Have I Missed The Boat? – Best Ways To Purchase Cryptocurrency (#GotBitcoin?)
Cryptocurrencies are undoubtedly one of the hottest topics in both finance and technology right now. Many proponents of the drastically new monetary products believe that decentralized finance is the future and one day we’ll all be using Bitcoin, Litecoin, or some other purely digital asset. Have I Missed The Boat? – Best Ways To Purchase Cryptocurrency (#GotBitcoin?)
Haven’t I Missed The Boat?
If this is the long game for cryptocurrency in general, then we are at an incredibly early stage in the digital asset story. The entire market capitalization of all cryptocurrencies is minuscule in comparison to other assets.
The value of all US stocks, for example, was estimated at $30 trillion in January of last year. Meanwhile, gold, which Bitcoin is often likened to, has a global market capitalization of $7.55 trillion. By contrast, Bitcoin market capitalization is just $148 billion and the rest of the cryptocurrency industry accounts for $72 billion.
Many Bitcoin commentators believe that thanks to its unique properties, it will serve a similar role as gold in the future. Add its carefully calculated supply and mining difficulty adjustments, and you will see that Bitcoin can become a perfect store of value. Upon the next halving (May 2020), Bitcoin’s release will fall in line with that of gold’s supply. While at the following halving, in 2024, its constant supply will drop to much lower than that of gold. This will be the first time in human history that a digital asset represents a harder form of money than precious metal.
It’s this ever-restricting supply that causes analysts to come up with the seemingly insane price predictions.
Willy Woo, a popular on-chain metrics analyst, believes that following the next halving, Bitcoin will attain a market capitalization of around $1 trillion. If Woo’s predictions come true, it would mean that Bitcoin is going to hit $58,000 in the next few years.
Of course, other cryptocurrencies have potential too. There are thousands of different digital currencies today. Some are associated with distributed computing platforms, while others are optimized for fast, and cheap transactions.
Which Digital Asset To Buy?
Only you can ultimately decide which cryptocurrency to buy. This article isn’t intended to persuade you one way or the other. The important thing is to do some research on blockchain technology and digital currency. Do this before you set your heart on some unknown digital currency that seems to promise the world.
You should also consider learning about the current financial system and its shortcomings. This will allow you to see which assets seem to address those shortcomings more effectively. Ultimately, for your investment in cryptocurrency to pay off, you need to find the coin or token useful in some way.
Where To Buy Your First Cryptocurrency
Once you’ve decided which cryptocurrency you want to buy, you then need to buy it, of course. This is a relatively straightforward process for very popular digital currencies — Bitcoin (BTC), Ether (ETH), Litecoin (LTC), etc.
However, the process is a little bit more involved for other digital currencies. The first part of this short guide will explain how to buy one of the popular digital currencies. The second part will tell how to exchange it for a more obscure token or coin, should you decide that’s where you want to invest.
Buying Bitcoin (or any cryptocurrency for that matter) is easiest when done peer-to-peer. You just need a friend willing to sell you the digital asset you want to buy. If you’re lucky enough to have one, just ask them to sell you some BTC, LTC, ETH, or whatever, download a suitable wallet and arrange the transaction.
Give your public address and the amount of fiat currency (dollars, euros, pounds, etc.) you want to spend to your acquaintance and they will transfer over your first crypto coins.
The sheer convenience of this method is great. However, not everyone knows a friend that can sell cryptocurrencies.
Peer-to-peer marketplaces are another way for people to get hold of some Bitcoin or other popular cryptocurrency. On sites like Paxful and LocalBitcoins, you will find various advertisements for buyers and sellers. Their rates will vary massively, as well as the accepted methods of payments. Some people will allow you to even buy cryptocurrency with Amazon gift vouchers! However, traditional means of payment are much more common.
Peer-to-peer marketplaces are great because users don’t need to submit lots of identification documents. However, sellers can charge more of a premium than you might find at other trading venues.
Note: If you are planning to arrange a crypto-for-cash exchange in person, you should be very careful.
There have been numerous cases of Bitcoin buyers or sellers being ambushed and robbed when attempting to trade in person.
Brokerage or Exchange Platform
Another good option to buy cryptocurrency is from a brokerage service, or from a fiat-to-cryptocurrency exchange.
These are round-the-clock venues that ensure easy access to digital assets. Most brokerages and fiat-to-crypto exchanges will support a reasonable range of digital currencies. For example, CEX.IO users can buy Bitcoin or one of the 14 other digital coins in one of four national currencies. The joint exchange/brokerage accepts deposits by either Swift, ACH, or VISA and MasterCard.
Exchange platforms are really user-friendly, but they do charge fees.
Typically, the more convenient the payment method is to use, the larger the fees. For example, VISA and MasterCard deposits at CEX.IO come with a 2.99% fee, while bank transfers are free.
Although they are undoubtedly convenient, exchange platforms can be expensive. What’s more, you need to go through identity verification to make a purchase.
This way, exchanges prevent money laundering and other fraudulent activities from happening on the platform.
Buying Other Digital Assets
As mentioned, fiat-friendly exchange platforms often do not support many different types of cryptocurrencies. If you want to take up a position in a more obscure project, you will likely need to first buy Bitcoin, and send it to the trading venue supporting the smaller cryptocurrency.
However, you should first check which exchanges support trading versus the smaller cryptocurrency and find out which asset it trades against. This is usually either Bitcoin or Ether. Once you know that, you know which cryptocurrency you will need to buy to make the trade.
Conclusion: Protect Your Own Wealth
Once you’ve bought your first cryptocurrency, it’s very important that you withdraw it from the platform you bought it from.
Without doing so, if the exchange wallet was to be hacked, you would run the risk of losing all your funds. Such hacks happen very often.
Make sure that you download an appropriate wallet for the coins you have just bought. It should be open-source and give the user, and only the user, access to the private key. If you’re struggling, search for recommendations on a forum such as Reddit.
P2P Bitcoin Marketplace Paxful Set To Surpass Localbitcoins In Volume
Peer-to-peer (P2P) Bitcoin (BTC) marketplace Paxful recently hit an all-time-high in weekly traded volume.
As of Dec. 2, CoinDance data reveals that for the week of Nov. 23, Paxful saw close to $30 million in P2P Bitcoin trades continuing a consistent upward trend since the platform’s inception.
Paxful Trumps Localbitcoins’ Trend
Paxful is a P2P over-the-counter platform that connects users offering to buy and sell Bitcoin using gift cards, Paypal, domestic bank transfers and other payment methods.
As a decentralized and non-custodial service, Paxful reportedly sees Bitcoin trades denominated in 70 different national fiat currencies and has seen $20-25 million in trades (weekly) throughout much of 2019.
While Paxful has reported a consistent uptrend since 2015, data from LocalBitcoins.com — a veteran name in the P2P crypto trading space — has seen a shakier arc with peak volumes largely reported during the winter 2017 cryptocurrency bull run.
Despite this, LocalBitcoins’ volume remained broadly in the $40-60 million (weekly) range for much of 2018-2019, although the last few months have seen a downturn with consistently sub-$40 million levels throughout October and November.
As noted, one of Paxful’s niche markets is the exchange of retail-branded gift cards for Bitcoin: the platform’s site reveals that Amazon gift cards are currently the most popular, followed by eBay, Steam and iTunes.
As reported, LocalBitcoins has seen its market share challenged as rival LocalCryptos — formerly LocalEthereum — announced it was set to add Bitcoin support alongside Ether (ETH).
LocalBitcoins has also come under criticism for its move to register as an official virtual currency provider with regulators in its home country of Finland, alienating users who hope to transact pseudonymously.
Centralized Exchange Alternatives And Tokenized Gift Cards
As Cointelegraph reported in July, major centralized American cryptocurrency wallet and exchange Coinbase has also entered the crypto gift card market, allowing customers in certain countries to exchange coins for brand e-certificates.
In August, Japan’s largest gift card platform Amaten revealed it would start issuing tokenized gift cards in partnership with blockchain network provider Aelf.
Binance Adds New Fiat Payment Options Through Integration With P2P Exchange Paxful
Binance has teamed up with peer-to-peer bitcoin exchange Paxful to add new ways to purchase bitcoin.
Announced Thursday, Paxful’s Virtual Bitcoin Kiosk will exclusively serve Binance as an additional fiat-to-crypto on-ramp for its users, joining services such as Koinal and Simplex.
Through the kiosk, Paxful can facilitate fiat payments in over 167 currencies. To start with, Binance users will have access to the Russian ruble, Vietnamese dong, Indonesian rupiah, Nigerian naira, Colombian peso, British pound, Mexican peso, Canadian dollar, euro and Argentine peso, with more possibly to come later.
Paxful users will also have direct access to Binance, further opening up digital asset trading – and therefore price arbitrage – to Paxful’s P2P network. While Paxful had offers from some of the top-10 crypto exchanges, the P2P exchange is exclusively providing its kiosk service to Binance, Paxful CEO and founder Ray Yousseff said in a telephone interview.
Founded in 2015, Paxful connects traders in a peer-to-peer fashion through its API service and has recently been conducting some $25 million in trades per week, according to UsefulTulips.
Binance also allows P2P trading on its platform for Chinese users and through WeChat and AliPay, although the latter company monitors the platform for trading, which is illegal under the companies terms and services.
Fiat-to-crypto purchases for both the dollar and euro through the Gemini Dollar (GUSD) and Paxos Standard (PAX) are supported too. The exchange has slowly added stablecoins to its platform under its “Venus” initiative and currently supports the euro, ruble, Turkish lira, Nigerian naira, Ukrainian hryvnia, Kazakhstani tenge and Indian rupee as fiat options, according to Binance.
The firms’ integration highlights a mutual interest in philanthropy, according to Yousseff. Noting bitcoin’s use cases in Africa, he said the exchange was rebuilt after discussions with locals across the continent. Binance maintains a philanthropic venture arm, Binance Charity Foundation (BCF), which has worked in Uganda.
While the U.S. takes up the lion’s share of Paxful’s market, researcher Matt Ahlborg at startup accelerator dlab said the exchange is becoming a meaningful alternative in sub-Saharan Africa as ex-pats look to send funds back home.
In the continent’s largest economy, Nigerians are exchanging gift cards sent by relatives in the U.S. for bitcoin and exchanging that for the national currency on Paxful. The process, which can be completed in half an hour, appears to be an effort to avoid more traditional remittance services, Ahlborg said in a blog post.
Paxful has shown resilience even when other exchanges have struggled, in what Ahlborg attributes to its integration on a local level.
“Paxful is able to onboard financially disconnected citizens of developing countries on a level that non-P2P OTC exchanges like Coinbase simply cannot,” Ahlborg said. “Gift card remittance works 24/7 whereas Western Union only works during business hours of Nigerian Banks.”
Comparisons between rival P2P exchange LocalBitcoins and Paxful (see charts below) show more continuous growth for the latter platform through the 2018 bear market, even if total volumes remain far lower.
“The lack of bitcoin liquidity was the first obstacle to solve to introduce bitcoin to Africa,” said Youseff in an email to CoinDesk. “We found a way for them to export an asset, which is gift cards, as a way to go around financial restrictions. Now, bitcoin is flooding out of Nigeria and into other African countries.”
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