When it comes to cryptocurrencies, there are a lot of things to consider before buying.
In this blog post, we will go over the different ways you can buy bitcoin and other cryptocurrencies, as well as the risks and benefits associated with each method.
We will also provide some tips on how to stay safe when investing in crypto and bitcoin. So, whether you’re a beginner or an experienced investor, read on for all you need to know about buying crypto and bitcoin!
Before we learn more about how to buy crypto and Bitcoin, it’s important to know the basic overview of these assets.
Crypto & Bitcoin Overview
A cryptocurrency is a digital or virtual currency that uses cryptography for security.
A defining feature of a cryptocurrency, and arguably its biggest allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
These days, you can use cryptocurrency to buy goods and services, or trade it for other currencies (including traditional fiat currencies like the US dollar).
Cryptocurrencies are also often traded on decentralised exchanges (more on that below) or traded with other users through peer-to-peer (P2P) platforms.
Cryptocurrency transactions are typically irreversible, meaning that once you’ve made a transaction, it cannot be cancelled or refunded by the sender.
This makes cryptocurrency a risky investment, but also one with great potential rewards.
The first and most well-known cryptocurrency, Bitcoin was created in 2009 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. Since then, numerous other cryptocurrencies have been created, all with different purposes and uses.
Bitcoin is a decentralised digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
Is it legal to buy bitcoin and cryptocurrencies?
In most jurisdictions, buying and selling cryptocurrencies is legal. However, there are a few countries where buying or using crypto is restricted or outright banned.
Before you buy crypto, it’s essential to check the laws in your country to make sure you’re not breaking any laws.
For our Singaporean readers, yes, cryptocurrencies are legal in Singapore.
Things to do and know before buying crypto and bitcoin
Before you purchase crypto or bitcoin, there are a few things you should do and learn to make sure you’re getting the best deal possible and staying safe while doing it.
1. Do your research
Crypto and bitcoin can be volatile, so it’s essential to do your research before buying any coins. That means understanding the risks involved, as well as the potential rewards.
Before investing any money, be sure to read up on the different cryptocurrencies, their use cases, and the technology behind them.
2. Know your wallets
There are 2 different types of wallets to store your cryptocurrencies: hot wallets and cold wallets.
Hot wallets are online wallets that are connected to the internet. These are convenient because they allow you to access your coins anywhere, but they’re also less secure because they’re more vulnerable to hacking.
On the other hand, cold wallets are offline wallets that are not connected to the internet.
These are more secure because they’re less vulnerable to hacking, but they’re also less convenient because you can’t access your coins anywhere.
Here are the best crypto wallets you can get in Singapore.
3. Avoid scams
Unfortunately, there are a lot of scams in the crypto world. It’s important to be aware of them and know how to avoid them.
Common scams include fake exchanges, fake wallets, fake ICOs, Ponzi schemes, and phishing attacks.
Be sure to do your research before giving any personal information or sending any money to anyone.
4. Do your due diligence
When buying crypto or bitcoin from an exchange, you’re trusting that the platform will keep your coins safe. That’s why it’s important to do your due diligence before choosing an exchange.
Be sure to read up on the different exchanges, their security measures, and user feedback before deciding.
That means checking out the team behind a project, reading the whitepaper, and doing your research to make sure you’re investing in a good project.
There are a lot of different exchanges out there, and not all of them are reputable.
We analysed, compared, and listed the best cryptocurrency exchanges in Singapore here.
- Crypto.com Review: Easily the Best Crypto Exchange in Singapore!
- FTX Review: Cheapest Crypto Exchange in Singapore & The World!
- Gemini vs Binance Singapore: We Have A Clear Winner!
- Coinhako vs Binance: Which is Better for YOU?
5. Know the fees
When buying crypto or bitcoin through an exchange, you’ll need to pay the fees. Be sure to check the costs before buying so you know how much you’ll be paying in total.
This could be the exchange fees, gas fees, or even deposit and withdrawal fees. All these add up, and it was one of our most important criteria when selecting the best crypto exchanges above.
6. Read the terms and conditions
Before buying crypto or bitcoin on an exchange, read the terms and conditions involved in using the exchange.
This will help you understand what you’re agreeing to and avoid any surprises down the road.
7. Have a backup plan
Investing in crypto or bitcoin is risky, so it’s wise to have a backup plan in case something goes wrong.
That means having a plan for how you’ll sell your coins if the price drops or how you’ll access your coins if the exchange gets hacked.
8. Use a VPN
If you’re buying crypto or bitcoin on an exchange that’s not based in your country, it’s a good idea to use a VPN.
This will help you avoid any potential problems with the law, and it will also help protect your personal information.
9. Know the slang and terminologies
This isn’t preached as often enough, but you need to know the terms and language used in the crypto space.
You can do as much research as you want, but without understanding the terminologies and acronyms, it won’t help much.
Read our guide to crypto slang and terms here.
These are just a few things to keep in mind when buying crypto and bitcoin. Be sure to do your research and never invest more than you can afford to lose.
Crypto and Bitcoin Risks
Cryptocurrencies are high-risk investments, so it’s important to understand the risks involved before buying any coins. Some of the risks include:
The price of crypto can be very volatile, and it’s often hard to predict where the market will go.
That means that you could buy coins when the price is high and then lose money if the price crashes.
That makes them a risky investment and one with the potential for high returns.
Another risk is that hackers could steal your coins. Exchanges and wallets have been hacked in the past, and it’s always possible to happen again.
That’s why it’s crucial to choose a reputable exchange and wallet and never store more coins than you can afford to lose.
There are also a lot of scams in the crypto world. Be sure to do your research before investing in any project, and never invest more than you can afford to lose.
Learn more about the most common crypto scams here.
Another risk is that governments could regulate or even ban cryptocurrencies. That could cause the price of crypto to crash, making it much harder to buy, sell, or use coins.
The crypto world is largely unregulated, which means that there is a risk that governments could crack down on exchanges and ICOs in the future.
There are currently no regulations against trading and investing in cryptocurrencies in Singapore, however, using digital payment tokens (DPT) is regulated by the Monetary Authority of Singapore.
An example of this is Crypto.com’s Visa Debit Card which is regulated by the Payment Services Act. Although many think you’re using cryptocurrencies to pay, these are converted into fiat and loaded onto the card before you make the payments.
That’s because cryptocurrencies are not legal tender in Singapore.
Finally, you should be aware that there are tax implications when buying and selling cryptocurrencies.
In some jurisdictions, you may be required to pay taxes on your gains. So, it’s essential to check with your local laws and regulations before buying or selling any crypto.
Fortunately for Singapore, we’re one of the few countries that don’t tax you on your cryptos.
If you’re storing your coins on an exchange or in a wallet that’s not secure, there’s a risk that hackers could steal them.
This is also why we recommend hardware wallets as your primary storage source.
These are just some of the risks involved in buying crypto and bitcoin. Be sure to do your research and never invest more than you can afford to lose.
Due diligence when buying crypto and bitcoin
When it comes to investing in cryptocurrency, due diligence is key. There are a lot of scams and fraudulent projects out there, and if you’re not careful, you could end up losing your money.
That’s why it’s important to do your research before investing in any cryptocurrency project. Here are a few things to look for in a cryptocurrency when you’re doing your due diligence:
1. The team behind the project.
Ideally, a good crypto investment will be led by a strong and experienced team.
You should look at where each member of the team has worked in the past, their educational background, and any other relevant experience they may have.
If anyone on the team has a track record of fraudulent behaviour or has been involved in other bad business deals, run the other way.
2. The project’s technology.
A good crypto investment will have a well-developed and innovative technology. Make sure to understand how the project works before investing.
To understand the technology behind a project, you can read the project’s white paper.
3. The project’s roadmap.
A good crypto investment will have a clear roadmap of what they plan to achieve and when they plan to achieve it.
This will give you an idea of whether or not the team is serious about the project and if they’re likely to achieve their goals.
4. The project’s tokenomics.
A good crypto investment will have sound token economics, AKA tokenomics.
This means that there should be a clear reason for why the project needs its own cryptocurrency and how it will be used within the ecosystem.
5. The project’s community.
A good crypto investment will have a strong and supportive community behind it. This includes both online and offline communities.
Check out forums, social media groups, and meetups to get a feel for the project’s community.
6. The project’s partnerships.
A good crypto investment will have strategic partnerships with other projects, businesses, and organisations.
This is an indicator of the project’s legitimacy and its potential for success. If a project has legit partnerships, it’s more likely to be a good investment.
7. The project’s whitepaper.
A good crypto investment will have a well-written and informative whitepaper.
This document should explain the problem the project is trying to solve, as well as how the team plans to use blockchain technology to solve it.
8. How transparent the project is.
A good crypto investment will be transparent and communicative with its investors.
You should look at things like the project’s social media presence and official forum to get a sense of how active and engaged the team is with its community.
9. How much funding the project has raised.
A good crypto investment will have raised a significant amount of money from reputable investors. You can look at the project’s website to see who its backers are, as well as how much money they’ve invested.
VC investors will often do a lot of due diligence on a project before investing, so if you see that a project has backing from well-known VC firms, it’s a good sign.
10. The project’s token price.
A good crypto investment will have a token price that reflects the underlying value of the project. Compare the price of the token to things like the market cap, circulating supply, and volume.
If the price of the coin is trading for much less than its market cap, it could be a good investment. However, if the price per coin is close to or more than the market cap, it could be overvalued. Pump and dump schemes often inflate the price of a coin to trick investors.
It’s worth noting that the price of a cryptocurrency doesn’t determine whether it’s “cheap” or “expensive”.
For example, a crypto that’s priced at $10 doesn’t mean it’s more expensive than a coin/token that’s priced at $1 or even $0.00001.
To determine if there’s upside potential on specific crypto, look at the market cap of the coin.
The general rule of thumb is that the higher the market cap, the less volatile (and risky) the token is.
Compare this market cap against other similar projects, and you’ll know whether it’s worth the investment.
For example, a project with a market cap of $10 billion with a token price of $1 is more “expensive” than a project with $1 billion market cap with a token price of $10.
11. The product or service offered by the project.
A good cryptocurrency investment should have a clear and viable use case for its token. Do some research to figure out how well that use case holds up, especially when compared to competing projects in the same space.
Do some research to find out if the project has any advantages over existing cryptocurrency projects, as well as how easy it is to use and how feasible it is to implement.
When it comes down to it, you’re investing in a project because you believe in its long-term potential. The project’s overall potential and how it can change the world will be a good indicator if it is worth investing in.
By looking at these various factors, you can get a good idea of whether or not a cryptocurrency investment is likely to be worth your money in the long run.
If you’re unsure about investing in cryptocurrency, it may be better to wait and see how the cryptocurrency market develops over time.
However, if you’re ready to invest, it’s important to follow these steps to do your due diligence.
Read our crypto 101 guide
If you’re new to the world of crypto, we recommend checking out our crypto 101 guide.
This guide will teach you the basics of cryptocurrency, blockchain, buying and selling coins, storing them safely, and what to look for when choosing a project to invest in.
How to buy crypto & bitcoin?
There are many different ways to buy crypto and Bitcoin. Some of the most popular methods include:
1) Centralised crypto exchanges
A centralised crypto exchange is an online platform that allows you to buy and sell cryptocurrencies.
These exchanges are run by a company, which is subject to regulation in most jurisdictions.
Most centralised crypto exchanges will require you to go through a rigorous Know Your Customer (KYC) process to start trading. This generally involves providing some form of personal identification document(s), and proof of address.
Once you have completed KYC, you will be able to deposit fiat currency (e.g. USD, EUR, GBP, SGD) into your account on the crypto exchange, which you can then use to buy crypto.
Some of the most popular centralised crypto exchanges include:
Steps required for centralised crypto exchanges;
- Register for an account on a centralised crypto exchange.
- Verify your identity (some exchanges may require this).
- Deposit fiat currency (e.g. USD, EUR, GBP) into your account.
- This can be done via a direct bank transfer or a third party such as StraitsX, depending on which the exchange offers.
- Buy the cryptocurrency you want with your fiat currency.
- Store your coins in a safe and secure wallet.
Pros of centralised crypto exchanges
- Easy to use
- A wide range of coins is available
- Usually regulated
- Some offer fiat-to-crypto pairs
- Offers recovery for lost crypto
- High liquidity
- Fast transactions
Cons of centralised crypto exchanges
- Centralised exchanges are a target for hackers
- Defeats the purpose of decentralisation intention of crypto
- Fees can be high
- A user-friendly interface is not always available
- Slow customer support
2) Decentralised crypto exchanges
A decentralised crypto exchange is an online platform that allows you to buy and sell cryptocurrencies without the need for a third party.
These exchanges are often more complex to use than centralised ones; however, they are not controlled by a single entity which can allow users to maintain more control over their funds.
Some of the most popular decentralised crypto exchanges include:
- Binance DEX
Steps required for decentralised crypto exchanges
- Create and register for a compatible wallet.
- Deposit the cryptocurrency you want to trade into your wallet.
- Connect the wallet to the decentralised exchange.
- Buy or swap the cryptocurrency you wish to with the coins you have deposited.
Pros of decentralised crypto exchanges
- Increased security
- Greater control over your private keys
- Reduced fees
- Offer anonymity than centralised cryptocurrency exchanges
Cons of decentralised crypto exchanges
- It can be more complex to use
- Limited coin selection
- May be less secure than centralised crypto exchanges
- Only provide simple buy and sell functions
- No ability to recover lost crypto
- Low liquidity
- Slow transactions
3) Bitcoin ATMs
A Bitcoin ATM is a machine that allows you to buy or sell cryptocurrencies for fiat currency. These machines are usually located in physical locations, such as shopping malls or airports.
However, Bitcoin ATMs have been illegal in Singapore since mid-January 2022.
Pros of Bitcoin ATMs
- Easy to use
Cons of Bitcoin ATMs
- Not always available
- Costly fees
- It does not offer all the coins you want to buy or sell
- Illegal in Singapore
4) P2P exchanges
A P2P exchange is an online platform that allows you to buy and sell cryptocurrencies directly with other users.
These exchanges are often used for trading rare or hard-to-find coins, allowing for more flexible trading terms.
They can come in the form of centralised or decentralised P2P exchanges.
Steps required for P2P exchanges
- Register for an account on a P2P platform.
- Verify your identity (some exchanges may require this).
- Find a seller that offers the coin you want to buy.
- Agree on a price and payment method with the seller.
- Complete the trade.
Pros of P2P exchanges
- Increased flexibility.
- It can be used to trade rare or hard-to-find coins.
- Usually have low fees.
Cons of P2P exchanges
- It can be more complex to use.
- It may not be available in all jurisdictions.
- It might not offer as much security.
- Low liquidity.
- It might take a long time to find someone to trade with.
- Little to no recovery options.
What to do after buying your crypto & bitcoin?
Once you have bought your crypto or Bitcoin, it is crucial to store it safely in a wallet. There are 2 main types of wallets: hot wallets and cold wallets. Keep reading because we will go into more detail about each wallet option.
Store in hot wallets
Hot wallets are online wallets that are connected to the internet. These wallets are convenient to use, but they are also more vulnerable to hacks. If you decide to store it in a hot wallet, here are the steps:
- Choose a hot wallet that supports the coins you want to keep.
- Create an account on the wallet website.
- Download and install the wallet software.
- Create a new wallet.
- Back up your wallet.
- Send your cryptocurrency from the exchange to your hot wallet.
Store in cold wallets
Cold wallets are offline wallets that are not connected to the internet. These wallets are more secure, but they can be more challenging to use.
Many cryptocurrency investors prefer cold wallets. If you decide to store it in a cold wallet, here are the steps:
- Choose a cold wallet that supports the coins you want to keep.
- Download the wallet software onto your computer or another offline device.
- Create a new address for each transaction you make.
- Send cryptocurrency to your cold wallet address.
- Store your private keys offline.
- Print your private keys and store them in a safe place.
You should avoid scams once you have stored your coins in a wallet.
There are many scams in the cryptocurrency world, so it is critical to be careful. Many fake websites and exchanges try to trick people into giving them their money.
If you are unsure about a website or exchange, you should research before using it.
- Be wary of strange or unsolicited offers.
- Do not send money to someone you do not know.
- Only use reputable websites and exchanges.
- Do not click on links from unknown sources.
- Do not buy products or services that are advertised as being able to earn you a lot of money quickly.
- Be careful of any website that asks for personal information or financial information. Do not give out personal or financial information to anyone.
- Research any website or exchange before using it.
- Be careful of Ponzi schemes.
How to sell crypto & bitcoin?
If you want to sell your crypto or Bitcoin, you can do so on any crypto exchange types mentioned above to buy your crypto.
Most centralised exchanges allow you to sell your coins for fiat currency, and some also allow you to trade them for other cryptocurrencies.
Some centralised platforms have direct bank withdrawals, while others require a third party for you to withdraw your crypto into fiat.
For example, you might need a StraitsX wallet connected to the exchange to withdraw in XSGD (a stablecoin), which will be converted to SGD that you can withdraw using your bank accounts.
Crypto.com has a FAST integration, so you can sell your cryptos directly for SGD straight into your bank account.
Here are the general steps you’ll need to take to sell crypto & bitcoins.
- Choose the platform you want to use to sell your coins.
- Create an account on the platform.
- Verify your identity (some exchanges may require this).
- Choose the coin you want to sell and the amount you want to sell.
- Choose a payment method and complete the trade.
- Withdraw your funds to your bank account or cryptocurrency wallet.
- Be sure to keep your coins in a safe and secure place.
In conclusion, there are several ways to buy crypto and bitcoin. Each has its own set of pros and cons, so it’s important to do your research before deciding on the best method for yourself.
Centralised exchanges are the most popular option, but they require you to go through a KYC process, and there is always the risk of hacks.
Decentralised exchanges are growing in popularity but can be (extremely) difficult to use for beginners. They are also prone to smart contract vulnerabilities and rug pulls.
Bitcoin ATMs used to be a convenient but expensive option, which is now banned in Singapore.
P2P crypto exchanges are a great option if you’re looking to avoid KYC, but they come with their risks.
If you’re new, stick to the easy method by opting for centralised crypto exchanges instead.
Once you’ve bought your crypto or bitcoin, it’s important to store it safely. Hot wallets are convenient but not as secure as cold wallets. Avoid scams by only dealing with reputable cryptocurrency exchanges and sellers.
When you’re ready to sell, you can do so on any of the platforms mentioned above.
I hope this guide helped get you started on your crypto and bitcoin journey!