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The Mass Media

How to buy cryptocurrency

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Coinbase logo. Uploaded under public domain.

Decentralized finance and cryptocurrency have seen an unprecedented amount of attention with the recent surge in the price of Bitcoin and other major cryptocurrencies. With Tesla buying $1.5 billion in Bitcoin (1), retail investors are looking to buy a piece of Bitcoin. However, before you buy Bitcoin, there are two “types” of cryptocurrencies you can buy. Understanding these two types will help you understand which cryptocurrency best fits your investing goals. 
Cryptocurrency Representation
Investing platforms such as Webull and Robinhood offer users the opportunity to “buy” cryptocurrency. For the average investor, buying on these platforms may fulfil their investing goals—however,  those with cryptocurrency understand that you can’t actually purchase cryptocurrency on those platforms. Robinhood discusses this on their support page, saying, “At this time, we don’t have the functionality to support coin withdrawals…At this time, we don’t have the functionality to allow customers to transfer their existing cryptocurrency assets into or out of their Robinhood Crypto account.” (2) On Robinhood, Webull, and similar platforms you are purchasing a monetary representation of that asset. And although they may implement the purchase of actual cryptocurrency in the future, it doesn’t seem likely to occur anytime soon. Those looking for a simple way to purchase cryptocurrency without needing to engage in complicated wallet transfers that occur on the blockchain should look to invest in cryptocurrency on regular brokerage accounts that offer cryptocurrency trading. Those looking to invest in cryptocurrencies should be prepared for extreme market volatility and a higher risk of losing their money compared to investing in regular market securities such as ETFs and blue-chip stocks. Those looking to invest in cryptocurrencies should do extensive research and have high financial risk tolerance. 
Cryptocurrency Exchanges 
Experienced cryptocurrency investors primarily invest in cryptocurrency using cryptocurrency exchanges. Although there are many cryptocurrency exchanges, the United States has three main exchanges: Binance US, Gemini, and Coinbase. These three exchanges and many more allow users to purchase cryptocurrency and either store it on the platform or send it to external wallets. Depending on the cryptocurrency, you may lose some of your investment as a result of fees when sending cryptocurrency to an external wallet. However, these exchanges allow you to trade, purchase and exchange cryptocurrencies. My personal recommendation is to use Gemini. Gemini offers a wide variety of cryptocurrencies to purchase and trade and recently introduced the Gemini Earn feature. (3) Although Binance and Coinbase have similar features, Gemini’s earn feature offers users the opportunity to earn interest on a whole host of cryptocurrencies, a list more exhaustive than Binance and Coinbase. For users looking to actually purchase and own cryptocurrencies, cryptocurrency exchanges are the better choice for those familiar with cryptocurrencies. 
As I have stated many times previously, Decentralized Finance is the future of the economy and of financial institutions. DeFi works for the people by having no centralized power that can manipulate our money. DeFi is true democratic finance, giving power back to the hands of the people. Whether you’re looking to dip your toes in some bitcoin or stake cryptocurrency on an external wallet or DeFi protocol, investing in cryptocurrency is a great way for anyone to get exposed to DeFi. Although cryptocurrency investing can get overwhelming and intimidating at times, through thorough research, even the least experienced investor can be comfortable investing in cryptocurrency. As usual, do plenty of research before you invest with any platform because any investing comes with plenty of risks. Only invest what you are willing to lose. 

  1. http://www.umassmedia.com/opinions/tesla-buys-bitcoin/article_a6be71c8-6bee-11eb-8f8b-a321f8401734.html 
  2. https://robinhood.com/us/en/support/articles/cryptocurrency-transfers-and-deposits/
  3. https://www.gemini.com/earn