Best cryptocurrency brokers

Minimum deposit to open an account.
Available funding methods for the below cryptocurrency brokers.
What you are able to trade with each brokerage.
Trading platforms offered by these brokers.
Spread type (if applicable) for each brokerage.
Customer support levels offered.
We show if each brokerage offers micro, standard, VIP and islamic accounts.

Free forex bonuses

Top Cryptocurrency Brokers for 2021, best cryptocurrency brokers.

We compare these features to make it easier for you to make a more informed choice.

Top cryptocurrency brokers for 2021

We found 11 online brokers that are appropriate for trading cryptocurrency.

Best cryptocurrency brokers guide

Are you interested in investing in cryptocurrency?

If the answer to this is a yes, then you will need to find the right cryptocurrencies brokers whocan accommodate you with the best facilities to trade on the cryptocurrency markets.

Before proceeding, lets cover the real definition of cryptocurrency.

Defining cryptocurrencies

In short, cryptocurrencies are digital or virtual currencies.

These currencies are reliant on cryptography to ensure the security and verification of each digital transaction.

Cryptography can control the number of units and prevent the change of code of the cryptocurrency unless some conditions are met.

The important characteristics of the cryptocurrencies

For some people, cryptocurrencies are the savior of the economy. This is because these can give the perks that not all banks or other financial institutions can provide.

Here are the unique characteristics of the cryptocurrencies which you cannot find in the conventional means of transactions.

No third party involved

There will not be third parties like financial institutions, governments, or any other third party organizations which govern the transactions between you and your recipients, and vice versa.

There is no third party that will intervene in your transaction. And it is a win-win solution with the P2P or peer to peer network. You can send cryptocurrencies through the P2P network and the other users will also be able to do the same for you.

Cryptocurrencies have more transparency

The problem with the conventional transactions is that one can ask for a refund and this will procure such unfortunate things to only one party.

As an example if your buyer has sent you a payment and you have delivered the goods but before the goods reach their destination, your buyer reverses the transaction your result could be that you will not receive the money you are owed and your buyer may have lead you.

You can avoid this issue with the cryptocurrencies transactions as these transactions are irreversible.

Not a single party can alter your transactions and this is why it can offer you more transparent transactions than the conventional fiat currencies.

Decentralized

There is no centralized place to transact at all so you can eliminate the high rates of fees when transferring money.

The cryptocurrency is maintained through the ledger technology called the blockchain. The blockchain prevents all other entities from tarnishing the data. Not a single person can alter the system so that your transactions will be safe and sound. We will discuss blockchain next.

Blockchain definition

Blockchain is bitcoin technology comes in the list of recorded data blocks, which are gathered by cryptography.

The recorded data in the blockchain is referred to as ledger. When there is a new data exchange, usually a transaction, a new block is added to the ledger or the blockchain.

In summary, the blockchain or ledger contains important information.

Cryptocurrency brokers

The era of virtual coin is upon us and is paving a golden path for traders. When trading cryptocurrency it is important to trade through reputable cryptocurrency brokers.

We list some notable cryptocurrency brokers below:

Etoro - being one of the top-rated cryptocurrency brokers it offers several currencies including ethereum, ripple, bitcoin and dash.

XTB - XTB too has a good name among traders and offers a wide range of such virtual currencies including litcoin, ethereum and bitcoin. It is placed as one of the top 5 cryptocurrency brokers in the industry.

Plus500 - it offers crypto throughout the day and night with good leverage for the most popular currencies like litecoin, ripple, neo, ethereum and bitcoin.

What is cryptocurrency?

Cryptocurrency is a virtual coin and is traded on cryptocurrency exchanges through cryptocurrency brokers.

Lately, cryptocurrency has continued to gain popularity. This has opened up lots of new trading tools and ways to trade including contracts for difference (CFD). They earn from the difference between the cost of an asset at the present time and what value it could become in the future.

Cryptocurrency wallets

Similar to other wallets this too facilitates storing, sending and receiving the currency. We explain the three types of cryptocurrency wallet below:

The hardware wallet

The hardware wallet is the most secure crypto wallet as all the data is stored offline. A few of the good examples are trezor, keepkey and ledger nano S.

The paper wallet

A paper cryptocurrency wallet is popular and it is secure. However, it is not as convenient as the hardware wallet.

The software wallet

The software wallet is the most conveniant among the three and can be managed from a desktop or mobile phone device. Some of the cryptocurrency wallets of note are exodus, jaxx and electrum.

Cryptocurrency exchanges

A cryptocurrency exchange is a place where buyers and sellers meet for the purpose of buying, selling or trading the virtual coins with the help of couple of cryptocurrency brokers.

Binance exchange is the most famous cryptocurrency exchange in the world and it offers crypto to crypto trading.

Combase is popular too and it offers trading on 100s and 1,000s of virtual currencies like litecoin, ethereum classic and bitcoin.

Localbitcoins, on the other hand, offers over-the- counter trading of virtual coins. Traders can post a currency for sale on its websites mentioning the rate and payment methods.

ICO and token

Abbreviated for initial coin offering the ICO is a kind of fundraising for a start-up. It is done by selling underlying tokens against ethereum or bitcoin.

ICO is similar to IPO in which traders buy company shares. Investors take an entry at early stage of the project and so are capable of making a profit with the success of the company.

However, one basic difference between the two is that any person from any place in the world can take part in the ICO.

Token meanwhile is a kind of cryptocurrency too but represents a specific asset. It is sometimes used as loyalty points that can be redeemed against discounts. It can also represent something uncommon like one token is 5 bitcoins.

The cryptocurrency mining

Just a little different with the fiat currencies, the cryptocurrencies are usually mined by miners. So, there is a phrase to describe the activity as the cryptocurrency mining.

To define it, it is a process in which the miners use powerful resources, in this case computers and adequate hardware to solve mathematical problems. These complicated problems need to be solved in order to attain the rewards.

To make it more challenging, these mathematical problems have cryptographic hash functions which are linked to the block which contains the information of the transaction.

These mathematical problems are tempted to solve with multiple miners.

So, when figuring out solutions for the problems, miners are competing with other cryptocurrency miners. It is about winning and losing. The winners will get small amounts of cryptocurrency.

The reward comes from the transaction fees the users pay. At least that is how major cryptocurrencies conduct and the other factor which also gives the rewards to the miner is the release of new cryptocurrency.

Cryptocurrency wallet

The cryptocurrency wallet is a digital wallet which the users use to deposit, store, hold, send, and receive digital currency or cryptocurrency.

Do not mistake it with concepts like paypal, payza, or various other digital currency systems. The crypto wallets do not serve as the storage of the cryptocurrency. The wallets only store the information in the form of public and private keys.

Meanwhile, the crypto itself is inside the blockchain. The users do not necessarily store their cryptocurrencies in their wallet. In summary, the cryptocurrencies wallet stores the important information which you can use to access your crypto assets.

Cryptocurrency exchange

When you have the cryptocurrencies assets, you may want to sell it to other users or, you could want to trade the cryptocurrencies. Here is where you will need to use a cryptocurrency exchange.

The cryptocurrency exchange is a platform which allows the users to buy, sell, or trade the cryptocurrencies.

Some exchanges only provide crypto-to-crypto trades, but some also allow the crossover currencies so that you can trade from crypto to fiat or fiat to crypto.

There are many cryptocurrencies exchanges that you can find on the internet. Some of them offer the trades for common cryptos such as BTC, ETH, BNB, USDT, and so on. But some also offer more wider array of currencies exchange.

Cryptocurrency brokers verdict

In current times, it is not exaggerating to say that cryptocurrency is the most volatile asset class that you can find.

It is due to the fact that it comes with the high speculative market not to mention that it currently disrupts the conventional economy so that many established players don�t see it to have inherent value.

Therefore, it is still safe to use the cryptocurrencies but in addition to fiat currencies.

We've collected thousands of datapoints and written a guide to help you find the best cryptocurrency brokers for you. We hope this guide helps you find a reputable broker that matches what you need. We list the what we think are the best cryptocurrency brokers below. You can go straight to the broker list here.

Reputable cryptocurrency brokers checklist

There are a number of important factors to consider when picking an online cryptocurrency trading brokerage.

Check your cryptocurrency broker has a history of at least 2 years.

Check your cryptocurrency broker has a reasonable sized customer support of at least 15.

Does the cryptocurrency broker fall under regulation from a jurisdiction that can hold a broker responsible for its misgivings; or at best play an arbitration role in case of bigger disputes.

Check your cryptocurrency broker has the ability to get deposits and withdrawals processed within 2 to 3 days. This is important when withdrawing funds.

Does your cryptocurrency broker have an international presence in multiple countries. This includes local seminar presentations and training.

Make sure your cryptocurrency can hire people from various locations in the world who can better communicate in your local language.

Our team have listed brokers that match your criteria for you below. All brokerage data has been summarised into a comparison table. Scroll down.

Our brokerage comparison table below allows you to compare the below features for brokers offering cryptocurrency brokers.

We compare these features to make it easier for you to make a more informed choice.

Minimum deposit to open an account.

Available funding methods for the below cryptocurrency brokers.

What you are able to trade with each brokerage.

Trading platforms offered by these brokers.

Spread type (if applicable) for each brokerage.

Customer support levels offered.

We show if each brokerage offers micro, standard, VIP and islamic accounts.

Top 15 cryptocurrency brokers of 2021 compared

Here are the top cryptocurrency brokers.

Compare cryptocurrency brokers min deposits, regulation, headquarters, benefits, funding methods and fees side by side.

All brokers below are cryptocurrency brokers. Learn more about what they offer below.

You can scroll left and right on the comparison table below to see more cryptocurrency brokers that accept cryptocurrency clients

Cryptocurrency brokers

Nothing moves faster than the cryptocurrency market these days. But to help you keep up with the fast-paced demands of the market, investing.Com has broken down all the best advantages of all the top crypto brokers. Check out our reviews to help give your portfolio an upgrade.

XM group

XM group is an award-winning forex and CFD broker. Available in more than 20 languages, XM group offers cutting-edge features and trades in under a second.

Wide variety of assets

High leverage

Live chat and other accessible support in 30 languages

No commissions

Non-expiring demo account

Moneta markets

Excellent research support

Wide range of instruments

Advanced trading platform

No deposit fees or inactivity fees

0% trading commissions

24/5 dedicated support

Free market analysis & trading tools

AAFX TRADING

Commission-free and swap-free trading accounts

Choice between fixed and variable spreads

High leverage up to 2000:1

Plus500

Intuitive, responsive platform compatible across operations systems

Leverage available for large array of tradable assets

Multiple avenues for reaching customer support

IC markets

Phenomenal order execution speeds

Support for all trading strategies & styles

Intuitive trading platforms with value-added tools

Liteforex

Liteforex is an expert, regulated forex trader whose educational resources, tutorials and expert analytics from claw&horns draw cryptocurrency investors of all levels.

Low-cost structure

Access to a large selection of forex pairs at reasonable spreads

Excellent customer service with 24-hour availability five days a week

Markets.Com

Broker regulated by five regulators, including ASIC and the FCA

More than 2200 asset types available to trade

Accessible and informative investor education tools

Bdswiss

Ultra-low spreads and affordable commissions

Excellent liquidity and rapid execution

Feature rich value-added tools like autochartist and trading alerts

Vantagefx

Excellent value-added trading tools and services

Very narrow spreads and low commissions

Intuitive mobile app with extensive functionality

Octafx

- easy account setup and low minimum opening balance

- scalping, hedging, and eas are all permitted strategies

- shariah-compliant options available for all account types

Squared financial

24/5 support in multiple languages

Good range of assets

Extensive training materials

Currency.Com

Capital.Com

Good range of assets

0% commission & no hidden fees

Market-leading spreads

Strong regulatory framework

Support in multiple languages

Wide range of assets to choose from

Hotforex

Multiple compelling account types to choose from

Enhanced trading experience with a host of value-added tools

A wide selection of trader resources and informational products

Exness

Exness group is an innovative CFD and forex brokerage that specializes in customized trading conditions, including instant fund withdrawal and unique leveraging rates.

Tight spreads and low minimum balances reduce financial commitment

Variety of account types including classic, mini, ECN, and islamic

Highly regulated and compliant with regulators including FCA, cysec, others

Fondex

Fx pro

Fxpro’s blend of features, range of available assets, and long-standing track record of success make it a award-winning destination for traders. Thanks to its speed, security, and reliability, fxpro has attracted over 1.3 million clients from more than 170 countries.

Many types of tradable instruments

High level of security and trust

Ctrader enables advanced algorithmic trading

Cryptocurrency, compared to other currencies and trading products on the market, is still very new. Cryptocurrency includes currencies such as ethereum, bitcoin, and litecoin. Cryptocurrency is decentralized and stored in a ledger, which is called a blockchain. Cryptocurrency allows people to pay and store money without going through a bank or even using their name.

Do you need a broker to trade cryptocurrencies?

A crypto broker serves as a middleman between the person buying and the person selling the cryptocurrency. The broker might also buy up a lot of cryptocurrency to sell on its own platform, making more of a direct seller. However, more often than not, the term “cryptocurrency broker” is used to refer to an intermediary. You place your order through the broker. After you pay for the cryptocurrency, the broker places your order on the crypto exchange.

The decentralized, anonymous nature of cryptocurrency means that you don’t technically need a broker to trade the currency. You can trade crypto with anybody—no fees, no centralized exchange, and no mediator. So, the question becomes whether you should work with a cryptocurrency broker.

Advantages of a cryptocurrency broker

There are several advantages of a cryptocurrency broker. First and foremost, the main advantage is the easy setup. Solo crypto trading is often associated with technical issues relating to the blockchain. Because a broker already has an established system, the technical issues are more avoidable. Also, a cryptocurrency broker lets you conduct leveraging, which is a type of trading that allows you to borrow funds to increase your position.

A cryptocurrency broker has more advanced technical instruments (such as a downloadable platform, mobile app, website, etc.) than someone who is doing it on their own. The crypto trading is faster, and you may also find that, when you use an established system, the price of the crypto is fairer.

Disadvantages of a cryptocurrency broker

Crypto brokers have their disadvantages. The main downsides to a crypto broker are fees and commissions. When you’re trading on your own, you don’t have to pay commission to anyone. A broker will likely charge commission, so you have to weigh the advantages listed above against the costs of such fees. Additionally, an unreputable crypto broker could cause you to lose money.

Is cryptocurrency trading risky?

The short answer is yes. Cryptocurrency trading is risky because the currency itself is so volatile. The currency is speculative and high-risk, and it’s not uncommon for the value to plummet hundreds of dollars at the drop of a hat. It’s also not uncommon for it to suddenly skyrocket in value.

Also, another major risk is crypto cybercrime. There is little to no regulation of this trading field, and cryptocurrency is not backed by the government. It doesn’t go through a bank, nor will the SEC reimburse you if you lose all your money. Crypto-related cybercrime ranges from mishandling private information to hackers raiding and depleting users’ cryptocurrency accounts.

How can I tell if a crypto broker is regulated?

Only some countries (such as the UK and its financial conduct authority) require that cryptocurrency brokers be regulated. However, there are warning signs of an unscrupulous or untrustworthy broker. Spotting these warning signs is key to avoiding being a victim. Such signs include non-existent services and products, unrealistic promises, questionable marketing practices, and anonymous identities of brokers.

If the broker lists certain services in its marketing, it should have those services. For example, if a broker says that it offers research and data, there should be research and data available on its platform. Simply put, the products and services listed should be there for you. If the broker is being dishonest about these services, move on.

If a crypto broker promises you that you are going to get rich, they are not trustworthy. A good broker knows that all trading, whether crypto or non-crypto, is volatile, and you shouldn’t make promises that might not come true. The broker should only promise to be ethical and provide a solid platform. Making unrealistic predictions is a sign that the broker is unscrupulous.

If the broker lies in its ads about its services or makes unrealistic predictions in its promotions, it is engaging in questionable marketing. This is especially common on social media. If a broker makes fake accounts on social media, with each account claiming to be a satisfied customer, that broker is a scammer. Don’t just avoid doing business with the broker, block them too.

Anonymous identities of the brokers

You should know the identity of the broker with whom you’re getting in business. While the nature of cryptocurrency allows for anonymous transactions, starting a crypto platform is, essentially, starting a business. A broker must be transparent about their identity, just as any business would. If the broker won’t even share their name, there is likely a good reason. You should definitely avoid them.

How do cryptocurrency brokers make money?

Cryptocurrency brokers make money by charging fees and commissions on the transactions they conduct. Cryptocurrency is new enough that many brokers are able to charge higher fees than they would for other, non-crypto products.

All in all, cryptocurrency is volatile, but it can be lucrative. When you’re looking for the best cryptocurrency broker, make sure you pick a broker who is transparent, honest, and has nothing to hide. Reading reviews will help you with your selection.

Risk disclosure: trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of fusion media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Top 5 cryptocurrency brokers – which broker is best? 2021

Whether you’re a newbie trader looking to invest in digital

Currencies for the first time, or a seasoned professional in the hunt for a more competitive platform, cryptocurrency brokers are in their hundreds. Although this allows you to choose a broker that best meets your needs, knowing which platform to sign up with is no easy feat.

In this article, we discuss the best five cryptocurrency brokers currently in the UK market. We also explore the many factors that you need to look out for when choosing a new broker – such as regulation, fees, spreads, customer support, and payment methods.

Table of content

Etoro - buy and invest in assets commissions-free

Buy over 2,400 stocks, 16 cryptocurrencies, and 250 etfs without paying any commissions

Trade thousands of cfds

Deposit funds with a debit/credit card, e-wallet, or bank account and paypal

Perfect for newbie traders and heavily regulated

What is a cryptocurrency broker?

In a nutshell, a cryptocurrency broker is an online brokerage platform that allows you to buy and sell popular digital currencies like bitcoin, ethereum, and ripple. The process operates much the same as a traditional stockbroker, insofar that you will need to open an account, deposit funds, and decide which asset you wish to invest in. You will then need to determine how much you want to invest, and the broker will facilitate the purchase on your behalf.

With that being said, there are two types of cryptocurrency brokers active in the online space, and the one that you opt for will depend on your personal requirements. This consists of a cryptocurrency broker that allows you to purchase digital currencies in their truest form, meaning that you will need to then store your coins in a private wallet.

Alternatively, some traders prefer to use cryptocurrency brokers that facilitate CFD products. This allows you to invest in cryptocurrencies without owning the underlying asset, meaning that you do not need to worry about storage. Moreover, CFD brokers allow you to short cryptocurrencies, so you can speculate that the value of the asset will go down.

In a similar nature to traditional brokers, you will need to pay a fee to invest in cryptocurrencies. This usually comes in the form of a commission, which is calculated against the value of your investment. You need to pay this at both ends of your trade. If using a CFD cryptocurrency broker, then you will likely be able to trade on a commission-free basis. You will, however, need to pay a fee in the form of the spread.

Pros and cons of cryptocurrency brokers

Types of cryptocurrency brokers

There are two types of cryptocurrency brokers active in the UK space – brokers that allow you to own cryptocurrencies 100% outright, and brokers that facilitate cryptocurrency investments via cfds.

Below we explain how the two broker-types differ.

�� own cryptocurrencies outright

If you’re looking to invest in popular cryptocurrencies like bitcoin, and you wish to own the asset 100% outright, then you will need to use a specialist cryptocurrency broker. The overarching concept is that you will personally take ownership of the coins and thus – you will need to store them in a private wallet. This comes with both its pros and cons.

On the one hand, by storing the coins in a private wallet, they will always remain in your possession no matter what. As such, you are not susceptible to a broker collapse. On the other hand, storing the coins yourself does come with its risks. This is because bad actors have the capacity to hack private wallets remotely when the user has failed to install security safeguards.

Crucially, the safest way to store your coins is to keep them in a hardware wallet, not least because it is never connected to the internet. This does make the process of transferring the coins out somewhat cumbersome, although this is the trade-off that you need to make when owning cryptocurrencies outright.

�� investing with a cryptocurrency CFD broker

The second options available to you is to use a cryptocurrency CFD broker. As is the case with other CFD products like stocks, indices, and commodities, you will not own the underlying cryptocurrency asset. Instead, you are merely speculating on which way the markets will go.

For example, if you like the look of bitcoin and think that it is due to increase in value over the coming days or weeks, cfds are a great way to facilitate this. Crucially, cfds allow you to invest in bitcoin cheaply and quickly. Moreover, cfds give you the option of applying leverage, as well as engage in short-selling.

Regarding the former, this means that you can invest more than you have in your account. And the latter – this is where you speculate on the value of a cryptocurrency going down. A further benefit of using a CFD cryptocurrency broker is that platforms are often regulated by the UK’s FCA or cysec in cyprus.

What payment methods do cryptocurrency brokers support?

In a time not so long ago, buying cryptocurrencies with real-world money was a difficult task, not least because brokers were unable to get the required green light from payment issuers. This meant that you would need to transfer cash to an unregulated broker – many of whom were nothing more than a scam.

However, with the cryptocurrency industry now a multi-billion pound marketplace, there are heaps of cryptocurrency brokers that support everyday payment methods. This includes the likes of:

As we discuss in the next section, cryptocurrencies brokers will sometimes charge you a fee when depositing and withdrawing funds. Furthermore, it’s likely that you will need to meet a minimum deposit amount.

Cryptocurrency broker fees

Cryptocurrency brokers are in the business of making money, so there is a range of fees that you need to made aware of prior to making an investment. The specific fees will vary from broker-to-broker, so be sure to check this yourself.

Deposit and withdrawal fees

Whether or not you need to pay any deposit and withdrawal fees will depend on two things – the broker and the type of the payment method that you wish to use.

For example, some of the brokers that we recommend on this page allow you to deposit funds for free, although they typically charge a very small withdrawal method.

Brokers that do charge a payment fee will usually do this on a percentage basis. For example, if the cryptocurrency broker charges 4% to deposit funds with a debit card, and you wish to deposit £1,000, you will pay a fee of £40.

Trading commissions

Some cryptocurrency brokers will charge you a trading commission when you make an investment. If they do, this will be charged at both ends of the trade. Moreover, this is typically calculated as a percentage against the amount you invest.

Let’s say that the cryptocurrency broker charges a 1% trading commission

You want to buy £500 worth of bitcoin

You will be charged a commission of £5 (1% of £500)

You want to sell your bitcoin when it is worth £750

You will be charged a commission of £7.50 (1% of £750)

As you can see from the above example, you will need to pay a commission when you initially invest in a cryptocurrency, as well as when you decide to sell.

Spreads

The spread is only relevant if you plan to use a cryptocurrency broker that specializes in cfds. For those unaware, the spread is the difference between the buy and sell price, so it’s a fee that you pay indirectly.

You use a cryptocurrency CFD broker to invest in bitcoin

The ‘buy’ price of bitcoin is $10,000

The ‘sell’ price of bitcoin is $10,100

The difference between the two prices amounts to 1%

This means that you need to make at least 1% in gains to break even

Essentially, you’ll want to use a broker that offers super-tight spreads, as this will help keep your trading costs to a minimum.

Supported digital currencies at cryptocurrency brokers

Although the vast majority of first-time investors seek to buy bitcoin, there are now thousands of other cryptocurrencies active in the market. Commonly referred to as ‘alt-coins’, these are much more volatile than bitcoin, and they suffer from much lower levels of liquidity.

Alt-coins also come with more risk than bitcoin. On the flip side, alt-coins have a greater upside potential. Nevertheless, although listing each and every digital currency that cryptocurrency brokers support is beyond the remit of this article, below you’ll find the most commonly traded coins in the space.

Short-selling cryptocurrencies

Short-selling refers to the process of speculating that an asset will go down in value. For example, if you think that bitcoin is currently overvalued and thus – it’s price will go down in the coming weeks, you would need to short-sell the asset.

The only way that you can do this is to use a cryptocurrency broker that specializes in cfds. The process works largely the same as making a standard market investment, but in reverse. In other words, you will initially need to place a sell order, and then a buy order when you decide to exit your trade.

Check out the example below of how a short-sell investment would work at a cryptocurrency broker.

You’re not a fan of bitcoin, so you decide to use a CFD broker to short-sell the asset

Bitcoin is currently priced at £5,000 per coin

You place a ‘sell’ order at a total stake of £1,000

A few days later, bitcoin begins to tank in the markets and it is now worth £4,000 per coin

This represents a reduction in value of 20%

You decide to lock-in your profits, so you then place a ‘buy’ order to exit the trade

You made a total of £200 in profit, based on 20% of your £1,000 stake

Leverage at cryptocurrency brokers

Do you have a higher tolerance for risk and wish to apply leverage on your cryptocurrency trades? If so, you’re in luck, as there are now dozens of cryptocurrency brokers active in the online space that allow you to apply leverage. Once again, you will need to use a CFD broker for this.

If you’re based in the UK, you might be bound by the regulations imposed by the european securities and markets authority (ESMA). If you are, this means that you will be capped to leverage of 2:1 when trading cryptocurrencies. The limits are in place to protect non-professional investors from large losses.

At leverage of 2:1, you can trade twice the amount that you have in your account

So, a balance of £500 would allow you to buy or sell £1,000 worth of cryptocurrencies

If your trade goes down by more than 50% (1/2), your trade will be liquidated

This means that you would lose your entire £500 margin

If leverage of 2:1 is not sufficient for your trading needs, you will need to consider a cryptocurrency derivative broker like crypto rocket. Such brokers operate in an unregulated manner, so you do need to tread with caution. If you do take the plunge, you can trade cryptocurrencies with leverage of up to 500:1, which is huge.

At leverage of 500:1, you can invest 500 times more than you have in your cryptocurrency broker account

So, a balance of £500 would allow you to buy or sell £250,000 worth of cryptocurrencies

This would amplify your gains by 500x

However, if your trade goes down by more than 0.2% (1/500), your trade will be liquidated.

Are cryptocurrency brokers safe?

You’ve likely heard horror stories of cryptocurrency brokers getting hacked, with clients subsequently losing their entire balance. While a number of brokers have previously covered these losses, many haven’t. The overarching concern is that much of the cryptocurrency broker space operates unregulated.

As such, you’ve got nowhere to turn if things go wrong. The good news is that some brokers do actually hold a license with the UK’s FCA or cysec in cyprus. Others also hold a license with ASIC in australia, meaning you’ll have regulatory oversight on multiple fronts.

With that being said, we would suggest making the following considerations when choosing a new cryptocurrency broker to ensure your funds remain safe.

�� cold storage: if you’re using a traditional cryptocurrency broker that allows you to purchase and own digital coins outright, then you should check whether or not the platform utilizes cold storage. This is where the funds are stored offline, so the chances of an external hack are virtually non-existent.

�� two-factor authentication: two-factor authentication (2FA) provides an extra layer of security on your brokerage account. In a nutshell, you will be required to enter a unique code that is sent to your mobile phone every time you perform a key account function. Crucially, this includes logging in and withdrawing funds.

�� multi-sig wallets: if the cryptocurrency broker utilizes multi-sig wallets, this means that multiple signatures are required for the platform to process withdrawals. Once again, this acts as a major safeguard against third-party hackers

�� encrypted data: if you are planning to deposit funds with a traditional debit or credit card, then you need to ensure that the broker’s website encrypts data. This will prevent your card details from getting into the wrong hands.

How to use a cryptocurrency exchange: step-by-step guide

So now that you know the ins and outs of how cryptocurrency brokers operate, we are now going to discuss the end-to-end investment process. By following the step-by-step guidelines outlined below, you’ll be able to invest at a cryptocurrency broker within minutes.

Step 1: choose a cryptocurrency broker

Your first port of call will be to choose a cryptocurrency broker that best meets your needs. You’ll need to consider key factors such as whether you want to buy cryptocurrencies or invest in cfds, as well as fees, payment methods, customer support, and spreads.

We would suggest reviewing the section below on how to choose a cryptocurrency broker if you need further assistance. If you don’t have time to research a cryptocurrency broker yourself, why not consider the merits of one of the pre-vetted platforms listed on this page?

Step 2: open an account

Regardless of whether you are using a traditional broker or a CFD platform, you will need to open an account. The amount of information collected from you will depend on the type of cryptocurrency broker that you opt for.

With that said, if you’re looking to deposit funds with real-world money, then this will likely include the following:

First and last name

Home address

Nationality

Date of birth

Contact details

Step 3: verify your identity

You will now need to verify your identity. This is to ensure that the broker remains compliant with its license issuer, as well as domestic laws on anti-money laundering.

The process requires you to upload a clear copy of your government-issued ID (passport or driver’s license) and a proof of address. This should be a bank statement or utility bill that is dated within the last three months.

Step 4: deposit funds

Once you’ve had your account verified by the cryptocurrency broker, you’ll need to deposit some funds. The specific payment method available to you will depend on the broker, although this usually includes a debit/credit card or bank transfer.

Some brokers also support e-wallets like paypal and skrill. Unless you are using a bank transfer, all other deposit methods are instant.

Step 5: invest in your chosen cryptocurrency

You are now ready to make a cryptocurrency investment. You will first need to choose the specific cryptocurrency that you want to buy (bitcoin, ethereum, etc.) and then enter the amount that you wish to invest.

There is no requirement to purchase a whole bitcoin, so you can buy as little as you like – as long as you meet the broker’s minimum investment amount. The funds will then be debited from your cash balance, and you’ll see the cryptocurrencies added to your account.

Step 6: withdraw coins from the cryptocurrency broker

You will now need to withdraw your newly purchased cryptocurrency coins out of the broker. Although most platforms allow you to store your coins on the broker’s website, we would strongly advise against this. Crucially, if the broker was hacked by a malicious third-party, you stand the risk of having your coins stolen.

As such, you should withdraw your coins to a private cryptocurrency wallet. To do this, head over to your wallet and copy your wallet address. Elect to make a withdrawal at the broker by pasting in your wallet address and entering the amount that you wish to cash out. The coins should arrive in your wallet within 1 hour – depending on how long the broker takes to process it.

How to choose a cryptocurrency broker?

Before signing up with a cryptocurrency broker, we would suggest asking the following five questions.

✔️ is the cryptocurrency broker regulated?

✔️ does the cryptocurrency broker support your preferred payment method?

✔️ what deposit, withdrawal, and trading fees does the cryptocurrency broker charge?

✔️ does the broker allow you to purchase bitcoin outright, or are you investing in cfds?

✔️ does the cryptocurrency broker list your preferred digital currencies – such as bitcoin and ethereum?

Top 5 cryptocurrency brokers – which broker is best?

So now that you have a firm grasp of what you need to look out for in a cryptocurrency broker, we are now going to list our top five platforms of 2021. All of these brokers have been pre-vetted by our team of in-house reviewers, so rest assured that the following platforms meet our strict criteria.

Best bitcoin brokers 2021

The forexbrokers.Com annual forex broker review (five years running) is the most cited in the industry. With over 50,000 words of research across the site, we spend hundreds of hours testing forex brokers each year. How we test.

Now over twelve years old, bitcoin continues to grow and mature as an alternative asset. After peaking at over $18,000 per coin in late 2017, bitcoin retreated in price, then surged back to claim record price highs above $28,000 in late december 2020. As of publishing, the total value of all bitcoin is nearly $500 billion.

This guide explains what bitcoin is, how to buy bitcoin, and summarizes the best cryptocurrency brokers to trade bitcoin cfds.

What is bitcoin?

Bitcoin is a form of public internet money or electronic cash, known as cryptocurrency. It was first launched on january 3rd, 2009 after its design was published in a white paper. Bitcoin’s supply is limited, and every bitcoin comes into existence through mining, where anyone from the public can verify transactions to help secure the network.

Thanks to its use of blockchain technology, all transactions are public. Furthermore, bitcoin is highly-resistant to any form of censorship, and forged transactions are impossible.

Best bitcoin brokers for 2021

Based on over 105 different variables, here are the best forex brokers to buy cryptocurrency, such as bitcoin.

Etoro - best overall for crypto trading

Swissquote - trusted global brand, diverse offering

IG - excellent offering, most trusted

City index - great all-round offering

Avatrade - multiple trading platform options

XTB - best customer service, great platform

HYCM - over 60 crypto cfds offered

Best overall for crypto trading - visit site

Etoro is excellent for cryptocurrency trading and copy trading and is our top pick for both categories in 2021. Furthermore, etoro offers a user-friendly web platform and mobile app that is great for casual investors, including beginners. (75% of retail investor accounts lose money) read full review

Trusted global brand, diverse offering

Traders willing to pay a premium to have their brokerage account held with a swiss bank choose swissquote for its competitive, multi-asset offering. Swissquote's cryptocurrency trading and wallet service are available from its etrading account, but is segmented away from its forex and CFD trading offering. (79% of retail investor accounts lose money) read full review

Excellent offering, most trusted - visit site

IG is the ultimate forex broker, finishing 1st overall in our 2021 ranking. Alongside finishing third for platforms & tools and second for research, IG finished best in class (top 7) for cryptocurrency trading, offering of investments (19,000+ tradeable instruments), commissions & fees, education, mobile trading, and professional trading. (75% of retail investor accounts lose money) read full review

Great all-round offering - visit site

Backed by GAIN capital, city index is a trusted brand that traders choose for its advanced trading platforms, excellent mobile app, diverse market research, education, and extensive range of markets. (73% of retail investor accounts lose money) read full review

Multiple trading platform options - visit site

Avatrade is a trusted global brand best known for offering traders an extensive selection of trading platform options. Our testing found avatrade to be great for copy trading, competitive for mobile, mostly in line with the industry average for pricing and research, and a winner for investor education. (73% of retail investor accounts lose money) read full review

Best customer service, great platform - visit site

As a trusted multi-asset broker, XTB offers traders outstanding customer service and an excellent trading experience overall thanks to the xstation 5 trading platform. 25 cryptocurrencies are offered. (82% of retail investor accounts lose money) read full review

Over 60 crypto cfds offered - visit site

While its storied history is impressive, when it comes to trading forex and cfds across its global brands, HYCM fails to impress. Effective spreads are high across all account options, and research and education are sub-par. That said, HYCM offers over sixty cryptocurrency CFD pairs. (71% of retail investor accounts lose money) read full review

How do you buy bitcoin?

There are three primary ways to buy and sell cryptocurrencies like bitcoin:

1. Buy bitcoin (the underlying asset) - the most common way to buy bitcoin is to buy physical bitcoin from an online bitcoin exchange such as etoro. Your bitcoin is then held and secured in a digital wallet provided by the broker.

2. Buy a bitcoin CFD (contract for difference) - another popular way to trade bitcoin is to use cfds. With a CFD, you do not own the underlying bitcoin. Instead, you are betting on the direction that bitcoin’s price will go, either up or down, and profiting when you are right.

3. Buy an exchange-traded note (ETN) - while far less common and not available in many countries, exchange-traded notes (etns) are very slowly growing in popularity. Etns are similar to exchange traded funds (etfs), meaning they trade like stocks on a formal stock exchange. Like etfs, etns aim to mirror the price of the underlying asset they track. For more on bitcoin etns, including pros and cons, see this guide from xena exchange and this guide from ETF.Com.

How much does it cost to trade bitcoin?

Fees for buying bitcoin can become quite high across many websites and un-regulated exchanges, which is why we only suggest using a regulated broker. While fees may vary to buy bitcoin, the costs will consist of any per-trade commission, along with the difference between the bid/ask price, known as the spread.

The fees to trade bitcoin generally start at anywhere from 0.002% to as much as 2% of the trade value, depending on where you trade and the trade size.

Brokers that charge a commission will usually have lower spreads, while commission-free brokers will have higher spreads to make up for the difference. For example, if you buy $25,000 worth of a bitcoin CFD, with a spread of $50, that would be commission equivalent 0.002% of the trade value. In other words, whether via spread or commission, bitcoin involves trading costs.

What does a bitcoin broker do?

Bitcoin brokers enable you to buy or sell cryptocurrency. Without a broker, you cannot safely trade cryptocurrencies like bitcoin. To avoid scams, using a trusted broker is crucial when you are trading bitcoin.

What is the best forex broker to trade bitcoin?

For bitcoin CFD trading, including the ability to go long or short, we recommend forex brokers such as IG or city index due to their competitive pricing. Conversely, traders who wish to purchase the underlying physical bitcoin will find that etoro is a great option, followed by swissquote bank.

Which forex broker offers the most cryptocurrencies to trade?

Our research found that etoro offers the most cryptocurrency pairs to trade. With etoro, investors can buy and sell bitcoin (underlying asset), trade crypto cfds, and even copy trade other investors. Behind etoro, other crypto brokers that offer dozens of cryptocurrency cfds to choose from include XTB and HYCM.

Which crypto exchange is the safest?

Among brokers offering bitcoin underlying, swissquote, regulated as a swiss bank, is the safest broker. Founded in 1996, swissquote is publicly-traded (SIX: SQN) and regulated in four tier-1 jurisdictions. Behind swissquote, IG is another safe broker for bitcoin trading. While not a regulated swiss bank, IG is publicly traded (LON: IGG) and regulated in six tier-1 jurisdictions.

How much is one bitcoin worth?

Powered by blockchain technology, the price of one bitcoin reached a new all-time high above $28,000 in december 2020. The price gains were mostly attributed to new institutional investors entering the market and buying bitcoin.

I first wrote about cryptocurrencies in 2013 when bitcoin was still a novelty. Yet, as I’m writing this, the combined market cap of cryptocurrencies is over $600 billion, with bitcoin accounting for over 70%. According to data from coinmarketcap, the price of bitcoin fluctuates widely across various trading venues.

Is buying bitcoin risky?

Despite the potential for large gains, buying bitcoin remains risky. The main risk is significant volatility (price swings). For example, if you buy bitcoin and the price drops by a lot, it can create a substantial loss of your money. Adding any leverage (trading with borrowed money) will only further increase the risk when buying bitcoin.

Also, bitcoin remains a complex financial product. Many investors have lost money by losing their private keys, whether through exchange hacks or not securing them properly in self-hosted wallets. Using a regulated, reputable broker is essential for safely trading bitcoin.

How do I know if a crypto broker is regulated?

To avoid scams, you should only use regulated bitcoin brokers. To verify a broker's regulatory status, first, determine the broker's legal name and country, then find the appropriate regulator website to look them up. For example, a broker in the UK must be authorized and regulated by the financial conduct authority (FCA). Here on forexbrokers.Com, we track, rate, and rank brokers across 20 international regulators.

How do you sell bitcoin short?

To speculate that bitcoin's price will fall, you must open a forex brokerage account with a broker that offers bitcoin cfds. Using a contract for difference (CFD), you can open a sell order (bet the price will go down) and then place your trade. To make a profit, the price of bitcoin must fall. If bitcoin rises in price, you will lose money.

If cfds are not available, using a futures or options contract can be an alternative way to bet against bitcoin. However, bitcoin futures and options are very complex instruments, not widely available, and should only be traded by professionals.

Should I buy physical bitcoin or use cfds to trade bitcoin?

If you are a long-term cryptocurrency investor, buying the underlying physical bitcoin is the safest and lowest-cost way to invest in bitcoin. For more active, short term trading, contracts for difference (cfds) can be suitable. Just remember, cfds are not ideal for holding long-term positions (months or years) because the financing charges add up.

Is trading cryptocurrency legal?

In some jurisdictions, cryptocurrency is banned or illegal to purchase, trade, or own. Meanwhile, in other countries, it is perfectly legal. For example, in the united states (US) and united kingdom (UK), it is legal to buy cryptocurrency from regulated brokers. However, cfds are illegal to trade in both countries. The UK ban on bitcoin cfds went into effect on january 6th, 2021.

How do you safely store bitcoin?

If you do not want to keep your bitcoin with your online broker, you need to store it safely. To secure your bitcoin, you must choose a hot (online) or cold self-hosted (offline) wallet.

Personally, for a hot wallet (online, internet-connected), I use blockchain.Com, which provides a mobile and web-based version. For cold storage, I use ledger, a hardware device that allows you to keep the bitcoin private key offline (including creating a backup recovery phrase in written format).

Do I need a broker to buy bitcoin?

Yes, always use a regulated bitcoin broker to buy bitcoin. Using a regulated broker, you will protect yourself from scams, and your bitcoin will be secure. To avoid scams, never buy bitcoin from someone directly on a third-party website or marketplace.

Summary

Here's a summary of the best forex brokers for crypto trading.

Methodology

For our 2021 forex broker review we assessed, rated, and ranked 27 international forex brokers. Each broker was graded on 108 different variables and, in total, over 50,000 words of research were produced.

While encouraged, broker participation was optional. Each broker had the opportunity to complete an in-depth data profile and provide executive time (live in person or over the web) for an annual update meeting.

All data submitted by brokers is hand-checked for accuracy. Ultimately, our rigorous data validation process yields an error rate of less than .1% each year, providing site visitors quality data they can trust. Learn more about how we test.

Forex risk disclaimer

"there is a very high degree of risk involved in trading securities. With respect to margin-based foreign exchange trading, off-exchange derivatives, and cryptocurrencies, there is considerable exposure to risk, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or related instrument. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses." learn more.

About the author: steven hatzakis steven hatzakis is the global director of research for forexbrokers.Com. Steven previously served as an editor for finance magnates, where he authored over 1,000 published articles about the online finance industry. Steven is an active fintech and crypto industry researcher and advises blockchain companies at the board level. Over the past 20 years, steven has held numerous positions within the international forex markets, from writing to consulting to serving as a registered commodity futures representative.

Trading cfds, FX, and cryptocurrencies involve a high degree of risk. All providers have a percentage of retail investor accounts that lose money when trading cfds with their company. You should consider whether you can afford to take the high risk of losing your money and whether you understand how cfds, FX, and cryptocurrencies work. All data was obtained from a published website as of 12/14/2020 and is believed to be accurate, but is not guaranteed. The forexbrokers.Com staff is constantly working with its online broker representatives to obtain the latest data. If you believe any data listed above is inaccurate, please contact us using the link at the bottom of this page.

The names, products, services, branding/logos, and other trademarks or images featured or cited within this website (www.Forexbrokers.Com) are the property of their respective owners and the owners retain all legal rights therein. These trademark holders are not affiliated with forexbrokers.Com and the use or display of names, trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, or endorses forexbrokers.Com or any of its reviews, products, or services. Forexbrokers.Com declares no affiliation, sponsorship, nor any partnership with any trademark holders unless otherwise stated.

IG - 76% of retail investor accounts lose money when trading cfds with this provider. You should consider whether you can afford to take the high risk of losing your money.

Advertiser disclosure: forexbrokers.Com helps investors across the globe by spending over 1,000 hours each year testing and researching online brokers. How do we make money? Our partners compensate us through paid advertising. While partners may pay to provide offers or be featured, e.G. Exclusive offers, they cannot pay to alter our recommendations, advice, ratings, or any other content throughout the site. Furthermore, our content and research teams do not participate in any advertising planning nor are they permitted access to advertising campaign data. Here is a list of our partners.

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Best cryptocurrency brokers

Luke jacobi

Contributor, benzinga

Many people believe that cryptocurrencies are the future of finance. When you’re ready to leap into crypto, choosing a broker to trade or invest in cryptocurrencies is one of the most important steps to your success in the crypto market.

Get started now with benzinga’s picks for the best cryptocurrency brokers and choose the right one for you.

Best crypto brokers and trading platforms:

Best for social trading: etoro

Best for ease-of-use: gemini

Best for new investors: coinbase

Best for gold investments: itrustcapital

Best for high-volume forex traders: cryptorocket

Best for accessibility: altrady

Best for multiple exchanges: voyager

Best for security: kraken

Best crypto brokers

Since different brokers have different strengths, you need to figure out what kind of broker best suits your cryptocurrency interests. Some brokers provide a social trading platform where you copy other cryptocurrency traders’ trades in your own account. Others can offer the ability to make transactions in a broader selection of altcoins.

Choosing the best crypto broker depends largely on addressing your needs as an investor or trader. The following list crypto brokers been selected for different reasons to meet the needs of differing cryptocurrency trading and investing styles.

Commissions

Account minimum

Etoro fundamentally changed the way many people trade and invest with its social trading platform. Social trading involves mirroring another trader or investor’s transactions in a special social trading account. While you make the same amount proportionally as the trader you’re copying, you also take the same percentage of losses the trader takes in their account.

In addition to its regular crypto trading platform, etoro offers an advanced cryptocurrency exchange platform called etorox. This platform is designed for algorithmic traders and institutional grade investors. It offers traders access to tight-dealing spreads, and its algox application programming interface (API) can be used to create custom automated trading tools.

Commissions

Account minimum

2. Best for ease-of-use: gemini

Stay on top of market trends, build your crypto portfolio and execute your trading strategy with gemini’s easy-to-use tools. The gemini app is available on all the major app stores, and it puts the industry’s best crypto exchange and wallet in your hands.

Gemini’s app is easy to use. You can track asset prices and real-time market prices and set price alerts so you can act fast on price movements for individual assets. You can also schedule recurring buys on bitcoin and other cryptocurrencies.

Invest with peace of mind with gemini’s solid cybersecurity and custody solutions. Create a free account and make your 1st buy in as little as 3 minutes.

Commissions

Account minimum

3. Best for new investors: coinbase

Coinbase is 1 of the largest and oldest cryptocurrency exchanges. It currently services 35 million customers worldwide. Coinbase has extensive educational resources and an intuitive interface ideal for new traders and investors.

The exchange also provides clients with a hosted wallet and offers global customer support. Coinbase is an excellent choice for those new to the cryptocurrency market who do not wish to use social trading services.

Pricing

Account minimum

4. Best for gold investments: itrustcapital

Itrustcapital is 1 of the few cryptocurrency brokers that lets you trade and hold physical gold in your individual retirement account (IRA). You can also trade bitcoin (BTC), ethereum (ETH), litecoin (LTC) and bitcoin cash (BTH) in your IRA. Itrustcapital provides you with a personal wallet by curv for your crypto transactions.

While itrustcapital has no minimum trade or account size, the company charges account holders a flat fee of $29.95 per month. This amount includes all IRA fees, asset custody charges and access to its trading platform, although all cryptocurrency trades carry an additional 1% transaction charge based on the trade size.

If you’re planning for your retirement and want to add physical gold to your cryptocurrency portfolio as an inflation hedge, then itrustcapital is a solid choice.

5. Best for high volume forex traders: cryptorocket

Cryptorocket offers straight through processing (STP) to its trading clients. This means you deal directly with the crypto and forex markets and not through intermediaries or market makers. This broker model is ideal for high volume forex traders who tend to be sensitive to dealing spreads.

In addition to the 35 crypto pairs offered, you can trade 55 fiat currency pairs, 64 major stocks and 11 indices. If you are based in a jurisdiction with relatively lax retail forex trading regulatory oversight, you may even be able to take advantage of cryptorocket’s 500:1 maximum leverage ratio for forex trades.

Cryptorocket also supports the popular 3rd-party metatrader4 trading platform.

6. Best for accessibility: altrady

Altrady is built by crypto traders for crypto traders. It makes cryptocurrency trading accessible for beginner, intermediate and advanced traders.

You can get the tools that professional crypto traders use without the expensive price tag. Altrady’s platform is intuitive and easy-to-use. Its crypto trading software platform adapts to your needs.

It combines 10 connected exchanges. It also offers immediate price alerts, portfolio manager, break-even calculator, and customizable trading pages by allowing traders to manipulate widgets to create preferred layout in order to trade comfortably, limit ladder order, gain quick access to market tabs, and integrated market scanners.

Commissions

Account minimum

7. Best for multiple exchanges: voyager

Voyager connects to more than a dozen of the most trusted and secure crypto exchanges so you have access to the largest crypto trading market available anywhere. Voyager gives you faster, more reliable execution, plus:

Access to multiple exchanges: voyager partnered with over a dozen of the most trusted and secure crypto exchanges and liquidity providers. Voyager’s exchange connectivity offers you competitive prices on your trades and faster, more reliable execution.

Commission-free trading: voyager operates commission free to save you money. You save money on trades through its extensive crypto market and best execution technology. Voyager achieves price improvement on over 90% of customer orders.

Start trading at a better price today! Download the voyager app today.

8. Best for security: kraken

Kraken takes a comprehensive approach to protecting your investments and builds in a number of sophisticated methods to prevent money or information theft.

Financial stability with full reserves

Healthy banking relationships

The highest standards of legal compliance

Crypto advantages vs. Disadvantages

Trading and investing in cryptocurrencies often carry a considerable degree of risk, as you may have observed given the volatility of bitcoin and some other digital currencies. Despite the disadvantages currently associated with cryptos versus fiat currencies (like lower liquidity and minimal payment options), the advantages of holding cryptocurrencies will increase as they become a more common form of payment.

Here’s a quick shot of crypto advantages and disadvantages.

Advantages

Security. Technology advances typically lead to increased intrusion into your privacy. In contrast, all identities and transactions are strictly secured in the digital currency environment. While most cryptocurrency transactions are very secure, you still could be vulnerable to cybercriminal actions, like hacking.

Low transaction fees. Because of the elimination of intermediaries like financial institutions, cryptocurrency transaction fees are generally quite low.

Decentralized. The lack of a central exchange or authority overseeing cryptocurrencies is one of their defining characteristics. Many people consider this among the biggest advantages of cryptocurrencies and blockchain technology.

High potential returns. You only have to look at a long-term bitcoin price chart to get an idea of the returns you can make investing wisely in digital currencies. The crypto world is still developing and expanding, so investing in the right digital currency now could translate into considerable returns in the future.

Disadvantages

Acceptance. Because digital currencies have not yet become mainstream, most businesses will not accept them as payment for goods or services. This situation will eventually change as public perception makes digital currencies more acceptable as forms of payment. For example, paypal has recently allowed customers to hold bitcoin balances and has plans to allow payments using that cryptocurrency by early 2021.

Volatility. The market volatility observed in some digital currencies can lead to large gains or large losses. Trading and investing in crypto is not for everyone, especially those with a low pain threshold or aversion to risk.

Taxes. The internal revenue service (IRS) states on its official website that “virtual currency transactions are taxable by law just like transactions in any other property.” that IRS web page also links to a guide about how existing general tax principles apply to transactions made using digital currencies.

Illegal activities. Due to the fact that digital currency transactions generally provide identity security, many people operating outside the law are thought to use digital currency for illegal activities. These activities could include money laundering, “dark web” transactions, and drug and human trafficking.

Cryptocurrency vocabulary

Like many other financial markets, the cryptocurrency market has evolved its own jargon. Some of the key terms used by market operators are defined below.

Block. A collection of transactions permanently recorded on a digital ledger that occur regularly in every time period on a blockchain.

Blockchain. A constantly growing list of blocks in a peer-to-peer network that records transactions.

Cryptocurrency exchanges. Also called digital currency exchanges, these generally consist of online businesses that allow customers to exchange cryptocurrencies for fiat currencies or other cryptocurrencies.

Cryptocurrency wallet. A secure digital account used to send, receive and store digital currencies. Crypto wallets can either be cold wallets that are used for storing cryptos in an offline environment or hosted wallets that are hosted by 3rd parties. Hosted wallets store your private keys and provide security for your digital currency balances.

Distributed ledger. A network of decentralized nodes or computers that connect to a network where transaction data is stored. Distributed ledgers do not have to involve cryptocurrencies and can be either private or permissioned.

Fork. Also known as a “chain split,” a fork is a split that creates an alternate version of a blockchain that then leaves 2 blockchains running simultaneously. For example, bitcoin and bitcoin cash came about due to a fork in the original bitcoin blockchain. Another type of fork is known as a “project” or “software fork.” this occurs when cryptocurrency developers take the source code of an existing altcoin project and create a new project. For example, litecoin is a project fork of bitcoin.

ICO. An initial coin offering (ICO) occurs when a new digital currency or token is sold, typically at a discount, to its first set of investors. An ICO lets issuing cryptocurrency companies raise funds from the public to support their coin’s development and maintenance.

Mining. A computationally-intensive process performed within a cryptocurrency network where blocks are added to the blockchain by verifying transactions on its distributed ledger. Miners are rewarded with digital coins as compensation for their successful computational efforts.

Are you ready for the future?

Digital currency and the blockchain appear to be the future of finance. Despite their current typical volatility and lack of widespread acceptance as a payment method, cryptocurrencies seem destined to become increasingly used for online payments. They could therefore make an interesting long-term investment, especially if you have a strong appetite for risk.

Where we will be in 20 years is anyone’s guess, but cryptocurrencies and blockchain technology show growing promise as forces to be reckoned with in the financial world. Get started today with 1 of our recommended crypto brokers.

Try gemini

Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini crypto platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with gemini now.

So, let's see, what was the most valuable thing of this article: compare the best cryptocurrency brokers for 2021. Read our cryptocurrency brokers guide. Our pros compare and list the top trading cryptocurrency brokers. At best cryptocurrency brokers