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How to buy crypto?

Felix
Linkedind

Felix - 29 April 2022 - 7 min read

Exchanges 101

In a simplified world, there are two types of exchanges: Centralized Exchanges (CEXs) and Decentralized Exchanges (DEXs).

CEXs allow you to buy and sell cryptocurrencies on their platform. Just like stock exchanges do it. You might be having a depot at your bank with a stock portfolio. Or you are a using one of the many neobrokers like Robinhood or TradeRepublic . For all of them you need an account at the service you are using and you need to transfer money first to that account. While we hope that your account is free of charge, the trading activity usually comes with a fee, sometimes fixed, sometimes variable. In exchange for paying service fees you can usually expect support and security as all these services need to comply with regulation and laws in the countries where they operate. With the growth of the crypto market, also new exchanges came along: The most well-known are CoinBase and Binance.

DEXs – on the other hand – allow you to buy and sell cryptocurrencies directly (peer-to-peer). There is no platform or person between buyers and seller and the trading happens entirely through automated algorithms. The blockchain technology is what made DEXs possible. Therefor a lot of new market participants exist. Some of you might be familiar with Uniswap . It is still early for DEXs and while there are some advantages (no need to create an account, all cryptocurrencies are tradeable, no hacking risk, no market manipulation), user experience and the risk of “doing something wrong” need to be addressed before we would recommend using a DEX: There is no recovery ability for lost or misplaced funds.

Although there are some services that follow a mixed approach by using centralized and decentralized elements, there is currently no service that combines the best of both worlds in our opinion. We would recommend that you start your journey with a more centralized and familiar service. And if anything good comes to our attention, rest assured that we will let you know.

Now "Where can I buy?"

To answer that main question you might have, we want to shortly explain what we are doing. On our dashboard we are listing the top 3 exchanges that have achieved the highest score within our exchange scoring system. The score is determined through a quantitative and qualitative rating and involves areas, such as regulation, trading volume, user experience, the number of users and fees.

The latter is also shown on the dashboard, next to the exchange. In case you see a range e.g. 0,4%-0,6%, there is a difference between the fee you pay as a maker and the fee you pay as a taker. You are a maker, when you place a buy or sell order that is fulfilled later. Because you provide liquidity to the exchange, you pay the lower fee e.g. 0,4%. You are a taker, in case you buy or sell immediately and take the order of someone else. You take liquidity out of the exchange and therefore you pay the higher fee e.g. 0,6%.

Be aware that there might be additional fees on some services. We try to prevent that you overpay by not showing any exchanges with high fees or if we have any other concerns. But the choice is yours.

In the table below, you will find our top 3 exchanges in a direct comparison:

CEXs compared TradeRepubliceToroKucoinCryptos > 50 > 60 > 600Trading Fees 1€1%0,1%Deposit Fee No feesNo feesNo feesUser > 1.000.000 > 25.000.000 > 10.000.000Exchange Scoring
Star Full
Star Full
Star Full
Star Empty
Star Empty
Star Full
Star Full
Star Full
Half Star
Star Empty
Star Full
Star Full
Star Full
Half Star
Empty Star
Difficulty BeginnerIntermediateExperts

You can support us for free!

Our service is currently free of charge. And you can help us to keep it that way. If you do not use a trading platform yet you can create an account by using our affiliate links. Simply smash one of the "Buy" buttons above or in the "Where can I buy" section of the respective cryptocurrency. Then follow the steps to create an account.

A few tips before you get invested

We will discuss these and other learnings in more detail over time but especially at the beginning of your investment journey, there are a few things we would have liked to understand better when we started:

  • Always invest for the long-term (3-5 years minimum).
  • Do not invest money you might need within that time.
  • Do not only invest in cryptocurrencies.
  • Do not invest all at once. Build your portfolio and portfolio positions over time.
  • Cryptocurrencies have a higher risk than any other asset. The smaller a cryptocurrency, the higher the risk but also potential rewards.

More about that soon. In the meantime, feel free to let us know if you want to learn more about a specific topic. Simply write us to support@coinformation.ai.

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Disclaimer: Cryptocurrency investments carry considerable risk of loss. The value of your investments can go up as well as down. Please do your own research before investing in any cryptocurrency. This service is for informational purposes only and is not financial advice.

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Coinformation provides information as well as fundamental data analysis of cryptocurrencies. We track prices, financials, on-chain metrics, social interest and many other metrics to identify long-term value and give short term signals in case these change.

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