been slow to adopt popular new cryptocurrencies.

Gemini

Gemini is another beginner-friendly crypto exchange that is well-suited for new and experienced traders. It offers robust security features and is available in all 50 U.S. states and 70+ countries. Gemini also has a mobile app with an easy-to-use interface. However, it has limited payment and deposit methods, and customer service can be mixed.

Binance

Binance is one of the largest crypto exchanges in the world, offering a wide range of cryptocurrencies. It provides a user-friendly platform and a mobile app. However, Binance has limited customer support, and the U.S. version of the platform has fewer coins and tokens available compared to the international version.

Uphold

Uphold offers a simple solution for trading multiple assets, allowing users to trade multiple assets directly without having to convert back to cash. It supports a wide range of crypto tokens and even some stocks, including popular ones like XRP. Uphold has both desktop and mobile apps. However, it is not as easy to use as some other platforms, and there have been some reports of poor customer service.

Kraken

Kraken is one of the original crypto trading platforms, offering a good selection of coins and tokens. It allows margin trading and has a high level of security and trust. However, it has a complex interface that may be difficult for beginners to navigate. There have also been some reports of poor customer service.

Crypto brokers

Some popular crypto brokers include:

• Interactive Brokers: One of the most established online brokerage platforms, offering a wide range of asset classes, including stocks, bonds, commodities, derivatives, mutual funds, and cryptocurrencies. Interactive Brokers introduced crypto trading in 2021, offering Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC). The platform stands out for its advanced trading tools and low fees, making it a popular choice among active traders.
• Robinhood: A beginner-friendly trading platform known for its zero-commission fee model and simple user interface. Robinhood currently offers crypto trading in 15 digital currencies and tokens, including Bitcoin and Ethereum. It provides a mobile app that is easy to use for beginners.
• EToro: A multi-asset brokerage and social investing platform that enables users to copy the trades of other successful traders. eToro offers a wide range of crypto assets, including Bitcoin, Ethereum, and XRP. However, in September 2024, eToro USA agreed to settle charges with the SEC and significantly curtail its crypto asset offerings, limiting US customers to trading Bitcoin, Bitcoin Cash, and Ether.
• Fidelity Investments: A well-known financial services company that provides a broad selection of crypto ETFs and offers commission-free crypto ETFs. Fidelity started mining Bitcoin in 2014 and launched an institutional crypto custody and trading platform in 2018. The platform stands out for its crypto-friendly approach and educational resources.
• Caleb & Brown: A crypto brokerage that provides a dedicated personal broker to guide clients through their crypto investments. They offer 24/7 customer support, industry-leading cold storage solutions, and access to institutional-grade liquidity across hundreds of digital assets. Caleb & Brown charges a flat fee for buy, sell, and swap orders, with no fees on spreads, deposits, or withdrawals.

When choosing a crypto broker, it is important to consider factors such as security, ease of use, available cryptocurrencies, fees, and customer support. It is also essential to understand the risks and volatility associated with cryptocurrency investments.

Crypto wallets

Hot Wallets

Hot wallets are always connected to the internet and can be accessed from a phone or desktop computer. They are highly convenient and can be accessed from anywhere with an internet connection. However, they are less secure than cold wallets and are vulnerable to a wider variety of attacks. Examples of hot wallets include Coinbase Wallet, MetaMask, TrustWallet, and Exodus.

Cold Wallets

Cold wallets are kept offline and deliberately designed to be hard to hack. They can be in the form of a USB drive or even a sheet of paper. Cold wallets are more secure than hot wallets but are nearly impossible to recover if the private key is lost. Examples of cold wallets include Ledger Nano S Plus, Ellipal Titan Crypto Wallet, and SafePal Crypto Wallet.

When choosing a crypto wallet, it is important to consider factors such as security, functionality, and cost. Additionally, active traders may benefit from having both a hot and cold wallet, using the former for frequent trades and the latter as a long-term storage solution.

Crypto funds

The U.S. currently has only one crypto mutual fund, the Bitcoin Strategy ProFund, which invests in Bitcoin futures. Crypto funds offer convenience and potential tax advantages for retirement accounts. They are easy to buy and can help build a diverse portfolio. Additionally, cryptocurrency prices can rise very quickly, making a crypto fund a potentially profitable investment.

However, there are some downsides to crypto funds. The cryptocurrency market is extremely volatile, and there are very few crypto funds available. The expense ratios for crypto funds can also be high, with the Bitcoin Strategy ProFund charging 1.15%.

For investors interested in crypto funds, there are similar alternatives, such as cryptocurrency trusts and ETFs. These funds invest in a range of cryptocurrencies and crypto-adjacent companies.

Crypto companies

Robinhood Markets Inc. (HOOD) and PayPal Holdings Inc. (PYPL)

Robinhood and PayPal are two of the most well-known crypto brokers that take the complexity out of purchasing crypto. They offer easy-to-use interfaces that interact with exchanges for you. However, with brokers, you may face restrictions on moving your cryptocurrency holdings off the platform. For example, at Robinhood and PayPal, you cannot transfer your crypto holdings out of your account.

MicroStrategy Inc. (MSTR)

MicroStrategy is a company that holds large amounts of cryptocurrency on its balance sheets. Investing in such companies can be a way to gain exposure to the cryptocurrency market without directly purchasing crypto.

Crypto Mining Companies

Another option for investing in crypto companies is to look at cryptocurrency mining companies. These companies are directly involved in the process of creating new cryptocurrencies through mining. Some examples of crypto mining companies include:

• Riot Blockchain (RIOT)
• Marathon Digital Holdings (MARA)
• Hive Blockchain Technologies (HIVE)

Crypto Exchange Companies

Crypto exchange companies provide a platform for buying, selling, and trading cryptocurrencies. Here are some of the top crypto exchange companies to consider:

• Coinbase (COIN) is one of the most popular and beginner-friendly exchanges in the US.
• Binance is one of the largest crypto exchanges in the world, offering a wide range of cryptocurrencies to trade and invest in.
• Gemini is another popular and established crypto exchange, especially for those looking to trade Bitcoin and Ethereum.
• Kraken is one of the original crypto trading platforms, offering a good selection of coins and tokens to trade and invest in.

Investing in crypto companies can be a less volatile way to gain exposure to the cryptocurrency market compared to directly investing in crypto coins. However, it is important to carefully research any company before investing and understand the risks involved.

Frequently asked questions