How to start trading Bitcoin in 2020 - part 2
Since its inception in 2008, Bitcoin has continued to show value, expose flaws in the traditional financial system and solidify its impact. After the most recent all-time high in 2017, Bitcoin entered a regression period that it has recently started exiting out of. With mainstream adoption growing, media attention rising, and bitcoin at a discounted price makes 2020 the year any smart investor starts to investigate bitcoin.
Read on if you like to learn about:
- How to purchase Bitcoin
- Registering and KYC
How to purchase Bitcoin
When it comes to buying and selling cryptocurrencies, many companies have streamlined the process and made it straightforward for newcomers. Applications like Binance, Kraken and Coinbase have embraced the philosophy of decentralized currency. With their integration of the asset into their platforms, buying Bitcoin has never been this easy. Each one offers its own advantages and prioritizes a specific market, but each one continues to innovate within the field and has demonstrated its dedication to the user.
Coinbase prioritizes the introduction of beginners into cryptocurrency with custodial ownership and low transaction fees. Coinbase continues to expand its operations, adds new listings of reputable altcoins continuously and is a great introduction to the space. It is currently the number one choice for retail investors, Coinbase is simplistic, trustworthy and a great way to get involved in the space. Their process of purchasing cryptocurrency requires ID verification, a bank account or debit card and the funds of which to do so. Coinbase has some of the lowest fees when it comes to purchasing and transferring your digital assets and is a great choice for anyone that has intentions of holding a large amount of cryptocurrency long-term. You also have the option of setting up recurring purchases of different cryptos in addition to transferring them to any other wallet you or a friend may own. Their range of cryptocurrencies is wide, and they do a great job in only listing altcoins that have a sustainable vision as well as the funds to back it up.
Something that really sets Coinbase apart is the ability to link your account allow to PayPal and instant withdrawals for a small fee. This leads to an extremely agile way to convert your Crypto back to Fiat in case of emergencies in only a matter of minutes.
Binance is an exchange that originated in China but since has migrated to the small country of Malta. Currently the biggest exchange worldwide, Binance offers exceptional charting tools, margin trading, staking programs, trading contests, and several other appealing features. In addition to their in-depth trading tools, you are also able to import more complex charting tools and technical indicators which can give the intermediate to advanced trader all the required information before executing a trade. Binance has a learning curve that beginners must overcome when first getting into crypto but poses an enormous potential for rewards. Binance currently lists more than 150 coins and allows you to exchange certain coins for others directly without having to first convert to fiat currency. The trading fees are quite small at around 0.1% for each placed trade, but Binance offers a nice incentive for those using its native token. Those holding BNB in their account while executing other orders will receive a 25% discount on executed orders and can save traders quite a lot if they intend on frequently day trading. A small side note is users that who want to utilize Binance will have to navigate to Binance.us because as of September 2019, Binance was required to set up a Bitcoin-exchange the was in accordance with the US regulations. The listings aren’t as abundant as the main site, but Binance.US is only required when one wants to direct deposit or withdraw fiat currency. In addition, one can always use the main Binance website to hold their cryptocurrencies and later transfer to Binance.US if they intend on cashing out at any given moment.
Kraken is a US exchange that started in San Francisco and claims to surpass other exchanges in terms of Euro volume and liquidity. With an aesthetically pleasing interface and an emphasis on customer support, Kraken is an advanced trading platform that offers a wide range of features and persistent security. Spot and margin trading is available on Kraken, but Kraken isn’t the most beginner-friendly and can tend to overwhelm new users. Currently accepting Euros, US dollars and Canadian dollars, depositing funds will take around 24 hours, after which you are liberty to purchase your desired cryptocurrency. Spot trading fees range from .06%-.26% and are extremely competitive compared to other exchanges on the market. However, similarly to other exchanges, those who add limit orders to the exchange will pay a lower fee than those who fulfill existing orders. It also should be noted that most countries have access to Kraken, but residents of Washington state and New York don’t.
The main advantage of Kraken lies in its low transaction fees, customer support, and strong security. A complex interface is something to take into consideration when first getting into cryptocurrency and unfortunately many beginners report they are overwhelmed by Kraken’s extensive features. However, Kraken undoubtedly is a leader in the business of exchanges and will undoubtedly continue to revolutionize the space in the upcoming years.
Registering and KYC
When registering with an exchange you will be required to verify your identity through a process called KYC (Know Your Customer). The process is straightforward and will vary from exchange to exchange, but it will generally consist of methods that are used to ensure you are the person you claim making transactions on their platform. KYC often entails proof of identification (photo ID or Driver’s License), security and password and two-factor authentication. 2FA will often require you to answer a text message or answer an email when logging in for future uses, so it is imperative you take the verification processes seriously and utilize accounts you plan to continue with in the future.
When connecting to bank accounts, many exchanges will withdraw or deposit a small amount and ask you to verify the amount for that specific transaction. This is only done to ensure you have access to the bank account and they are not fraudulent.
After these authentication processes are complete, you now will have access to your liquid funds and a limitless market in which you can purchase specific cryptocurrencies. In any event, when trading cryptocurrency you must be made aware of the associated risks that come along with the benefits. All the aforementioned exchanges are exceptional platforms, but some are better suited to beginners and advanced traders than others.
Nonetheless, investing in Bitcoin is an exciting and most rewarding endeavor in terms of monetary value as well as knowledge. As we continue forward in 2020, which exchange you decide to utilize to take advantage of this revolutionary platform will come down to personal preference. But it should always be considered that prioritizing security, volume and fees will help minimize your risk and maximize your rewards as a trader.
Read also part one of How to start trading Bitcoin in 2020
Disclaimer: This article is for informational purposes only and does not provide any investment, tax, legal, or accounting advice.