Cryptocurrency Buying Guide: Learn How to Buy and Sell Crypto Assets from Scratch

Bitcoin and various cryptocurrencies have continued to attract investors’ attention over the past few years. Many people want to enter at relatively reasonable prices. But for beginners, how exactly do you buy cryptocurrencies? What are the available purchasing channels? What are the differences between various trading methods? This guide will answer all these questions.

Five-Step Process for Buying Cryptocurrency

The basic process across all cryptocurrency trading platforms is quite similar, with five core steps:

Step 1: Choose the Right Trading Platform
Select the type of exchange based on your investment goals (spot trading, derivatives trading, or decentralized platform).

Step 2: Complete Account Registration
New users need to open an account. Most platforms require identity verification (KYC).

Step 3: Deposit Funds into Your Account
Use fiat currency or other cryptocurrencies to top up. Common methods include bank transfer, credit card, or online payment.

Step 4: Execute Trades
After depositing, place buy orders or trade cryptocurrencies based on market judgment.

Step 5: Withdraw Funds
After trading, you can convert assets into stablecoins for safekeeping or withdraw fiat currency back to a verified bank account.

Overview of Cryptocurrency Trading Channels in Taiwan

Several major local providers offer cryptocurrency trading services in Taiwan, each with its own features:

Features of Local Trading Platforms:

• Support direct NTD deposits and withdrawals, most convenient for Taiwanese users
• Clear fee structures, fewer trading pairs
• Less trading depth and liquidity compared to international large platforms
• Simplified verification process, lower barrier to opening accounts

When choosing a local platform, Taiwanese users should consider the convenience of NTD deposits/withdrawals, fee levels, and available cryptocurrencies.

Analysis of the Three Main Cryptocurrency Trading Methods

Centralized Exchanges (CEX)

Centralized exchanges operate similarly to traditional stock brokerages, with user assets held in custody by the platform. Features include:

Advantages:

• High trading volume and liquidity
• Rich trading pairs and options
• User-friendly interface, easy to operate
• High trading depth, fast execution

Risks:

• Risk of platform hacking
• Limited privacy protection
• Platform failures may impact trading

A typical approach is to first buy stablecoins (like USDT), then exchange stablecoins for the desired cryptocurrencies.

Decentralized Exchanges (DEX)

Decentralized platforms conduct transactions via smart contracts on the blockchain, without third-party custody, making the process fully transparent.

Advantages:

• Fully transparent, tamper-proof transactions
• No KYC required
• Assets are self-custodied by users
• Strong censorship resistance

Disadvantages:

• More complex operation process
• Less trading depth
• Transaction speed and costs depend on blockchain network conditions
• User experience not as smooth as centralized platforms

Using decentralized platforms requires managing wallets and private keys independently, demanding higher technical skills.

Derivatives Trading Platforms

Derivatives platforms mainly offer futures, options, leveraged tokens, and other contract products, allowing investors to speculate on price movements in the short term.

Features:

• Support both long and short trading
• Offer leverage trading to amplify gains (also increase risks)
• Low entry barrier, small capital required
• Suitable for experienced short-term traders

Risks:

• High leverage trading risks
• Possible forced liquidation
• Active risk management needed

Derivatives trading typically uses margin mechanisms, with leverage ratios from 1x to 100x, with significant differences across platforms.

Spot vs. Derivatives: A Buying Guide

Spot Trading Characteristics

Buying on a spot exchange involves acquiring actual cryptocurrencies, which need to be stored in a wallet. Suitable for:

• Medium to long-term holding
• More conservative investors
• Sufficient initial capital
• Only able to buy long, not short

Derivatives Trading Characteristics

Derivatives are based on the price of underlying assets, allowing speculation without actual asset ownership. Suitable for:

• Short-term speculation
• Hedging risks
• Limited capital but want to increase position size
• Seeking profit from both rising and falling markets

Comparison Table:

Choosing Trading Methods Based on Investment Goals

Beginners Recommended:
Buy spot cryptocurrencies on centralized exchanges for simplicity, good platform experience, quick order execution, and abundant educational resources. Start small to learn the basics.

For Privacy and Security Focus:
If dealing with large sums or prioritizing privacy, consider decentralized platforms. Learn wallet management and private key protection first.

For Short-Term Traders:
Derivatives platforms offer dual-direction trading and leverage, suitable for experienced traders engaging in intraday or swing trading. Be cautious due to high leverage risks.

Trading Strategies for Different Timeframes

Super Short-Term Trading (Intraday):
Capitalize on daily small price fluctuations, buy low and sell high. Suitable for full-time traders, requires close market monitoring.

Short to Medium-Term Trading (Weeks to Months):
Use technical or fundamental analysis to determine entry points, set take-profit and stop-loss percentages. Suitable for investors with other jobs.

Long-Term Investment (Over Half a Year):
Based on understanding of fundamentals and market cycles, buy spot assets for long-term holding. Best done on mainstream trading platforms.

Key Points for Cryptocurrency Investment

✓ Prioritize Risk Management:
Bitcoin’s price is highly volatile; always set stop-loss orders for each trade.

✓ Define Clear Investment Goals:
Different goals require different trading methods. Shooting blindly can lead to losses.

✓ Start with Demo Trading:
Use demo accounts to familiarize yourself with trading processes and test strategies.

✓ Learn Platform Operations:
Before real trading, fully understand the features of your chosen platform.

✓ Be Cautious with Leverage:
Leverage trading offers higher gains but also higher risks. Beginners should avoid high leverage ratios.

Summary

The process of buying cryptocurrencies is straightforward: choose a platform → open an account and verify → deposit funds → trade → withdraw. The key is to select the appropriate trading method based on your personal situation.

Long- and medium-term investors should buy spot on mainstream centralized exchanges and store assets themselves; short-term traders can leverage derivatives platforms; privacy-conscious users may try decentralized platforms.

Regardless of the method chosen, cryptocurrency investment involves risks. Always assess your risk tolerance, establish comprehensive risk management, and prioritize rational investing and risk control. In the current market environment, rationality and risk management are always the top priorities.