Cryptocurrency trading is a fast-paced addition to the investment world that’s only really come into vogue in the last few years. As the price of Bitcoin continues to surge at key intervals throughout the years, investors are flocking to cryptocurrency exchanges, wallet options, and new platforms that allow for the buying, selling, and holding of these exciting tokens.
Locking in fantastic growth opportunities is something that all investors must chase after with relentless precision, and the cryptocurrency market is a fantastic place for this pursuit to take place. Crypto tokens operate on two distinct levels, placing the commodity in the same atmosphere topically as real estate, gold bullion, and other dual-purpose investment asset classes. Yet approaching the market takes a different approach from these other hard assets. Namely, you must utilize an exchange or another type of platform in order to purchase and hold cryptocurrency coins.
The exchange is perhaps the most well-known option when it comes to the purchase and trade of cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). That said, crypto exchanges aren’t the only name in the game.
Exchanges provide investors with the access and tools they need to buy and sell real tokens that can be used for trading or purchasing needs, as the commodity was originally intended. Paying for goods and services, like bottled water delivery or the monthly cable bill can be facilitated through the hybrid use of fiat currencies and crypto tokens while engaging with high quality cryptocurrency exchanges—if that’s your particular usage need, of course. Other investors might want to treat these commodities solely as investment products, like their ETF funds, stock holdings, and other valuable assets.
A crypto exchange (like Coinbase, Binance, Kraken, or Gemini) allows you to purchase tokens, just as you would at a forex kiosk on the street or in the airport at your favorite international holiday destination. This is the trading of one currency, your fiat currency (U.S. Dollars, Euro, or other currencies), for the cryptocurrency in question (BTC, ETH, etc.). Once you’ve made this swap, you can trade in crypto on the exchange freely, working with trading pairs and building a portfolio of diverse assets within the digital currency landscape.
Robinhood and other Brokers
Robinhood, PayPal, and other sources of financial service options also act to facilitate the purchase of cryptocurrencies, however these holdings differ from the free-flowing wallet offered by an exchange. The Robinhood vs Coinbase debate is an ongoing one that sees a number of pros and cons lists being exchanged by users of either or even both platforms. Beginners love the simplicity offered by Robinhood and the trade fees are almost nonexistent when it comes to purchasing and selling crypto tokens on the platform.
However, while trading cryptocurrencies on Robinhood is easy, and it integrates seamlessly with the stock portfolio management that Robinhood has become so well known for over the years, Robinhood users are unable to make inter-crypto trades with their coins. The purchase of Bitcoin and the few other options available within Robinhood’s user space act like stock purchases. With Robinhood, you can hold tokens but not withdraw them to an offsite wallet or leverage them for purchasing power. In this sense, buying crypto on Robinhood is a lot like purchasing an ETF or shares of a “crypto stock” rather than the real thing.
Traders who want a simple interaction with value holding will enjoy the ease of access granted by Robinhood and others like it. However, Coinbase, Kraken, Binance and others remain the steady hand in the market for those who want to make their cryptocurrency holdings work to their full extent. Each offers a unique advantage, selecting the right approach for you just takes some evaluation.
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