Buy cryptocurrencies 2021: Which cryptocurrency to buy?
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2020/ 2021 is considered the year of cryptocurrencies. With a historical high, Bitcoin once again attracted the attention of investment newcomers and private investors. Many investors have since become more interested in trading cryptocurrencies.
However, past events also show that trading in the digital coins is not a foregone conclusion. For many new investors, Bitcoin and Co. also seem abstract and incomprehensible, so that they shy away from entering crypto investment.
Indeed, trading cryptocurrencies needs a solid know-how. The following article aims to explain how digital currencies work, present buying opportunities and give recommendations for safe trading platforms and crypto tools.
Instructions: Simply buy cryptocurrencies in three steps
In advance, we have additionally created a video tutorial: How to buy cryptocurrencies quickly and safely.
Step 1: Open an account with eToro
Before you can buy cryptocurrencies, you first have to create an account with an online broker of your choice that supports cryptocurrencies.
Our choice falls on our test winner eToro. Here, opening an account is very easy and eToro shines with the lowest fees when buying cryptocurrencies. In addition, eToro is state-regulated and therefore subject to deposit protection.
To register with eToro you simply need to enter your personal details in the registration form on the homepage.
Step 2: Deposit
Now you will receive an email from eToro with a confirmation link. After confirming your account you can proceed to buy cryptocurrencies.
In order to fund your trading account, you need to click on the "Deposit Money" button in the bottom left corner. Then a window opens in which you can select the desired payment method.
Depending on which payment method you choose, the payment can now be made and the account topped up.
Step 3: Buy cryptocurrencies
Now you can buy the desired cryptocurrency, in our case Bitcoin or Bitcoin CFDs. The easiest way is to enter the cryptocurrency in the search field and thus find it.
Now the desired purchase settings can be made in the purchase field. Here you can also specify how many euros you want to buy cryptocurrencies for. If you want to buy real cryptos, you should leave the leverage set to "X1".
If you don't want to buy real cryptocurrencies, but prefer to trade cryptocurrencies CFDs, you can also find them via the search box and then set the leverage to "X2". But here is the hint: CFDs are rather something for experienced investors, as the risk of loss is significantly higher here.
Buy cryptocurrencies: The best platforms in comparison
 | Trade real cryptos and crypto CFDs |
 | Broker fully regulated |
 | Many tradable assets |
 | User-friendly platform 0% commissions Deposit from 20€ |
 | Deposit management in Stablecoin USDT offers protection against volatile price movements |
What are cryptocurrencies?
For a long time, however, the innovation cryptocurrency remained quiet until it experienced a rapid rise as an independent international currency in the wake of the global financial crisis. Cryptocurrencies are means of payment that function exclusively digitally. The name "crypto" comes from the term "cryptography", which describes the encryption of data or information.
Cryptocurrencies are an alternative to classic, centrally managed FIAT currencies such as the US dollar, euro, yen, Swiss franc and British pound. Most cryptocurrencies are decentralised, i.e. they are not managed by a central authority that would determine a currency policy. Unlike conventional currencies, there are therefore no notes and coins available with which to trade.
The best-known cryptocurrency is Bitcoin, which was the first digital currency to pioneer the crypto market. The term "bitcoin" is composed of the terms "bit" as the designation for the smallest available storage unit and "coin" as the English-language designation for the word "coin".
Bitcoin is the focus of this article because of its great market significance. In the meantime, however, many other digital coins are available on the market and new ones are constantly being added.
Bitcoin exchanges and brokers - Which providers are recommendable?
The term bitcoin exchange can sometimes be confusing for newcomers to the crypto market, as different terms are often not clearly distinguished:
As a rule, however, the term bitcoin exchange refers to crypto exchanges that offer real coins.
In addition, CFD brokers are popular, i.e. providers where you can speculate on rising or falling prices of cryptocurrencies with the help of a derivative or CFD certificate ("contract for difference").
There are also Bitcoin marketplaces where cryptocurrencies can be freely traded between customers without a price being charged.
More recently, there has also been an increase in the number of crypto certificates that are traded on traditional stock exchanges and reflect the market value of a cryptocurrency. However, they are also not considered Bitcoin exchanges in the true sense, even if the digital coins can be traded in real time on the trading venues.
Rank 1: eToro
The provider eToro is excellently suited for trading real coins but also CFDs.
The platform's broad product portfolio also includes 16 digital currencies (Bitcoin, Bitcoin Cash, Ethereum, Dash, Litecoin, Ada, Ethereum Classic, Stellar, Ripple, EOS, NEO and currency pairs such as Bitcoin against Euro and Ethereum against Euro).
Deposit protection by the CySEC (Cyprus Securities and Exchange Commission), deposits are protected up to an amount of 20,000 euros. (Compared to the usual amount of 100,000, however, this sum is relatively low).
Due to the low trading fees, eToro is particularly well suited for short-term and risk-loving investors who want to make their profits within a few minutes and hours.
In addition, the platforms offer various levers with the help of which high returns can be achieved even with small trading sums.
A wide range of support services and the clear presentation of various trading signals, which can be used to plan and analyse trades, can offer valuable assistance to Bitcoin beginners in particular.
Rank 2: Plus500
Thanks to comparatively low trading fees, Plus500 is equally suitable for small investors and frequent traders.
Risk-averse investors can trade CFDs with leverage of 1:2. CFDs of 12 digital currencies are available (Bitcoin, Ethereum - Bitcoin, Ethereum, Litecoin, NEO, Ripple XRP, IOTA, Monero, EOS, Bitcoin Cash ABC, Stellar, Cardano, Tron).
The simple and clear operation of the interface is a real plus, especially for new investors.
A large number of charts and trading tools provide an additional overview.
A test portfolio also offers the opportunity to test trading Bitcoin CFDs in real time without already risking your own assets.
Rank 3: CryptoRocket
Crypto Rocket Logo is also a CFD broker that is becoming increasingly popular.
Here, users can not only trade a variety of cryptocurrencies, but also forex, commodities and indices if they are interested. A special feature of this provider is that CryptoRocket allows deposits and withdrawals via Bitcoin as well as credit card.
Perfect for all true crypto fans. Furthermore, the platform offers very low spreads and high leverage. Customers can also look forward to a free demo account.
No deposit and withdrawal fees
No minimum deposit amount
Narrow spreads and high leverage
24/7 customer service availability (via email, live chat and phone).
Rank 4: Coinbase
The bitcoin exchange Coinbase, founded in 2012, says it has over 12 million customers in 34 countries.
Thanks to the simple and quick registration and the intuitive control of the user interface, Coinbase is also well suited for crypto beginners.
However, trading on the American platform is relatively high with trading fees of 1.49 percent of the transaction value and deposit fees of 3.99 percent of the deposit value when using credit cards.
Attention: Registration and verification can be carried out without any problems, but due to the lack of support, it cannot be ruled out that there may be problems with transfers and deposits in individual cases.
How do cryptocurrencies work?
The transactions of a cryptocurrency between two people, who are identified by the addresses of their wallets, are combined in blocks. Because these blocks are encrypted by a mathematical hash function and subsequent blocks have a reference value to preceding blocks, an encrypted chain of blocks is created, i.e. a blockchain. The encryption and chaining of blocks ensures that transaction data of a blockchain is immutable and protected from hackers.
But beware: the reliable value of bitcoin coins does not yet say anything about the value at which they can be exchanged in trade with other currencies. In this respect, there have been and continue to be considerable price fluctuations.
Bitcoins are created and traded in a decentralised computer network, the heart of which is the so-called blockchain, a database now several gigabytes in size, in which all Bitcoin transactions are listed.
For a cryptocurrency to be used and transferred, the network must be powered by computing power. In public blockchains, this is done by many independent participants called "miners" (in reference to the search for gold, mining). Miners are rewarded with cryptocurrency for providing computing power and confirming a transaction.
To access the crypto system and use digital currencies, investors must have a Bitcoin wallet, i.e. a digital wallet in which their own Bitcoins are stored. Technically, the wallet is a unique very long string of characters that can be used to identify and assign the individual "wallet".
Alternatively, bitcoin exchanges offer the possibility, similar to a classic stock exchange, not to store the crypto coins themselves, but to trade in share certificates of the respective currencies.
Features of the crypto system
In principle, trading in bitcoins is similar to trading in ordinary currencies and commodities. Similar to how the value of coins and notes is represented by a real existing asset (gold reserves, economic output), the value of cryptocurrencies is also covered by an equivalent value.
This results from:
- the uniqueness of the individual crypto keys,
- the enormous computing effort required to extract them (so-called mining), and
- the resulting limited availability of the coins (similar to trading in gold and commodities).
- However, there are also some special features of cryptocurrencies that interested investors should know and take into account:
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Fast trading
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Maximum anonymity
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High security standards
Since cryptocurrencies are not managed by a bank or central bank, but by the so-called blockchain, an open-source database that is free of charge for all users, trading in cryptocurrency can be made very cheap thanks to the absence of administrative costs.
Why should one invest in cryptocurrencies?
What to look out for when buying cryptocurrency
If you are in a hurry to buy cryptocurrencies, we recommend that you pay attention to the following things. Because otherwise it can quickly happen that a total loss of the investment is threatened. So anyone who wants to buy cryptocurrencies quickly and safely should at least ask themselves these questions:
Is it worth buying cryptocurrencies at the moment?
Where are cryptocurrencies best to buy or trade?
Which cryptocurrency is the best in comparison at the moment?
What opportunities and, above all, risks can I expect if I want to buy cryptos?
As with any other investment, you should also proceed carefully when buying cryptocurrencies. In doing so, you should pay particular attention to the following aspects.
Tip #1: Goal of your investment
Ask yourself why you want to buy digital currencies. What is your goal with your investment? Do you already know which cryptocurrencies make sense for you to invest in? Do you just want to store some Bitcoins in your wallet, do you want to use it as a means of payment, do you even want to start trading Bitcoin?
Tip #2: The "best cryptocurrency" depends on your goals.
In the following sections, we will introduce you to the most important cryptocurrencies in more detail. Which of these digital currencies should you invest in? It all depends on your goals and beliefs. You may want to choose Bitcoin as your largest coin, or you may want to support a project like Ethereum.
Tip #3: Risk management
Always be aware that cryptocurrencies are a very volatile asset class. In extreme cases, prices can change by more than 10% per day, or have done so frequently in the past. You must therefore monitor the price of your purchased cryptocurrencies regularly!
Tip #4: Proper handling of wallets
As described in the section on wallet storage, you need to learn how to use wallets properly. Using QR codes or public keys and making sure that you only send cryptocurrency to compatible wallets is essential!
Tip #5: Secure storage of funds
Every type of wallet has its uses, but if you want to keep larger cryptocurrency balances safe for longer, you should store them in a secure hardware wallet. Here you can learn everything about the use of wallets, we also have the best hardware wallets in our test.
Tip #6: The amount of the transaction fees
When you buy cryptocurrencies, there are always fees in the form of a commission, i.e. a percentage of the amount you buy. Find out how much your chosen broker or crypto exchange charges before you buy! We can recommend the low-cost online broker eToro.
Which cryptocurrencies are recommendable besides Bitcoin? A list of Bitcoin alternatives
Among them, however, some systems have also emerged that appear to be only slightly mature and are therefore not suitable for new investors in particular. New crypto investors should therefore primarily turn to bitcoin or other proven and large crypto systems:
Ethereum
Ethereum, currently probably the biggest Bitcoin competitor, is not a digital currency in the true sense of the word, but a platform for smart contracts on which customers can conclude contracts with the platform's own currency, Ether.
With these contracts, programmes automatically pay a previously defined consideration whenever a previously defined sum is transferred in Ether.
Litecoin
Released in 2011, Litecoin is one of the oldest cryptocurrencies alongside Bitcoin. Experts also call it the silver of the digital gold Bitcoin.
Since, unlike Bitcoin, new Litecoin blocks are even generated every 2.5 minutes and not just every 10 minutes, four times as many units are available.
Dash
At the heart of this currency, which used to trade under the name Darkcoin, is a block mechanism called Darksend that instantly anonymises transactions.
Since Dash is available in very large numbers, it can only be compared to the classic cryptocurrencies to a limited extent. The currency is therefore more of a supplement to other systems.
Ripple
Ripple is a special altcoin because it runs on the private Ripple blockchain. So there is no way to become an XRP miner. The cryptocurrency has a very clear use case; an instant, low-cost transfer of FIAT currencies between countries around the world.
Many well-known banks are already working with the XRP blockchain. Amounts are sent around in XRP between banks, then converted back to FIAT. Global transactions take minutes, not days. Ripple is the fourth largest cryptocurrency by market capitalisation, with around USD 9 billion.
Tether
Tether is the best known stablecoin, the value is based on an equal amount of US dollars. 1 USDT is therefore always approx. 1 USD. Although USDT would also be suitable as a means of payment because of its stability, in practice it is used as a safe haven to store money temporarily with crypto exchanges.
Tether is used as a private blockchain by Tether Ltd, which is seen as a disadvantage by some authors.
Which cryptocurrencies should one currently buy?
There are currently more than 9,000 different cryptocurrencies available on the market to buy and trade. So anyone who wants to buy a cryptocurrency is literally spoilt for choice here and should take a closer look. Some cryptocurrencies are projects that lie fallow and are not developed further, and others have the appearance of a scam or are built on so-called pyramid schemes.
In addition, digital currencies can be divided into different groups with different goals or applications.
So-called store of value serve the pure storage of values
Some cryptos are based on so-called smart contracts.
Other cryptos are used as a means of payment in industry or in the IoT (Internet of Things).
We have compiled an overview of the best and most well-known cryptocurrencies:
1. BITCOIN (BTC) | → the largest, best-known and, above all, first cryptocurrency on the market. |
2. Ether (ETH) | → the second largest tradable cryptocurrency on the market and the basis of the Ethereum network. |
3. bitcoin cash (BCH) | → a hard fork of bitcoin with a higher transaction speed |
4. Ripple (XRP) | → the international payment network enables transactions between banks within the shortest time and at low cost. |
5. IOTA (MIOTA) | → digital currency that can be used as a means of payment in the Internet of Things (IoT). |
6. tezos (XTZ) | → serious competitor of the Ethereum network as a platform for smart contracts. |
7. litecoin (LTC) | → a copy of bitcoin with higher transaction speed. Limited to a maximum of 84 million tokens. |
8. Cardano (ADA) | → research project with the aim of finding scalable solutions for the use of digital currencies in the long term and establishing them. |
9. DASH (DASH) | → also a copy of Bitcoin, with a clear focus on anonymity and the privacy of investors. |
10. NEO (NEO) | → blockchain (of the same name) for smart contracts and digital asset creation |
11. chainlink (LINK) | → focuses on the problem of decentralised oracles |
12. polkadot (DOT) | → the project goal is the communication capability and interoperability between individual blockchains and networks |
13. monero (XMR) | → focuses on investor privacy and offers a user-friendly mining process with conventional hardware |
14. EOS (EOS) | → the blockchain Block. One offers solutions for the needs of professional users. |
15. Stellar Lumens (XLM) | → enables international foreign exchange trading and aims to enable an international payment network. |
The crypto market is constantly in motion, so we can only recommend cryptocurrencies here that we currently consider to be serious. The list can never be exhaustive and our recommendations depend heavily on our own trading preferences.
What options are there for buying / trading cryptocurrencies?
The number of available buying and trading platforms for digital currencies is growing as rapidly as the number of cryptocurrencies. A few basic systems can be distinguished:
Wallets - Possession of real cryptocurrencies
Put simply, the blockchain technology of cryptocurrencies can be compared to a decentralised electronic cashbook in which all transactions are recorded so that each user owns a copy of the cashbook.
This decentralisation allows for maximum anonymity of the individual users. Those who want to use this should own the digital coins themselves if possible, as the anonymity at exchanges and brokers is partly restricted by registration data. This is possible with a wallet, an electronic purse. The wallet thus enables you to receive and send your own "cryptos".
But beware: There are various forms of wallets, some of which also require the entry of user data (e.g. online wallets, mobile wallets). With other forms (hardware wallet, paper wallet), however, this is not required. Investors who value a high degree of anonymity should bear this in mind.
Crypto Marketplace - Personal Bitcoin Trading
Buying cryptocurrencies peer-to-peer from other people is possible, but also risky. If you want to pass on your tokens to another person, you should already look carefully at who you are dealing with. The risk of theft is enormously high, especially for larger sums.
Investors meet on a so-called crypto marketplace to trade digital currencies with each other. Users can post offers to buy or sell cryptocurrencies on the marketplace, which in turn can be accepted by other users.
The price is determined by supply and demand. Most platforms charge a commission for successful brokerage, which is usually shared by the buyer and seller.
Crypto Exchange - Trading according to fixed prices
At specially created crypto exchanges, investors can buy Bitcoin and Co. directly, similar to a conventional exchange. This is often possible with a credit card in euros and USD. Trading on crypto exchanges is completely automated. In contrast to the crypto marketplace, the trades are not organised manually, but are processed on the basis of a price calculated by the exchange.
The best-known crypto exchanges include Kraken, CEX.IO, Bitstamp and Paymium. Since the prices on the individual exchanges can differ greatly, a thorough comparison is highly recommended before placing any trade order.
Crypto-Broker - Trade with CFD
Crypto ETF, cryptocurrency fund or buy CFD crypto? For investors who want to profit from the performance of cryptocurrencies, trading with so-called CFD brokers is a good option. A CFD ("contract for difference") is comparable to a classic security, where the investor does not own the value itself, but only a value certificate.
CFD investors therefore do not own digital coins in the true sense. CFD trading is particularly interesting due to the use of levers, with which investors who enjoy speculation can increase the effect of possible price increases (or price decreases) by a fixed factor.
Exchange certificates - Trade cryptocurrencies on the stock exchange
Some digital currencies can be traded not only with specialised CFD brokers but also on conventional stock exchanges. The only prerequisite is the possession of a corresponding securities account. Available certificates are, for example:
The participation certificate on Bitcoin by the Swiss financial expert Vontobel (ISIN DE000VL3TBC7/WKN VL3TBC), which tracks the price of Bitcoin 1:1 against the US dollar.
Likewise, a certificate is available for Bitcoin Cash, which is considered Bitcoin's little brother.
The provider XBT also offers a certificate for Ethereum. Further crypto certificates are planned by different providers.
Can you buy cryptocurrencies at a bank?
Unthinkable a few years ago, possible nowadays. Admittedly, if you want to buy cryptocurrency, you can't just go to your local bank, but many traditional banks are starting to take cryptocurrencies seriously and already offer trading in major currencies such as Bitcoin or Ether. NEO banks or fintech start-ups are taking a special approach. They focus on the digitalisation of banking processes and have redefined them for their target groups.
Buy cryptocurrency via an ATM machine
ATM machines offer the possibility to exchange Euro or other fiat currencies into Bitcoin. ATM machines can currently only be found. The situation is different in Austria and Switzerland. The Austrians have many ATMs, and in Switzerland there are more and more. However, those who do not want to buy Bitcoin but another cryptocurrency still have to be patient and resort to crypto exchanges and brokers.
Buy cryptocurrencies with Paypal without verification or registration
If you want to remain anonymous and buy cryptocurrency and pay via PayPal, we have to disappoint you at this point. Basically, a registration with a crypto exchange or an online broker is necessary to be able to trade with cryptos. Likewise, the PayPal account must be confirmed for the purchase of cryptocurrencies. This only works with a registration at an exchange or broker.
The only way to buy cryptocurrencies and pay with PayPal is to buy through another person, which can only be done on a trust basis. However, similar to passing cryptos via P2P, this option comes with the risk of theft.
Sell cryptocurrencies
Stop Loss or also Take Profit are tools in which a cryptocurrency is automatically sold in the event of a loss or increase in value. The tools can be defined in advance. For the investor, this has the advantage of having to constantly monitor current prices.
Those who prefer to keep an eye on the prices can also sell cryptocurrencies manually. As with buying cryptocurrency, a new trade must be opened for a sale. This is done by simply clicking on the position in your own portfolio. In the selection window, the options Buy or Sell can be selected. Determining the right time is not that easy. Our tip: do not let yourself be blinded by constantly rising prices, but sell when the return is positive in your eyes.
Buy, trade or speculate in cryptocurrencies?
We speak of buying when so-called "real" coins are acquired. The buyer becomes the owner of the tokens and must manage them himself and also needs a wallet to store the coins. This form of trading is suitable for buyers who are also interested in the technology of blockchains and not only want to profit from price changes.
Good profits in the shortest possible time can be achieved by trading cryptocurrencies. The trader acquires a certificate and profits from price changes by reacting to rising or falling markets by buying or selling. Derivatives, CFDs and binary options are perfect for speculating on the crypto market. Here, one works with the underlying values of securities and uses predictions about possible price trends. It is possible to make high profits with relatively low investments. However, speculation also involves a high investment risk.
Crypto Wallets at a glance
Paper wallets were already very popular at the time of Bitcoin's emergence. They allow the investor to access the Bitcoin system using a personal access key and a Bitcoin address, which are comparable to a user name and password.
Since the imprint of the key and address are considered insecure by today's standards, most providers now use two QR codes to manage the user address.
The first QR code contains the publicly accessible address with which bitcoins can be received.
The second code contains the personal security key with which the Bitcoins can be stored or sent.
This new variant of the paper wallet is most secure if both QR codes are kept in different locations.
Which wallet providers are recommendable?
Once you have gained an overview of the different options for storing Bitcoin with the help of the individual wallet systems, interested investors are quickly faced with a second challenging task: choosing the right wallet provider. The following list is intended to provide assistance in this regard:
Ledger (hardware wallet)
The Ledger Nano S from the Paris-based company Ledger is considered the best-selling hardware wallet in the world. With a price of 79 euros, the stick offers a relatively expensive but extremely secure storage option for up to 55 Bitcoin keys. Also available is the more extensively equipped Ledger Blue (approx. 300 euros).
Trezor (hardware wallet)
The hardware wallet provider Trezor, also based in France, currently offers two wallets for purchase, each with space for a maximum of 14 coins:
The compact Trezor Model One (approx. 59 euros) and the somewhat better equipped Trezor Model T (approx. 165 euros).
Bitadress.org (paper wallet)
On the Bitadress.org website, customers can achieve a high level of random encryption by randomly moving the mouse pointer, which serves to secure the Bitcoin address and the private key (WIF). The keys generated in this way can be stored either as a combination of letter numbers or as a QR code. For trading, the coins can be passed on like banknotes with the help of the Bitcoin addresses.
Graphic processing is also possible for this purpose. The WIF, on the other hand, always remains with the owner and should therefore be stored very securely. The website thus offers a good opportunity to store one's own coin holdings. However, it is not possible to purchase digital coins, e.g. by credit card or bank transfer.
Conclusion: Recommended broker for buying cryptocurrencies: eToro
No wonder, because eToro is licensed and regulated by the state. In addition, there is a free demo account, extensive customer support and a very user-friendly platform. In addition to various cryptocurrencies, you can also trade forex, stocks, indices, commodities and much more.
Here are just a few of the many advantages of eToro at a glance:
Real cryptocurrencies and CFDs with leverage
Free registration
Deposit with PayPal, credit card, SOFORT transfer and more
Social trading
No custody account management fee
Without verification up to 2000€
FAQ
It all depends on your own ideas to say which is the best cryptocurrency. At the moment, it can be assumed that bitcoin will continue to rise as the drawing card of the crypto scene.
Cryptocurrencies can be purchased from online brokers or crypto exchanges.
Cryptocurrencies generally have a high volatility. Due to its popularity, it cannot be assumed that bitcoin will lose value in the near future.
Some banks have online trading portals that already offer cryptocurrencies.
