Not only daring private individuals buy coins, but also institutional investors have discovered digital currencies for themselves. Many of them put their money into the two best-known cryptocurrencies, Bitcoin and Ethereum. Together, their market capitalization represents around 60 percent of all digital currencies. So it’s no wonder that almost every trading center for cyber currencies has Bitcoin and Ethereum in its repertoire.
Even though they are actually available for purchase on every crypto platform, the differences between the trading venues are enormous. Some offer real bitcoins, others ETPs of bitcoin on a securities exchange, and still others rely on bitcoin derivatives.
Probably the easiest way to trade cryptocurrencies is through crypto brokers.
Crypto brokers often offer trading with Contracts for Difference – CFDs for short. This is a type of security that reflects the price of a cryptocurrency.
Especially the platforms of eToro, Plus500 and Libertex convince with a good user experience and a very good product range.
Founded in 2007 in Tel Aviv, Israel, eToro refers to itself as a multi-asset platform and the leading social trading provider in the world.
With registered offices in the UK, Cyprus, Isreal and China and over 10 million customers, the platform’s stated mission is:
“To make the global markets accessible for everyone to trade and invest in them in a simple and transparent way” (Mission Statement eToro).
eToro therefore offers the possibility to trade well-known stocks, such as Apple, Google, Facebook and many more. But also other investment options such as derivatives on commodities (such as oil, gold, silver, cocoa and coffee) as well as foreign exchange, ETFs and other various indices are part of the offer, which leads to very different eToro experiences.
Cryptocurrencies are also available for buying and selling. The provider does not limit itself to the most well-known cryptos such as Bitcoin, Ethereum and Litecoin, but also Ripple or Zcash and other rather unknown cryptocurrencies can be traded.
All in all, several cryptocurrencies are offered for trading and the range is constantly expanding.
Founded by Yoni Assia and Ronen Assia, eToro has continued to develop over the years. In 2009, the webtrader with the trading platform was added, and in 2011, the Android and iOS app was released.
In 2013, more stocks of well-known companies were added and in 2017, cryptocurrencies such as Bitcoin, Ethereum, Litecoin and quite a few others were added to the portfolio. In 2018, an in-house cryptocurrency wallet for Android and iOs was also launched.
Today, the team includes 19 employees and has 5 investors from around the world. For the founders, the following company values are particularly important: simplicity, innovation, entertaining, openness and quality.
Above all, eToro Copy Trading is an absolutely unique selling point of the trading platform, which leads to positive eToro experiences. The website is programmed in a modern way, clarifies every new and experienced investor several times about the risks of trading and shines with constant further developments of the offer.
The eToro test shows that the website has a wide range of stocks, forex, digital currencies and commodities.
What is another bonus point with eToro is that it provides over 160 cryptocurrencies with integrated wallet. Since you can trade leveraged crypto CFDs on top of real cryptocurrencies makes eToro the exchange & broker in one.
But where else can you expand your portfolio so elegantly with stocks and CFDs and copy competent investment strategies quickly and easily via the social functions? In addition, the eToro app offers a wide range of investment options. The possibility to follow other users and copy their transactions is remarkable. Logically, the exchange between investors is also promoted here.
In addition, the demo version and the in-house blog allow new traders to quickly learn and familiarize themselves with the material.
Unfortunately, the customer service only works via a “Frequently Asked Questions” help section and an email contact form, but not via a 24/7 live chat.
Plus500 is, according to its own statement, the largest broker in the field of derivative financial instruments, has 300,000 active customers and is one of the top 250 companies (FTSE 250) in the UK.
Plus500’s trading capabilities clearly indicate its focus on active traders. Customers can place their orders via the in-house Plus500 platform. Direct trading partners are not available. At Plus500, investors can only trade CFDs. Accordingly, there are no offers for fund savers or share savings plans.
In terms of fees for CFD trading, Plus500 scores with a so-called “zero transaction cost policy” and the waiver of a minimum fee. The order fee is settled via the spread, a fee is only incurred for a position that is held overnight (“overnight fee”). Furthermore, an inactivity fee of 10 USD may be charged if clients do not log into the client account for at least 3 months. For the purchase of a DAX CFD, investors pay an order fee of 1.50 euros.
Fund trading is not provided at Plus500. Other online brokers sometimes offer several thousand investment funds at a discount or even without an issue surcharge.
Plus500’s offer is clearly aimed at specialized CFD traders. Positive: Plus500 offers access to many different tradable CFDs, such as CFDs on stocks, ETFs or cryptocurrencies. With its low order fees, Plus500 is one of the price leaders in the industry. The security of deposits at Plus500 differs from that at German banks. According to Plus500, deposits are secured via the UK’s Financial Conduct Authority (FCA; www.fca.org.uk).
Libertex is a European broker that offers trading in leveraged derivatives (CFDs). The platform is operated by Indication Investments Ltd and is based in Cyprus. The company was founded in 1997. Since then, the broker has been operating internationally and serves over 2 million clients.
Libertex is one of the most loved brokers for crypto trading. You can bet on rising or falling prices with a leverage of up to 1:2. Commissions start as low as 0.06% of the order volume.
At Libertex you can invest in rising or falling prices with leverage. The order screen gives you the possibility to set the leverage yourself. This is a good advantage in Forex and CFD trading. The maximum leverage for private traders can be up to 1:30. New clients can use a demo account with virtual funds up to 50.000€ to test the trading platform by themselves. The minimum deposit for a live account is only 100€.
Furthermore, Libertex can score with a wide range of tradable assets. Over 250 different markets are available. Among them there are stocks, forex trading, cryptocurrencies and more (the markets are traded via CFD). From my experience, Libertex continues to strive to add new and interesting markets to the platform.
Fees with crypto brokers
Fee models of crypto brokers differ from crypto exchanges in that there are no transaction fees.
Instead, spreads are charged on the prices through which brokers make their money. For example, the spread to buy bitcoin is 0.75%. Let’s say you buy €1,000 worth of Bitcoin at a rate of €10,000. Then you will pay a total of 7.50€ in fees for your purchase of 1,000€ in Bitcoin. If you trade with a broker with leverage, you should also pay attention to whether there are so-called “overnight fees”.
You can see the fees at any time in your portfolio overview at eToro.
Buy cryptocurrencies on an exchange
Crypto exchanges allow you to place direct orders in an order book to buy physical cryptocurrencies. The big advantage here is the sheer selection of cryptocurrencies and often low fees.
But beware: The risk also increases with crypto exchanges, because they are often not regulated and are not subject to any financial supervisory authority. Therefore, it is recommended to immediately withdraw purchased cryptocurrencies into your own wallet.
Here it is imperative that you have understood the concept of private keys and addresses, because if you make a mistake here, this could result in a high loss, up to total loss!
An example that something like this can also happen to professionals is provided by this unfortunate investor, who probably paid more than 10,600 Ether (the equivalent of over 5 million US dollars!) for an Ethereum transaction due to a mistake:
Likewise, with crypto exchanges, you should be careful not to buy dubious small coins that have little liquidity and could crash to the bottom within a very short time. If you are unsure, crypto brokers might be a better choice for trading cryptocurrencies.
Buy cryptocurrencies P2P from other people.
Of course, you can also buy cryptocurrencies “in real life” from other real people.
However, you should be extremely careful in this case, because in the past there have been several cases of robbery, especially with larger sums.
Therefore, you should never show up to such a meeting alone and rather exercise caution than take an unnecessary risk.
Buying cryptocurrencies via an ATM machine
In isolated large cities, there is the possibility to buy Bitcoin via an ATM.
These machines function similarly to change machines at an airport and allow you to exchange euros for bitcoin for a fee. If you have the option and there is a BTC ATM near you, this can be a good way to buy the cryptocurrency.
However, if you also want to invest in altcoins (alternative cryptocurrencies) such as Ethereum, IOTA or Polkadot, you will not be spared from going to a crypto broker or crypto exchange.
App as a helper
Various trading platforms specialize in cryptocurrency trading. Some even offer the possibility to buy cryptocurrencies in the app. The most well-known providers if you want to buy and sell cryptocurrencies in Germany are eToro, Binance, Bitpanda, Coinbase and Bitcoin.de. When comparing the aspects of demo account, security, fees, minimum budget, payment methods, available cryptocurrencies and regulation, many internet comparisons conclude that especially eToro is well suited for beginners who want to buy cryptocurrencies. Trade Republic from Berlin has also been offering trading with the cryptocurrencies Bitcoin, Ethereum, Litecoin or Bitcoin Cash for a few months now. Like everything at Trade Republic, you can buy cryptocurrencies here in the app. Compared to crypto-only platforms, eToro and Trade Republic have the advantage that you can also trade stocks and ETFs here.
Paypal is a thing
There are several crypto trading platforms that allow their clients to pay for digital currencies with Paypal. In Germany, for example, you can pay for your cryptocurrencies with Paypal at eToro.
Conversely, Paypal offers its users in the US access to cryptocurrencies. Customers can buy various cryptocurrencies directly from the online payment service and no longer need an external platform to do so. Subsequently, users can also use the purchased Bitcoin or Altcoins as a means of payment. In doing so, Paypal converts the cryptocurrencies into US dollars during the payment process. When Paypal will also offer this service to its users in Germany is still open.
Which cryptocurrency to buy?
Bitcoin is the most widely used cryptocurrency with by far the largest market capitalization. In other words, Bitcoin has already established itself. So, for those who want to buy cryptocurrencies, Bitcoin is usually the first choice. However, this does not change the fact that the price fluctuations are enormous and that Bitcoin will not be replaced by another cryptocurrency one day after all. So you should know the alternatives:
Bitcoin, Ethereum & Co. The original goal of cryptocurrencies was to create a decentralized payment system, independent of banks, anonymous for every user and secure at the same time. In 2009, Bitcoin fulfilled these claims as the first cryptocurrency, paving the way for countless other virtual currencies. The biggest differences between Bitcoin and altcoins are mostly technical – for example, the form of the blockchain or how data is processed and stored. Alternative cryptocurrencies can often be generated (mined) much faster than Bitcoin due to new findings and thus newer technology, and trading with them is also much more dynamic. Some well-known altcoins are also linked to specific purposes or products. For example, Ethereum, the most widely traded alternative currency after Bitcoin, is also suitable for making contracts and distributing food coupons in crisis regions. Also well-known and widely traded are the cryptocurrencies Litecoin (very fast) and the independently developed fork Bitcoin Cash. Niche coins: examples of cryptocurrencies linked to products are Carat, which is linked to diamonds, and Hullcoin – a cryptocurrency issued as a reward for good deeds.
Ripple: Ripple is a special case. First of all, Ripple is not a cryptocurrency per se, but a platform that is preferably used by banks and other large financial service providers for the fast processing of as many transactions as possible at the same time – for example, also as an alternative to the widely used SWIFT payment system. Blockchain technology is not used here, but rather a multi-stage and yet very fast acceptance process for each transaction. The cryptocurrency traded in this process with the abbreviation XRP has a special feature: The issuers defined a fixed number (100 billion) of tokens for trading at the start. Critics repeatedly note that a large share of the XRP tokens is held by the platform operators and only a significantly smaller share (about 30 to 40 percent) can be traded by the network members. Especially since the operators could theoretically short the market or flood it with new tokens at any time. This leads the idea of a decentralized payment system somewhat ad absurdum, but Ripple or XRP is still one of the most traded cryptocurrencies alongside Bitcoin and Ethereum. This is because Ripple occupies an exciting niche.
TRADE CRYPTOCURRENCIES AS CFD
Investors who are primarily interested in participating in the performance of a cryptocurrency can trade various cryptocurrencies relatively easily via a CFD broker. Whatever cryptos you want to trade, a CFD is the easiest way to do it.
You can think of a CFD like a security. As an investor, you participate directly in the development of the price of the cryptocurrency. If the digital currency rises, then your CFD also rises. However, you do not physically own the internet currency, so you do not own a digital coin or a file. For this, speculative investors can use leverage by means of a CFD. With a leverage factor of 30, the CFD then falls or rises 30 times as much as the price of the cryptocurrency. Participation at a ratio of 1:1 is of course also possible.
If you want to buy or sell a cryptocurrency as a CFD, you can use Plus5005, for example. By the way, at Plus500 you can deposit with credit card and PayPal, the account opening is very fast and without postident. However, you can of course use any other CFD broker of your choice.
CRYPTO-ETPS (EXCHANGE TRADED PRODUCTS)
WHAT IS A CRYPTO-ETP?
ETPs are ETNs, or exchange traded notes. These are exchange-traded notes that track the performance of an underlying asset. ETNs offer investors the opportunity to invest in asset classes such as Bitcoin, Ethereum and other cryptocurrencies at a low cost.
HOW DOES A CRYPTO ETP WORK?
Investors can use ETPs to participate in the performance of cryptocurrencies. To do so, they do not have to turn to unregulated crypto trading venues, crypto wallets are also not required for trading. Trading and holding cryptocurrencies is done through a regulated security.
In Germany, investors have been able to buy ETPs on cryptocurrencies such as bitcoin, ethereum and litecoin for several years, for example the CoinShares Physical Bitcoin (BTC) (ISIN GB00BLD4ZL17/WKN A3GPMN). The ETP tracks the performance of the main cryptocurrency almost 1:1.
BUY CRYPTOCURRENCIES AS A CERTIFICATE
You can also buy some digital currencies on the stock market. This can be done with a certificate, which allows investors of a speculative nature to participate in the performance of an underlying asset. For this, you only need a securities account as a prerequisite. A free securities account with excellent conditions is offered by finanzen.net zero1, for example.
Certificates are already available for some cryptos. With the Bitcoin participation certificate, you can easily invest in the price development of the best-known cryptocurrency. The certificate replicates the Bitcoin price, but is not a “real” Bitcoin, but a derivative on the cryptocurrency. The product allows a participation of almost 1:1 in price gains and losses of the Bitcoin against the US dollar – and without a predefined redemption date. To buy the bitcoin certificate, all you need is a securities account.
Investors can also invest in the little Bitcoin brother Bitcoin Cash by means of a certificate. By buying the Open End Participation Certificate on Bitcoin Cash from Vontobel, you can participate in the price development of Bitcoin Cash.
There is also an Ethereum certificate: With the purchase of the participation certificate from XBT, you participate in price gains and losses of Ethereum. Banks and certificate issuers are already planning further products for many other internet currencies. You can find out more about the current status in our special guides on the individual cryptocurrencies.