Digital or virtual currency that can be used to buy goods and services, is designed to work as a medium of exchange. Unlike traditional government-issued currencies such as INR or USD, cryptocurrencies are not managed by a government or a central authority and usually operate on a technology known as blockchain.
Table of Contents
Features of cryptocurrency
- Decentralization: Very few cryptocurrencies are controlled by any central authority or government.
- Blockchain Technology: It records transactions on a public ledger or blockchain (which can be verified and cannot be altered without power).
- Secure Transactions: Transactions are safe and impossible to change using cryptographic techniques.
- Global & Borderless: Unlike other payment mediators like banks, cryptocurrency can be sent and received anywhere in the world, with minimal fees, without intermediaries.
How to buy cryptocurrency
- Select a Cryptocurrency Exchange: A cryptocurrency exchange is an online platform that allows you to buy, sell, and trade cryptocurrency.
- Some popular exchanges include: Binance Coinbase WazirX (India-specific), and Kraken CoinDCX Check out the exchange, the exchange has trust, good security features, and supports the cryptocurrencies you want to buy.
· Join the exchange you like. Verify your identity (KYC): To operate most of the exchanges, one has to meet Know Your Customer (KYC) regulations, which simply means you have to present documents such as a passport, Aadhaar card, or PAN card. You can also opt for two-factor authentication for more security.
· You can set up your bank account, debit or credit card (in India), or UPI to have smooth transactions. Some exchanges also allow stablecoin deposits in wallet deposits (USDT).
· Once you’ve provided your payment method, deposit funds into your exchange wallet Via Bank Transfer / UPI which Often has low-fee options, or Credit/Debit Cards which may have higher fees, but instant processing.
· Look through the list of cryptocurrencies the exchange offers (among them, Bitcoin, Ethereum, Ripple). Use your research and goals to decide what coin you want to buy.
There are two common ways to buy:
Market Order: Instant purchase at current market price.
Limit Order: You set your price, the coin hits that price, and the exchange executes the order.
Storage of cryptocurrency
1. Exchange Wallets: Convenient but less secure. Private Wallets: Save your cryptocurrency to a personal wallet for more security.
2. Private wallets
Hot Wallets: online wallets like MetaMask and Trust Wallet
Off-chain: offline wallets like Ledger and Trezor hardware wallets
Fees Involved in Buying Cryptocurrency
1. Exchange Fees: The fees stand for trading cryptocurrency on an exchange. These typically include:
Ø Trading Fees
Maker Fee: Used when you place a limit order (setting your price).
Taker Fee: This is applied when you buy or sell instantly when you specify a market order.
Range: Commission varies from 0.1% to 0.5% (varies by exchange and your trading volume). Example: Binance has ~0.1%. Coinbase may be higher (~0.5%).
Ø Spread Fee
Some platforms charge spread, i.e. they sell the price at the sales and arrange to purchase from the buy location.
Range: 0.5% to 1.5%. This fee can be hidden and will not be directly shown to the user.
2. Payment Method Fees
Crypto purchase costs depend on how you buy it. Bank Transfer / UPI: Typically, low-cost or free. Credit / Debit Cards: The fees for this range from 2 to 5 %. Reason: You might also have to pay extra if you use a crypto to pay for something. Third-party Payment Providers: Some exchanges have third-party payment gateways that take a charge in addition
3. Blockchain Fees or Network Fees:
These are fees paid by the miners or the validators to process transactions on the blockchain. That comes down to how much traffic the blockchain has and which cryptocurrency is being used.
Bitcoin (BTC): They can vary from a couple of dollars to over $30 in high traffic times.
Ethereum (ETH): Gas fees during the peak can vary between a few cents and over $50.
Fixed Fee Coins: Fees are a little less in some blockchains, for instance, Ripple (XRP) or Litecoin (LTC).
4. Deposit and Withdrawal Fees Deposit Fees:
Almost all exchanges allow free deposits through bank transfers, but some exchanges may charge for deposits using certain payment methods. Withdrawal Fees: By sending your crypto to an external wallet, exchanges will charge you withdrawal fees. Example: On Binance, the Bitcoin withdrawal fee can be ~0.0005 BTC.
5. Inactivity Fees (From Some Platforms):
Meanwhile, some exchanges place a monthly fee on your account if it has been inactive for quite some time. Range: Through not all platforms, $5 to $10 a month.
How to Buy Cryptocurrency for a Low Price: Strategies and Tips
1. Compare trading fees: Check out exchanges with little or no fees on transactions. Examples:
Binance: Low fees (~0.1%)
CoinDCX, WazirX: Competitive fees in India
Kraken: Discounts for higher trade volumes with reasonable fees.
2. Instead of using a Market Order, use a Limit Order Market Orders:
Market price—this is convenient, but comes at a higher cost because of spread. Limit Orders: Establish the price you would like to pay for buying. If the price is hit by the market, the order becomes executed automatically.
3. Stop Using Credit/Debit Cards,
Prefer Bank Transfers OR UPI Bank Transfer or UPI Payments: Lower transaction fees and sometimes free on some platforms. Credit/Debit Cards: Fees generally run 2%-5%. If you don’t need an instant purchase, avoid these at all costs.
4. Find a way to Monitor Crypto Prices for Dips so you can use these market opportunities to time trades in pairs (e.g., buy ETH when BTC is low and then sell it when BTC is high. Look for market corrections: This is the nature of the crypto markets; prices can drop rapidly after an increase. Use Price Alerts: When the price drops, set an alert on exchanges or apps (Coin Gecko or CoinMarketCap) to notify you.
5. Spend less on Middlemen Fees — Use Decentralized Exchanges (DEXs) On Uniswap or PancakeSwap, which are decentralized Exchanges, gas fees are used instead of intermediaries. Opt for low-fee blockchains such as Polygon or Solana.
6. Off Peak (Low Network Activity (Buy)) Whenever a network is heavily trafficked on Bitcoin and Ethereum, fees go up. When the network is not all that congested (for example, early mornings or weekends) try and buy.
7. Do Dollar Cost Averaging (DCA) Instead of trying to buy as cheap as possible at the cross, decide to invest a fixed (e.g. weekly or monthly) amount. Why: The use of this strategy can reduce the risk of purchasing at overpriced prices during a single purchase.
8. Short for Exchange Promotions and Offers. Referral Bonuses: In some cases, you get free crypto or a fee discount if you sign up through a referral link. Zero-Fee Trading Days: So, look out for exchanges that waive trading fees for special events.
9. Buy Small-Cap or New coins If you’re new to the cryptocurrency industry, you may consider investing in some of the smaller or newly launched cryptocurrencies, because they have higher growth potential and lower entry prices. Even though this route comes with higher risk, nevertheless, research well first before pooling your money into it.
10. The Less You Trade the More You Save. By Trading for the Long Term, you avoid multiple trading fees.
