If you want to start investing in Bitcoin and crypto currencies in 2020, you will first be faced with the big question: Where do I best buy Bitcoins?

First of all it is important to distinguish between crypto exchanges and crypto brokers. Both are trading platforms where you can invest in crypto currencies.

However, there is a striking difference:

Via CFD brokers you trade certificates, on Bitcoin exchanges you buy real coins.

Both have their advantages and disadvantages, which we would like to present to you now:

Bitcoin Broker / Crypto Broker

Crypto Brokers allow you to speculate on rising or falling crypto prices by using CFDs (“Contracts For Difference”).

So instead of buying Bitcoins, you buy “long” or “short” derivatives from the broker. This allows you to trade Bitcoin with leverage.

In other words:

If you want to buy Bitcoins for €1,000 on a crypto exchange, you will also receive exactly €1,000 worth of Bitcoins.

On a CFD platform you can now use leverage. If you buy with a leverage of 2:1, you will receive Bitcoin certificates worth €2,000.

Thus you can profit more from price fluctuations with the same capital, but of course you also increase your risk. Another advantage of CFD brokers is that they are subject to strong regulation by financial regulators.

As a result, you can be sure that your investments are protected and everything is legal.

In addition, you don’t need to worry about the safekeeping of your coins, as you only trade CFD contracts.

I want to actively trade Bitcoins and Crypto Currencies

I would like to deposit via PayPal

I would like to trade on a regulated trading platform

I would like to trade anonymously, without KYC

I would like to trade other asset classes besides crypto

I don’t want to have to worry about keeping the cryptocurrency safe

Bitcoin Exchanges / Crypto Exchanges

On crypto exchanges you can buy real Bitcoins. So unlike CFD brokers, you don’t trade certificates, but buy the real coins yourself and then cash them out to your wallet. With real coins you can be sure that you are the owner of the crypto currencies.

You can also, for example, pay out your Bitcoins to pure old coin exchanges such as Binance and then continue trading there. However, you are also fully responsible for the safekeeping of the coins.

The last Binance Hack shows how the large wallets of crypto exchanges are repeatedly becoming targets for hackers.

Many crypto exchanges are still unregulated, so for security reasons you should pay out your coins to your own wallet as soon as possible after purchase.

With these 8 factors you will find the best crypto exchange

1. Security

Safety is the be-all and end-all when it comes to where you should buy your Bitcoins.

The Exchange website should use SSL encryption and allow you to use 2FA (two-factor authentication).

2. Regulation

Non-regulated stock exchanges are not subject to financial supervision.

This means that there is a constant risk that the Exchanges may deny you payouts for no reason, or in the worst case, even steal your money.

For exchanges in Germany, the certificates of the FCA (from Great Britain) and the CySEC (from Cyprus) are most relevant.

3. Fees

Some exchanges are trying to exploit new users by offering extremely high fee models.

For example, the VeriWox exchange allows its users to buy Bitcoins via PayPal – with horrendous 10% fees.

Make sure you know in advance what fees you can expect so that you won’t have to face any unpleasant surprises later.

4. Minimum deposit

Only recently has it become possible for retail investors to invest independently in financial derivatives.

Some exchanges still require a minimum deposit of several thousand euros.

5. Choice of Cryptocurrencies

After you have bought your first Bitcoins, you will certainly want to invest in some Altcoins.

Keep this in mind the first time you join a stock exchange and make sure that the most important crypto currencies are all offered.

6. Demo Account

Especially if you are investing in crypto currencies for the first time, it can make sense to approach it with play money first.

eToro for example offers a free demo account which allows you to take your first steps on the trading platform completely risk free.

7. Liquidity

How many active users does the exchange have?

If a stock exchange has only a few hundred users, the alarm bells should of course ring. However, a low number of users is not only a sign of possible security deficiencies.

The order books are of course also less full, which can lead to large price deviations in the Bitcoin price.

8. Crypto Stock Exchange or Crypto Broker?

Finally, you should consider whether you would rather invest for the long term or trade actively.

In the case of an investment we clearly recommend a Bitcoin exchange, traders are recommended to use a CFD broker due to the extended trading possibilities (e.g. trading with leverage).