Where to buy cryptocurrencies?

There are many different platforms to purchase cryptocurrencies. 

The most commonly used are the so-called CEX, or centralized exchanges, mainly because they support purchases in fiat currencies (dollar, euro, etc.). 

However, there are also the so-called DEX, or decentralized exchanges, which have certain advantages but generally do not support fiat currencies. 

In this article, we will explore the individual purchasing options along with their respective advantages and disadvantages. 

How to Buy Cryptocurrencies from CEX?

CEX are by far the platforms preferred by users because they are easy to use and compatible with fiat currencies. 

Their limitation is that, being centralized (i.e., managed by a single entity), they present a higher risk of shutdown. 

Generally, they are managed by regular companies, which can fail, shut down, or, for example, be seized. 

For this reason, it is advisable not to keep cryptocurrencies on CEX after purchasing them. 

Within a CEX, users can exchange fiat currencies, stablecoins, and cryptocurrencies among themselves. The platforms thus act solely as intermediaries, managing users’ funds in centralized wallets. 

They are easy to use, very fast, and generally compliant with regulations. 

They are particularly ideal for beginners, as they support fiat currency deposits via bank transfers, credit cards, or services like PayPal.

To purchase cryptocurrencies on a CEX, the first step is to register and pass identity verification (this is generally mandatory, especially if you wish to use fiat currencies). 

Once your account is active, you need to deposit funds, typically in fiat currencies, using the available deposit methods: bank transfers, credit and debit cards, PayPal, or transfers from other wallets. 

Once the deposit is completed, simply choose the cryptocurrency you want to buy, enter the amount, and confirm the purchase. 

However, there are different purchasing methods, often with varying commission fees. Additionally, sometimes even deposits with credit or debit cards incur commission fees. 

The most famous and widely used CEX are Binance, Coinbase, Bybit, Kraken, OKX, but in recent years Bitget, Upbit, Gate, KuCoin, MEXC, HTX, Crypto.com, Bitfinex, and BingX have also been increasingly utilized. 

How to Buy Cryptocurrencies from DEX?

DEXs, on the other hand, are preferred by more experienced users, particularly those who wish to make purchases anonymously. 

In fact, they are managed by decentralized protocols directly on-chain, and do not require any identity verification. 

The main issue is that they generally do not support fiat currencies, but in some cases, they can be linked to platforms that allow their use. However, it should be noted that these platforms typically require identity verification.

DEX operate directly on the blockchain, without central intermediaries, allowing users to maintain full control over their funds. For this reason, they are often preferred by more experienced users. 

However, sometimes transaction costs are high, as they must be recorded directly on decentralized blockchains, and it may happen that there are illiquid exchange pairs where it is not advantageous to trade even slightly significant amounts. 

They also require more expertise to be used, and the use of a compatible wallet. 

Regarding security, it must be said that in theory they are neither stoppable, censorable, nor seizable, but if they do not have secure code, they can be hacked. Therefore, it is recommended to use only platforms that are now widely recognized as secure. 

The purchasing process is slightly more complex, even though the registration and identity verification phase is completely skipped. 

First of all, you need to acquire a non-custodial wallet. 

Then, make sure to connect it to the exchange. 

As with CEX, at this point a deposit is required, but fiat currencies cannot be deposited (only stablecoins). However, some wallets allow the purchase of stablecoins with fiat currency, circumventing this apparent issue. 

Once the deposit is made, it is also necessary to ensure that the wallet contains tokens of the native crypto of the DEX blockchain to pay transaction fees, otherwise no operations can be performed. 

Once you have ensured that you have all the necessary funds for the purchase and the payment of fees, you select the trading pair between the cryptocurrency you wish to purchase and the stablecoin you have in your wallet. 

At that point, select the amount and confirm the transaction. The wallet will prompt you to sign the transaction, and you will need to pay the fees. Sometimes the execution of the transaction may take a few minutes. 

The most widely used DEX is Uniswap, both on Ethereum and Arbitrum. 

However, PancakeSwap, Curve Finance, dYdX, and SushiSwap are also widely used. 

Lately, PumpSwap, Raydium, Orca, HumidiFi, Fluid, and Aerodrome are also being used. 

How to Buy via OTC and Through ETFs?

In addition to purchases on CEX and DEX, sometimes you can also buy directly from wallets. 

Wallets, however, are not exchange platforms, but in some cases, they connect to exchange platforms (both CEX and DEX) to enable buying and selling directly from the wallet. 

Finally, there are two other types of purchases that are widely used, especially by institutional users. 

The first are spot ETFs, which are funds directly collateralized in crypto whose shares can be traded on the stock exchange. 

In reality, these are not actual purchases of cryptocurrencies, but rather purchases of shares in funds that hold only cryptocurrencies (typically, each individual fund holds only one). 

It is a method used by everyone, also because it is the same as other ETFs, such as those on gold or stock indices, but it is certainly one of the favorites among institutional investors. 

The advantage is that they offer exposure to crypto without requiring the investor to directly own or custody them. 

The purchasing method is the same as for stocks on the stock exchange. 

On the other hand, large institutional investors who seek direct ownership of crypto typically purchase via OTC. 

OTC (Over The Counter) trading involves the direct purchase or sale of cryptocurrencies between two parties, without going through intermediaries like public exchanges. 

To be honest, there is still a kind of intermediary, namely the platform used to conduct such exchanges, but the purchasing process is indeed quite different.

First, you contact a specialized OTC desk and discuss the details of the transaction: desired volume, timing, and payment methods. 

Then, to make a purchase, the investor deposits fiat currency via bank transfer and the desk provides a quote valid for a limited period.

Once the OTC desk quote is accepted, the transaction can be confirmed and completed. 

The advantages for large investors are transaction confidentiality, rapid execution at predetermined costs, and above all, access to deep liquidity.