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You want to invest in cryptocurrencies but you’re wondering how to do it, and which platform to use. There are a lot of scam platforms around – usually promoted heavily on social media – and if you use one of those you could lose all of your money. However, there are some well-established, secure ones that you can use and we are looking at the top ones here.
As of the end of May 2021, the global market cap of cryptocurrencies was $1.73 trillion. It’s a growing market and is set to get bigger.
Cryptocurrencies are a form of online payment in which transactions are logged and verified on a ledger called a blockchain. The records are maintained by a decentralised system rather than by a centralised authority (such as the Bank of England).
Another term recently coined to describe this corner of the market is ‘Decentralised Finance’, or “DeFi”.
The most prolific cryptocurrencies right now are Bitcoin and Ethereum (aka ether), whose value have rocketed in recent months because big investment houses and banks see them as a store of value and have actually bought a lot. Major Wall Street investment banks such as JP Morgan and Goldman Sachs have also taken a keen interest in the rise of cryptocurrencies in recent months. Both banks regularly put out research notes about the area. The sentiment of these can also have an affect on the direction of the market.
Notable celebrity investors include Tesla CEO Elon Musk, who revealed his electronic car company would be investing $1.5 billion in Bitcoin earlier this year.
Both Bitcoin and Ethereum, can go up and down wildly, dragging the other, smaller currencies with them, and therefore your level of return, can change at any moment. In fact the whole crypto market took a huge dive in May this year, thanks to comments by China’s ruling party and Elon Musk, spooking a lot of investors. Bitcoin’s value had topped $63,000 for one token in April 2021 but fell to nearly half those levels.
Ethereum has also garnered widespread acceptance in the market and is the second largest cryptocurrency, but similarly to bitcoin, has experienced wild volatility and price swings.
So, you know that volatility (the wild mood swings of the crypto market) is an issue.
But, even before you’ve actually bought some crypto, you need to know how to protect your money going in.
The main way to buy cryptocurrencies is to do it through one of the crypto platforms online.
However… There are several of them and some are simply fronts for criminal gangs! They will take your money before you know it.
So it’s essential to choose a cryptocurrency platform that you know is genuine and safe. In the past, people have lost money through genuine platforms when they were hacked, so you need a proper platform that you know is safe, where you can buy and, ideally, store your money.
The ones we like are:
We are also interested in Cash App for reasons you will see below.
Read on to find out more.
Coinbase is a cryptocurrency exchange platform launched in the US in 2012. It’s the best-known cryptocurrency platform in the West.
People use the platform to securely buy, sell, transfer and store digital currencies. It is widely considered to be one of the best cryptocurrency exchanges on the market and gives customers access to a range of cryptocurrencies such as bitcoin, Ethereum, Litecoin and about 50 others.
In April, it was the first major crypto business to go public in the US.
Coinbase is used to convert one cryptocurrency to another, to send and receive it and it allows you to see the current price and trends for cryptocurrencies. You can also see your portfolio of holdings and news about the industry.
At the time of writing in June 2021, Coinbase wallets are free of charge to use. The platform also does not charge for transferring cryptocurrency from one Coinbase wallet to another.
There are, however, fees applied to buy/sell transactions on a sliding scale.
In the UK, variable fees are as follows:
The platform says it will always notify you of all Coinbase Fees (not including the margin) and any other service fees that apply to each transaction immediately before you conﬁrm each transaction and in the receipt we issue to you immediately after each transaction has processed.
When setting up your account, as with a bank account, you will need documents to verify your identity, such as your passport or driving licence and utility bills.
Once your account is set up you will need to add your card details to link it to a bank account and load money onto the app/site. When you have an initial pot of money to trade with, then you are ready to go!
Clicking on the home button, you will be able to see your account balance at the top — this will be in your local currency. You can also look at your portfolio of holdings on the portfolio page.
You can also add currencies to a “watch list” in order to keep track of movements day-to-day. On this page you can also see the “top movers” — the coins which have had the biggest fluctuations up or down.
The pros of Coinbase are
There are, however, high fees when you’re not using Coinbase Pro.
Another downside can be that the user does not control wallet keys (explained below).
CoinPass is the only platform on this list that is a homegrown UK platform, registered and run in this country. It is also FCA-approved, which is not an easy approval to gain!
iIt was set up in 2018 and currently allows investors to buy and sell eight coins. Another six coins will be added to the list soon.
It’s a secure platform with all funds insured against malicious theft.
All but 5% of the coins on this platform are kept in ‘cold storage’ (i.e. off the website and in a separate, secure storage place away from hackers..
CoinPass prides itself on being extra-secure and being on the FCA crypto-assets register which makes it a good bet for UK investors.
It has two types of platforms – one for simple buy-and-hold investments and the other for regular traders.
It is new compared to the others so may have a few teething problems, but it seems to be doing everything it can to make the experience of using the platform as simple and secure as possible.
Kraken is another option for people looking for an exchange to buy cryptocurrencies on. With it, you can buy or sell using various fiat currencies. That includes British pounds, US dollars, Canadian dollars, euros, and the Japanese yen.
The San Francisco-based exchange was established in 2011 and formally launched trading operations in 2013. It provides a place where you can easily move money to and from linked bank accounts to cryptocurrencies.
Kraken is hailed in financial circles as a trusted source of data on crypto. It filters information to the Bloomberg Terminal — a popular destination for financial analysts and traders.
Kraken has a variety of features and order types available on its platform.
It is also known for its low fees and security.
However, many of its features aren’t currently available outside of the US.
It also has long verification times for some transactions and the interface can be tricky to use.
As of April 2021, Binance was the biggest cryptocurrency exchange in the world in terms of trading volume. Founded in 2017 in China by Chinese-Canadian business executive Changpeng Zhao, it provides a platform for trading various different cryptocurrencies. It is now Cayman Islands-domiciled, having left China following increasing regulatory pressure.
(Please note that Binance has been told by the FCA that it can’t carry out any regulated activity in the UK, but Binance have said it won’t have a direct impact on the services it currently provides.)
Binance offers more than 100 different trading pairs between 500 cryptocurrencies which gives it a broad appeal. It offers plenty of fiat-crypto pairs as well.
It also charges lower fees than other exchanges on the market. Some people argue that it also has a more advanced charting method, so you can track movements more easily.
It is geared towards more advanced users than other platforms, too.
The platform would be a good fit for people who are interested in trading lesser-known altcoins as they include more of those than most other platforms.
It does, however, have limited appeal in the US. US customers can’t use the platform and the Binance.US exchange is limited.
Another mark against it is that it can be an overwhelming experience to use a platform with so much choice.
Once you get serious about investing in cryptocurrencies it’s a good idea to spread your holdings across at least two platforms/wallets.
We explain below what crypto wallets are.
It could be handy to have some crypto in Coinbase, some in Kraken and some in a Cold Wallet, just to be on the safe side. You really never know what will happen to any of these forms of storage so, to be on the safe side, it’s handy to ‘spread your bets’ in terms of storage as well as investments!
A recent addition to the platforms market is Cash App.
Cash App is a peer-to-peer payment app, formerly known as Square Cash. It is owned by Square, which is backed by Twitter’s CEO Jack Dorsey. Dorsey has been a vocal proponent of Bitcoin and was partially responsible for catapulting it into the mainstream.
The app lets customers send and receive money easily, and can be linked to an existing bank account or spent directly through the payments service.
It also comes with an optional cash card which you can use to withdraw money from ATMs or pay for things with. When you join up, you choose a username which becomes your “cashtag”. Users can also be found using a phone number or email address.
In January 2018, the app began allowing customers to buy Bitcoin. This is, so far, the only cryptocurrency supported by the service — giving it a big disadvantage if you’re looking to trade multiple cryptocurrencies.
In addition to exchanging Bitcoin, you can send or request Cash App payments internationally.
There are no fees to send or request payments with friends in the UK, so it can be a good option if you need to exchange currency internationally.
Fees can vary on Cash App, which charges two kinds of fees for bitcoin transactions:
Cash app can be used similarly to other digital banks or cash cards.
This is really only useful for Bitcoin enthusiasts…not those who want to trade in various cryptocurrencies.
Even though Cash App was an earlier adopter of crypto transfers, you can still only exchange Bitcoin on it. It may, however, charge lower fees for you to do that and it has a simple interface.
If it rolls out more coins to trade in the future it could be one to watch.
If you’re going to get interested in crypto, you’ll also need to know where they’re stored and how to get access to those stores. This is where cryptocurrency wallets come in.
A crypto wallet is a device that allows access to cryptocurrencies.
It has a ‘private key’ associated with it which is what you use when you send money and receive money.
The private key is a long string of numbers and letters assigned to your wallet — sort of like a password. If you want to keep your currencies safe, you have to keep that key safe. Wallets are a sort of gateway to accessing your assets.
There are three types of crypto wallets:
A hot wallet, which is the easiest method is to store cryptocurrencies, is held on the exchange where you bought it.
The exchanges usually hold onto your private key, which the user doesn’t have access to. This means you need to trust the company to keep the key safe. This is one of the reasons some people do not store large amounts of tokens on exchanges.
You can also use payment providers such as PayPal to store your cryptocurrency.
These could potentially leave you stuck with your money in that medium.
If you use PayPal, for example, you have to cash out your cryptocurrency using PayPal. These also don’t give you access to the private keys.
Those looking for more control can store cryptocurrencies on their own computer in a digital wallet.
This needs software to manage it. The risks associated with this method are the potential for hacks, which could happen if you are connected to the internet.
If you have a lot of coins, it’s advisable to look into something called a cold wallet, which look a bit like USBs or hard drives.
Through using these, your private keys are stored on a device that’s not connected to the internet.
In order to use them you need to attach them to your computer, like you would any USB. You send or receive crypto to and from your cold wallet through the internet and then when you’ve finished your transactions you remove the wallet and store it somewhere very safe!
A couple of cold wallets that are worth considering are:
You could, of course, also go with the old school method of simply printing your access code, or private key, out on a piece of paper. These can exist as QR codes or as a long (very long!) complicated series of letters, numbers and symbols.
“Paper wallets” are usually discouraged due to the fact that you can’t send funds partially – only as a full balance.
Whichever wallet you choose, be sure to back them up regularly.
Losing access to your crypto wallets can be quite the headache and end up being very costly.
It’s crucial to understand how your crypto wallet works before you move your funds.
Jasmine Birtles’ MoneyMagpie webinars are the perfect place to learn about investing from industry experts and give you the confidence to start investing your cash. Crypto-specific ones give more insight into:
Keep an eye out on the website or on social media channels for what’s coming up next.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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interesting article! I am currently working with an IoT software development company to implement changes in the software just so that customers can pay with cryptocurrency – and I already see a positive trend.