With Bitcoin (BTC) price breaching the $55,000 value threshold, even the most conventional investors and brokers are now reportedly taking the alternative digital currency as a serious asset that can drive investments. As per reports, Bitcoin brokers are now witnessing unprecedented traffic on their websites as well as a huge surge in mobile app downloads. But which broker is the most suitable for you?
This guide will discuss some of the most popular brokers to facilitate you in terms of making an informed choice. Let's check out our list of the best Bitcoin brokers in 2021.
Compare the Best Bitcoin Brokers
We evaluated a wide range of factors including ease of use, transactional expenses, regulatory compliance, user interface and other variables to identify the best Bitcoin brokers in the market. Here is a list of the Bitcoin brokers along with their unique features, advantages and disadvantages.
Understanding Bitcoin Brokers
A Bitcoin broker is a service that connects BTC buyers with sellers for a certain fee. However, because of the volatility of the market, brokers have to execute their customers' orders as quickly as possible. Brokerage services are generally used by short-term and day-to-day traders who don't want to deal with the challenges of owning Bitcoin such as requiring and managing a wallet.
A Bitcoin broker allows trading in derivatives and the users can bet on the price volatility of the crypto rather than buying and selling it. In exchange for the service, they charge a predefined fee in the form of a commission. While you don’t necessarily need a brokerage service to buy bitcoins, they make the whole purchasing process much quicker and convenient. Bitcoin brokers offer them quick order execution and convenience. Apart from that, brokers also offer financial instruments such as contracts for difference (CFDs), futures, and options for bitcoins that make it easier for traders to buy and sell BTC tokens.
In order to use Bitcoin brokerage services, you have to go through the process of registration and making an account. This is a straightforward procedure that doesn't require a lot of time.
- Registering Your Account – This step involves providing your basic information such as name, phone number, email address, and password. At this stage, you need to ensure the password is strong. Ideally, it should be a combination of upper and lower case letters, a digit, and special characters. The broker service will attempt to verify your account through email or phone number for security reasons.
- Making Your Initial Deposit – Once you have registered and verified your account, it is time to make your initial deposit. Many broker services have minimum deposit limits while some don’t. You don’t necessarily have to invest all the money you deposit and you can use a wide range of payment methods to do so. This amount works as your seed capital.
- Start Trading – After you deposit your seed capital, you can start trading. It is recommended that you start with a demo mode to familiarise yourself with the user interface and test your investment strategies.
During the registration process, many leading Bitcoin brokers will ask you to submit more documentation for security reasons. This is usually done by those brokers who comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. While the verification process may add a few more steps for completing your registration, it also helps brokers to keep your personal information and bitcoins safe and secure. Compliance with regulations also allows them to prevent illegal and ethically questionable trading on the platform providing you with a secure environment.
When you are trading bitcoins through brokerage services, you can do so by investing in CFDs or contracts for differences. These financial instruments allow you to bet on the price of Bitcoin and depending on the future outcome, your brokerage firm compensates you. Relying on CFDs eliminates the need for going through the cumbersome process of buying and selling BTC tokens. CFDs can be bought and sold instantly. Moreover, using financial instruments like CFDs also enables you to use advanced risk minimisation features like stop loss and take profit.
You have to keep in mind that brokerage services aren't required to comply with KYC and AML regulations so you may find a few services on the internet that will promise absolute anonymity, less fees, and a faster registration process. Just remember that all of that comes at the cost of putting your personal information and digital assets at risk. That’s why it is not recommended to rely on such platforms.
How to Choose a Bitcoin Broker?
Before you choose your preferred Bitcoin broker, you have to ensure that you have taken all factors into consideration and the broker will serve your requirements in an adequate manner. Some of the most crucial factors you need to take into account include the following:
- Regulatory Compliance - If you want to trade bitcoins in a safe trading environment without putting your funds at risk, make sure the chosen broker maintains compliance with KYC and AML regulations.
- Transactional Costs - The second most important factor is the cost of trading Bitcoin on the platform. This includes spreads, commissions, deposit and withdrawal charges, storage fees, and other expenses. Ensure that you are choosing one that minimises your transactional expenses so you can optimise your profit margin.
- Available Payment Modes - Depending on the country you live in, brokers offer different payment methods in different regions. Generally, these include bank transfer, debit and credit cards, and e-payment methods. Make sure that the BTC broker you are going for has the payment method available that's best suited for you in terms of expense, transaction speed, and convenience.
- Leveraged Trading - Leverage trades allow you to invest more capital in crypto trading than you actually have in your account. This is an advanced form of trading Bitcoin and should only be used by experienced traders. If you want this feature, you'll have to make sure the broker offers it.
- User Interface - Another key feature that you will rely on on a daily basis is the user interface and experience of the broker website or app. Make sure it is intuitive and easy to use so you can execute and manage your trades in the most effective manner.
- Security - Ensure that your Bitcoin broker has all the key security measures in place including end-to-end encryption, two-factor authentication (2FA), and SSL certification before you start trading.
Advantages & Disadvantages of Using a Bitcoin Broker
Should I Buy or Trade Cryptocurrency?
The answer to this question is totally subject to your trading strategy and objectives. If you are a long-term trader who wants to hold Bitcoin and reap greater rewards, then buying BTC and storing it in a crypto wallet is a better option. However, if you are a short-term trader or a day trader who just wants to generate a secondary income through Bitcoin volatility, then trading cryptocurrencies is the way to go.
As a day trader, you have more options available to you to bet on the price of Bitcoin and other cryptocurrencies. You can rely on a number of trading instruments such as futures, options, and CFDs that allow you to trade Bitcoin without actually purchasing the cryptocurrency. This means that you won't have to deal with the challenge of owning and managing a cryptocurrency wallet.
3 Steps to Using a Bitcoin Broker
Step 1: Choose a Bitcoin Broker
Taking all of the above factors into account, choose a BTC broker that fits your requirements in the best way possible.
Step 2: Signing up/Setting up Bitcoin Broker
Sign up and verify your account on the chosen Bitcoin broker platform. Ensure that you go through the verification process to secure your personal data as well as your funds.
Step 3: Deposit Initial Amount and Start Using Bitcoin Broker
As a final step, you will deposit the seed capital and then you can start trading on the Bitcoin broker website or mobile app.
Bitcoin brokers make trading a convenient and seamless process. You don't have to deal with the challenges of owning Bitcoin and transactions are executed in a matter of seconds. They provide an ideal platform for day traders and short-term investors who don't need to own or hold BTC coins for months or years.
Frequently Asked Questions
A Bitcoin broker enables you to trade BTC without actually purchasing the cryptocurrency. You don't have to own or manage a wallet.
Short-term traders. If you are simply looking to generate a small and steady passive stream of secondary income using the volatility of Bitcoin price, then BTC brokers provide the right platform.
If you are not a highly experienced trader, it is recommended that you stay away from leveraged trading. It can be quite risky.
Because cryptocurrency brokers comply with Know Your Customer (KYC) regulation that allows them to keep the trading environment free from illegal and ethically questionable activities.
Yes, but it is not recommended. Trading through unregulated BTC brokers that don’t verify the identity of traders on their platform can put your funds at risk.
Invest in different promising cryptocurrencies, instead of just one. Use features like stop loss, negative balance protection, and take profit for risk minimisation.
No. That's not recommended. You should make it a habit to set a portion of your profits aside.
By listening to investment gurus, reading up on the latest news, and learning how to read price movement charts and patterns.