How to Acquire Cryptocurrencies

There are several ways one can invest in cryptocurrencies. The following are 4 common channels for acquiring crypto:

1. OTCs and Brokerages

Investors can acquire cryptocurrencies through over-the-counter (OTC) desks offering cryptocurrencies. OTC desks can eliminate price slippage and provide liquidity for large trades. Some established OTC desks are Blockchain, Genesis Global Trading, Cumberland, Susquehanna and itBit. Most major cryptocurrency exchanges such as Coinbase, Binance, Bittrex, Bithumb and Poloniex, also offer OTC trading services in addition to electronic trading. Minimum trade amount varies from desk to desk and typically ranges from $25,000 to $75,000 (1).

There is also a growing number of companies offering more sophisticated ways to trade cryptocurrencies. For instance, exchanges such as Kraken, Bitfinex and TradeZero operate dark pools, and Tagomi, a prime brokerage company, surveys the markets for liquidity and uses algorithms to break up large orders and smart route them to various market, filling large orders at the lowest cost.

2. Exchanges

A faster and more hands-on way to acquire cryptocurrencies would be through cryptocurrency exchanges. Because the crypto market never closes, these exchanges operate round the clock. Exchanges vary in fees for trades, deposits and withdrawals, user interface, and geographical restrictions due to regulations – for instance, exchanges without BitLicense cannot service New York residents. Some major exchanges are Binance, HitBTC and Kucoin, and ones with BitLicense are Gemini, itBit and Coinbase.

Established exchanges typically require users to clear KYC and AML procedures upon registering and there is a growing trend among exchanges to provide educational resources on their website for their users. Coinbase even offers up to $50 worth of cryptocurrencies to users who complete courses on specific cryptocurrencies in supported locations. Exchanges which have established themselves to be highly concerned with complying with regulations also tend to have stricter listing process and consequentially lists fewer but only well-established cryptocurrencies. For instance, Gemini exchange only offers Bitcoin, Ether, Bitcoin Cash, Litecoin and Zcash, whereas Binance, the exchange with the highest trading volume, lists hundreds of different cryptocurrencies – few which have been delisted in the recent market downturn.

Crypto exchanges also vary in the level of security they offer. Exchanges which lack insurance or capital to cushion against cyberattacks can go under water after hackings or from operational failures in the past. For example, MtGox, an exchange which was responsible for 80% of the global Bitcoin trading volume, was hacked and subsequently declared bankrupted. More recently, the Canada-based ex