How to Access Cryptocurrencies

I write about trading and investing in cryptocurrencies a lot, because it has been (and continues to be) a hot market with a lot of movement and general volatility. It might not stay that way for a whole lot longer (think weeks or months instead of years), but that doesn’t mean that it is likely that the party is over yet. What I sometimes forget, is that it is far less easy for the wannabe trader or investor to access the stuff than it is to get your hands on Forex or stocks, so I thought I would do a short piece about where you can get cryptocurrencies, or at least a derivative that allows you to trade or invest in cryptocurrencies such as a CFD.

The cheapest and most straightforward option is to buy some directly from another individual, if you want to have a long position. This can avoid typically expensive fees or commissions which many cryptocurrency exchanges seem to charge. It might not be a quick, easy or convenient solution, but you might be surprised how easily you can find informal groups of people looking to buy or sell without any real commissions in the country where you live.

CryptocurrenciesThe second option, which again is useful for intended investors, is to use exchanges. The problem with cryptocurrency exchanges is that they can be very expensive, with fees of up to 10% (yes, you read that correctly, ten percent!) completely possible. The advantage of using an exchange is that the better ones are secure, quick, and easy to use, so you have peace of mind. There is no denying they are on the expensive side, but for long-term investors hoping to triple their money or even better, what’s a few percent in fees? The problem though is that many of the better exchanges might not be available in your country, not to mention the fact that if you must fund them by bank transfer, your bank might not agree to make the transfer, or at least they won’t do it quickly – there are several reasons for this.

So, we reach the final alternative – Forex/CFD brokers. Although most of them are still not offering trading in cryptocurrencies, many are, with about half of those providing access to Ethereum and Ripple (the second and third largest cryptocurrencies by market capitalization at the time of writing), as well as Bitcoin. Two well-known brokers offering all three are eToro and AvaTrade. Sending bank transfer to such brokers could be easier than to certain exchanges. I am not specifically recommending either broker, but I was looking at eToro’s fees and spreads today for cryptocurrencies, and they seem quite reasonable: approximately 0.70% for Bitcoin, 2% for Ethereum, and 3% for Ripple, while there are currently no overnight fees charged on long positions for any of the three.

When it comes to cryptocurrency exchanges, I have not seen any with lower fees than Kraken, the U.S. based exchange founded in 2011. I can’t vouch for them beyond that.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment. Learn more from Adam in his free lessons at FX Academy.