Investing in cryptocurrencies is increasingly popular, because the crypto markets are constantly fluctuating. You can buy currencies via several online brokers. What are the most popular exchanges and how do you choose the best cryptocurrency brokers?
- Popular cryptocurrency brokers
- Investing in cryptocurrencies
- How does it work?
- Costs of trading
Please note: cryptocurrency trading is associated with great risks, you can (partially) lose your investments.
Popular cryptocurrency brokers
To buy crypto you need an account with an online broker. There are a lot of different cryptocurrency exchanges. Below, you will find a few of the best cryptocurrency brokers for regular traders.
If you want to trade and invest all by yourself eToro is currently Europe’s online brokerage champion. eToro is a large international platform with millions of users from over a hundred countries. You can trade in stocks, but also in commodities, crypto or currencies. Templates also allow you to invest directly in a variety of sectors.
Bitvavo started in 2018 and is the leading crypto exchange platform in the Netherlands. The platform is very popular due to the low trading fees and the easy-to-use staking program. You can invest in more than 175+ cryptocurrencies. Bitvavo now has more than 1 million users and is active in 27 European countries.
Founded in Slovenia in 2011 and now located in the UK, Luxembourg, Singapore and the US, Bitstamp is one of the largest and oldest crypto brokers worldwide. It offers only well-known cryptos but trading is cheap and professional. The platform has more than 4 million clients, from private investors to institutional investors.
Via Bitpanda you can easily invest in well-known stocks such as Apple, Microsoft, or Tesla or invest in the larger ETFs. In addition, it offers many cryptocurrencies such as bitcoin, ethereum and solana and you can invest in commodities such as gold and silver via the platform. It is headquartered in Vienna and was Austria's first unicorn in 2021.
Binance is the biggest crypto exchange in the world based on its daily trade volume. The platform started operations in 2017. Now, the crypto broker has over 20 million users. Binance solely offers crypto assets, but with an incredibly large selection of 500 coins.
Bitfinex is, like Binance and Coinbase, a popular crypto exchange with a large trade volume. The platform was founded in 2012. Now, it has millions of users from 20 countries. On Bitfinex you can trade in a large selection of crypto and trading pairs - a combination of different cryptocoins.
Uphold is a crypto exchange with around 70 cryptocoins, in addition to stocks and a few precious metals. The platform has a couple million users and operates in 180 countries. Uphold was founded in 2014 and is originally from the United States.
Coinpanion is a crypto broker from Austria. The platform started in 2019 so it is quite new, but the company is already active in more than 20 countries. Coinpanion works kind of like an index: you can choose from several portfolios with different risk-levels. The platform will invest in cryptocoins for you according to its in-house trading algorithm.
Kraken was founded in 2011 in the United States. The broker offers over 50 cryptocoins and other currencies, crypto indices and derivatives. Kraken has millions of customers from 190 countries across the world. Just like Binance and Coinbase, Kraken has a large daily trading volume.
Investing in cryptocurrencies
Crypto investing is increasingly popular. Europe is a leading cryptocurrency economy in the world, holding over 870 billion euros worth of crypto in 2021. The fluctuating cryptocurrency markets make for interesting investment opportunities, but trading cryptocurrency also carries a lot of risk. A coin can surge in value and collapse again within the same day. Therefore it is advised to start investing small amounts and spread the risk as much as possible.
You can further minimize risk with your choice of investments. For example, you can buy older and more established coins like bitcoin and ethereum. Additionally, you can choose to invest in cryptocurrency funds and indices to automatically spread risk across different coins.
Bitpanda, for example, has an index for the largest cryptocurrencies. And eToro has several crypto funds you can choose from. This way, you do not have to keep track of the market and you greatly reduce potential losses. As a novice investor, this saves you a lot of time and effort.
How does a digital exchange work?
You can buy a digital currency via a lot of different investment platforms. On a cryptocurrency trading exchange you will get a crypto wallet that allows you to buy, sell, store and trade crypto with other retail investor accounts. You can also trade one cryptocoin for another or even earn interest from your cryptocoins. Alternatively you can buy into, for example, a crypto index which works similar to regular exchange traded funds.
When you have bought your first digital currency, you need to safely store it. A lot of brokers have their own wallets where traders can store their crypto assets. This makes it easier to trade your digital currency or buy new coins. Keep in mind that this crypto wallet makes you sensitive to the company’s operations, possible hackers or bankruptcy.
Do you want to invest in indices or keep up with the latest altcoins?
When choosing a cryptocurrency exchange, there are a few things to look out for. The first is a platform’s portfolio: do you want to buy into indices or keep up with the latest altcoins? Also consider the ease of use. If you are new to the cryptocurrency market, you might want extra trading information. The best cryptocurrency brokers have a mobile app as well, so you can look into your investments anywhere and anytime. Lastly, cost and safety should be your top priority when choosing your cryptocurrency broker.
Costs of trading
When comparing different cryptocurrency trading services, the costs of an cryptocurrency exchange are a very important factor.
The costs that traders come across most often are transaction fees. This is a percentage that you pay the broker each time you buy, sell or transfer cryptocurrency assets. Withdrawing your currency in euros also has a transaction fee. If you plan to actively buy and trade in crypto, the costs of trades can quickly add up and eat at your returns.
Pricing differs per broker, but also per cryptocurrency.
The fee for cryptocurrency transactions is usually under 0,5 percent. A fee of 1 percent does exist, but is relatively expensive. Transaction fees differ per exchange, but also per cryptocurrency. The rule of thumb is: the higher the purchase, the lower the transaction fees. Also keep in mind that some exchanges have weekly or monthly transaction and withdrawal limits. Although, these are usually large amounts (tens of thousands of euros) and are meant to protect your assets from possible theft.
Some brokers, like Kraken and Bitfinex, offer margin trading as well. This is a loan from the exchange to reinvest, for instance to cover the transaction fees. A broker will have additional fees as well as added interest when you use this service.
Safety of crypto trading platforms
Aside from costs, the safety of a trading platform is crucial. For example, every broker that offers crypto trading to users has to register with a local financial industry regulatory authority. This measure is meant to prevent money laundering through an exchange. In addition, in Europe a broker is obligated to identify users when they apply for an account.
When a bank goes bankrupt, the financial regulator often vouches for people that have an account with that bank. Unfortunately, a crypto broker generally does not qualify for a deposit guarantee for their investors. Therefore, take a good look at the trustworthiness and past performance of a platform. In general, a substantial customer base, large trading volume and long track record are all good signs.
Take a good look at the trustworthiness of a platform.
Lastly, the way you store your crypto assets is important. Usually the broker will have its own cryptocurrency wallet, which makes trading very easy. But as mentioned before, you will be more sensitive to possible hackers or company mismanagement. To sidestep this, you can have a seperate wallet with a special app on mobile or desktop. When your crypto funds are very high, it is recommended to buy a hardware wallet. This is like an external harddrive with its own special password. A hardware wallet will be more expensive though.
Frequently asked questions
Some frequently asked questions about finding a cryptocurrency broker are:
How can I easily trade bitcoin or other cryptocurrencies?
To buy, sell or trade digital currencies you need a digital wallet. You can get one in several ways. A hardware wallet is said to be the safest storage option for digital currencies. But for trading, an online wallet at a cryptocurrency broker is probably the most popular.
What is the best cryptocurrency broker for small individual traders?
Many crypto exchanges are active in Europe. The first thing to be aware of is that the costs of trading on an exchange can heavily influence your profits and that many cryptocurrency brokerage services are not regulated by authorities.
Some have cheap trading fees. Other exchanges have easy to use mobile apps, or a wide range of currencies and coins. Therefore, the best crypto brokers for you depend on your style of investing or trading crypto.