Lesson Summary 007

Among the most common reasons why people buy cryptocurrency are speculation, passive income generation and network governance participation.

Understanding the differences between exchanges and brokers is crucial.

Exchanges are online trading venues for buying and selling cryptocurrencies in exchange for other cryptocurrencies or fiat currencies.

Centralised exchanges (CEXes) are run by companies. These companies make money from trading fees and look after users’ cryptocurrency. By contrast, decentralised exchanges (DEXes) aren’t managed by central authorities and users control their cryptocurrency at all times.

Brokers are individuals or firms which buy and sell cryptocurrency on behalf of their customers. They typically offer additional services such as custody. Generally speaking, brokers charge higher fees than exchanges but are more convenient.

Key considerations when choosing an exchange include the range of supported cryptocurrencies, deposit methods and trading fees. As for choosing a broker, assess factors such as minimum trade sizes, variety of support services and fee structures.

There’s no such thing as a ‘good’ time to buy cryptocurrency. Just like any financial market, cryptocurrency markets consist of people with a wide variety of goals, strategies and plans.

What you consider a ‘good’ time to buy is ultimately shaped by (i) your plan, (ii) your personal circumstances and (iii) your level of education and market experience.

To identify where to buy a given cryptocurrency, use websites such as CoinGecko and CoinMarketCap. These websites aggregate cryptocurrency market data and present it in a user-friendly format.

Keep security front of mind when buying and selling cryptocurrency. These security tips are particularly important:

• Keep your computer or device updated with the latest operating system.
• Use a reputable anti-virus software package.
• Use a password manager to keep your passwords unique, strong and secure.
• Bookmark exchange websites—and get in the habit of clicking via these bookmarked links—to lower the chances of using a phishing website.
• Be weary of fake apps. Download official apps from an exchange’s website.