Cryptocurrencies have gone from obscure digital currencies to an everyday, albeit speculative, investment. And crypto exchanges hire celebrities and buy sports complex naming rights to convince investors to buy crypto using their services. While exchanges are certainly an option, there are many other ways to buy cryptos.

Where to buy cryptocurrency

Investors can buy and trade cryptos on a variety of platforms. Each has some pros and cons, and the availability of different cryptos, price per coin, transaction fees, and additional fees can depend on where someone buys crypto. Five common options are:

Crypto exchanges

Crypto exchanges

are platforms that let users buy, sell, and trade cryptocurrencies. These are broadly split into two groups, centralized and decentralized exchanges. 

Centralized exchanges, such Coinbase, Crypto.com, FTX, and Gemini, let investors create an account and then invest in any of the cryptos that the platform supports. Users may need to first verify their identity and link a funding source, such as a bank account or debit card. They can then use dollars to buy crypto from the exchange. 

Decentralized exchanges

are automated programs that are run by a decentralized network, much like cryptos themselves. No single entity controls the exchange, and investors don’t need to create an account or verify their identity to use a decentralized exchange. However, these exchanges only support crypto-to-crypto trades, so an investor needs to have a crypto wallet with funds on it if they want to buy crypto from a decentralized exchange. 

Direct purchases

Rather than using an exchange, investors can trade directly with one another using peer-to-peer crypto marketplaces. However, these marketplaces generally only support a few types of cryptos. And some of the more well-known ones, such as Hodl Hodl, support the sale of Bitcoin exclusively. 

Crypto ATMs

These physical machines look like bank ATMs and can be found in stores across the country. But they don’t dispense cash. Instead, crypto wallet holders can use the ATM to buy cryptos in person with cash—and sometimes a debit or credit card. 

Buyers may need to register with the ATM company and verify their identity before making a purchase. They can then type in their wallet’s address or use the machine’s QR code scanner to scan their crypto wallet’s QR code before making a payment and completing the purchase. Rather than using an existing wallet, some machines can print out a slip of paper with the information for a new crypto wallet that will have the funds on it. 

FinTech apps

Many investing and payment apps have added crypto trading and investing as options for users. Investors who have Titan, Cash App, PayPal, Robinhood, SoFi, or Venmo may be able to easily use their account to also buy crypto. The options and process can vary from one app to another. 

For instance, Cash App users can use their existing account to buy Bitcoin with their existing Cash App balance. With SoFi, a member may need to sign up for SoFi invest even if they already have a loan or account with the company. Once they do, they can purchase up to 30 different types of cryptos through the app. With Crypto, when you become a client you have a team of experts who manage your crypto investments for you.

Crypto funds and portfolios

Rather than buying and holding crypto in an account or crypto wallet, investors can look for ways to purchase other types of securities or funds—such as a Bitcoin exchange-traded fund—that give them exposure to the crypto ecosystem. 

Some of these funds are set up to mirror the rise and fall of an underlying crypto, similar to an index fund. However, actively managed crypto funds and portfolios take a more hands-on approach. Investors can buy into the fund or portfolio, and the portfolio managers will use their industry knowledge and research to choose which cryptos to buy and sell. Titan offers an actively managed crypto portfolio.

5 steps to buying cryptocurrency

Many crypto investors start with a centralized exchange, and the process can be broken down into five steps. 

1. Choose an exchange.

   Compare popular centralized exchanges to see which may be the best fit. Look at the supported cryptos and trading fees. However, also consider the companies’ reputations and whether they have insurance that could protect users’ funds from a hack. It may be better to pay a slightly higher fee for extra security. 

2. Create an account.

   Next, create an account username and password. Note that some exchanges have referral programs and sign-up rewards. 

3. Verify your identity.

   The verification process can depend on the exchange, but it may involve submitting a photo of an official identification card. New users may also need to take pictures of themselves with a webcam or phone, which the system will compare to the photo on the ID. 

4. Add a payment method.

   The exchange may support multiple payment options, including bank transfers, wires, credit cards, and debit cards. Compare their fees and funding times to see which will be best. 

5. Place an order.

   Once the payment method is approved, users may be able to use it to buy the crypto immediately, or they could fund their account with fiat currency (e.g., dollars) and then exchange them for crypto later. 

Centralized exchanges may only offer more well-known cryptos, such as Bitcoin, Ethereum, and a limited list of altcoins. Investors who want to buy lesser-known and brand-new cryptos will need to set up a crypto wallet, fund the wallet, and find a decentralized exchange that offers the crypto. 

Considerations before buying cryptocurrency

While investing in crypto may be easier than ever, there’s still a lot to consider. Similar to investing in stock, it’s important to review the specific crypto and the risks involved. But there are also a few general things to consider before buying any crypto: 

• Crypto can be highly volatile.

  While some cryptos have become household names, there are still very large price swings. Some early investors might have had their investment go “to the moon,” but others have been left holding their (empty) bags after a market crash. 

• The crypto landscape is always changing.

  One of the things that can make investing in crypto interesting is that developers are continually launching new projects. Some of these fail, or turn out to be a scam, but others might become the next big thing.‍

• Scams are prevalent.

  It’s difficult to trace cryptos and impossible to reverse transactions, two of the reasons investors need to be extra careful about crypto-related scams. Use strong and unique passwords when creating accounts and enable additional security features, such as multi-factor authentication, when it’s an option. For investors who use crypto wallets, remember to never share the seed phrase or private key with anyone, including someone who claims to be customer support for a decentralized finance app or wallet. ‍

• ‍Regulations are sparse. While local, state, and federal regulators are working to address concerns related to crypto investing, there are still many unanswered questions. Be particularly cautious when using decentralized finance (DeFi) apps, which might not be concerned with following the few U.S. laws that do exist. 
• Diversification can be important.

  Investors can try to diversify their crypto holdings by buying different types of cryptos that won’t necessarily move in tandem. They may also consider how digital assets, such as cryptos and NFTs, fit in with their entire portfolio. 

The bottom line

Centralized exchanges and FinTech apps can be an easy way for mainstream investors to buy their first crypto. Investors who want to dive deeper and access lesser-known cryptos may do so via decentralized exchanges. And as cryptos become more mainstream, investors can also choose from newer options, such as crypto ETFs and actively managed crypto funds or portfolios, which can offer a more diversified investment with a single purchase. But, no matter the platform, it’s important to consider the risks before making an investment.