What are cryptocurrencies?
- 1 What are cryptocurrencies?
- 2 How to buy Cryptocurrencies?
- 3 Cryptocurrency Mining
- 4 Payment methods to buy/sell cryptocurrencies
Cryptocurrencies, also known as cryptocurrencies, are virtual currencies that are exchanged like a traditional currency, but with a very important particularity: cryptocurrencies are outside the control of governments and institutions.
Conceived, at their birth, as a means of payment, their use in the investment sector and cryptocurrency trading is widespread and they are usually treated as a commodity, although – it must be said – there are also more and more stores that accept payment with cryptocurrencies.
How to buy Cryptocurrencies?
Not all investors are looking for the same thing and not all want to reach their goal in the same way. There are those who will have a preference for classic cryptocurrencies and will decide to invest in Bitcoin or Ethereum and others who will prefer to be more original when it comes to investing in the network and operate with Frienz or STORM. Some will even opt for Initial Coin Offering (ICO), whose approximate translation into English is Initial Coin Offering and which is, very briefly, a kind of cryptocurrency crowdfunding.
But with this guide to buy cryptocurrencies we want to help you (not confuse you more), so we will try to be very clear and concise. Therefore, we are going to reduce everything to three main methods of buying and selling cryptocurrencies: Contracts for Difference with regulated brokers (CFD), cryptocurrency exchange and cryptocurrency mining.
Cryptocurrency Contracts for Difference (CFDs)
It is one of the most common ways of online trading and its main feature is that the investor does not own the cryptocurrency in question at any time, but bets on the increase or loss of its value. In other words, it is about opening a position through a broker (we always recommend regulated cryptocurrency brokers) and trying to predict (following certain clues) what the future movement in the value of an asset will be. You can make money (or lose) with both the increase and loss of value.
It is the least used cryptocurrency trading system and also the most complicated (to practice and to explain).
The key to cryptocurrency mining are the nodes: computers connected to each other that are responsible for verifying the correctness of the transactions that occur in the sector of exchange and investment of digital currencies. They are miners who have to solve (as quickly as possible) complex mathematical problems to maintain order. Every 10 minutes they receive a problem and the first one to solve it gets new cryptocurrencies. This is called ”Proof of work”.
Characteristics of cryptocurrency mining
Technical capacity: given the increasing professionalization of the process, it is only suitable for people with great technical capacity.
- Large capital: significant initial capital is needed to make large investments.
- Expensive equipment: cryptocurrency mining equipment is expensive due to its high energy consumption.
- Buying/selling cryptocurrencies in english speaking countries
- The differences when operating with cryptocurrencies in one country or another are minimal. But there are. And we want to highlight them in this section.
The three cryptocurrency trading systems mentioned above, trading platforms, cryptocurrency exchange and cryptocurrency mining, are available in Spain. To these we must add the option of buying cryptocurrencies in ATMs, since Spain has the fifth largest Bitcoin ATM network in the world.
In Mexico, cryptocurrencies can be purchased through trading platforms to operate with CFD contracts (Plus500 or Xtb are some of the available ones) and also through exchanges.
The situation is the same as in Mexico: you can trade cryptocurrencies with brokers and exchanges, but there is a caveat: in Colombia you can only sell in local currency.
It is the same as in Colombia: the systems available are CFDs and exchanges. There are no local platforms either, so we recommend you to use LocalBitcoins.
In Chile you can buy cryptocurrencies with trading platforms like Plus500 or Xtb, with exchanges or through some Bitcoin cashiers in the capital: Santiago de Chile.
Online broker platforms and exchanges are the systems in Argentina to buy cryptocurrencies. To them we must add the local futures market.
Payment methods to buy/sell cryptocurrencies
Below we explain the most common payment methods when buying and selling cryptocurrencies, as well as the most used currencies in such transactions.
Buy/sell with PayPal
It is the best known and most used electronic wallet, however, its adaptation to the cryptocurrency market leaves something to be desired. In the case of exchanges there are almost no options. And if you opt for a broker, you will find one that supports it, for example, Plus500.
Buying/selling cryptocurrencies by credit or debit card
Cards are the most common way to pay for the purchase of cryptocurrencies. Almost all online broker platforms – and more and more exchanges – give the option.
Buying/selling cryptocurrencies with dollars
The dollar is the most widely used currency for buying and selling cryptocurrencies. All the platforms reviewed in this text support them.
Buying/selling cryptocurrencies with euros
Some CFD trading platforms, such as Plus500 or Xtb, support euros. As for exchanges, we recommend you to opt for Coinbase.
Security tips when buying/selling cryptocurrencies
Whichever cryptocurrency trading system you choose, whether you buy one cryptocurrency or another, whether you pay in dollars or euros… there are a series of security tips for buying cryptocurrencies that you should follow. And we say more: you should heed these tips whenever you operate on a network.
Unknown software: never install unknown software if you do not want to fall prey to malware.
Regulated platforms: before entering any personal data, make sure that the site in question has all the required seals and is properly regulated.
Passwords: enter a different password for each online trading platform and never share your e-wallet password.