One can speculate on crypto prices using two ways; you can either trade them through a broker or buy and sell through via a crypto exchange. When trading crypto with a broker, you will find numerous derivative products. Crypto trading on derivatives means you are speculating on the price movements without actually owning the crypto coins. On the contrary, buying cryptos through an exchange signifies you own and hold the crypto coins.

Cryptocurrency Brokers

Crypto trading via brokers enables you to buy and sell crypto derivatives contracts without owning cryptocurrencies. Since you don’t own the crypto coins, you tend to make a profit from the rise of a specific crypto’s price. Such derivative products consist of:

• Crypto CFDs: Contracts-for-difference or CFDs enable traders to speculate on the digital asset’s price (whether rising or falling). The trader has the right to close the contract at any time, but the broker’s marginal requirements will determine the possible trade range. 
• Crypto Futures: A crypto futures contract is a type of agreement between the trader and broker where the trader is obliged to buy or sell the crypto at a specific price in the future when the contract expires. 
• Crypto Options: They are similar to crypto futures, but rather than the obligation of buying and selling crypto, options will only allow traders to withdraw from the contract at the expense of losing options premium.

Cryptocurrency Exchanges

A crypto exchange is a marketplace where traders can buy cryptocurrencies while owning them. It is a type of digital marketplace that can help you buy and sell selected cryptocurrencies. Furthermore, a crypto exchange offers in-built wallets to store your cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash and more. Typically, crypto exchanges offer a wide range of cryptocurrencies as compared to crypto brokers.

Exchange Fees

Although a crypto exchange charges various fees, conversion and trading fees are the two most common. Furthermore, brokers tend to make money on trading spreads and fees, which can vary from one broker to another. 

What Are The Other Ways To Buy Cryptocurrencies?

Apart from crypto brokers and exchanges, there are many other ways as well to buy and own cryptos.

• Some crypto traders like to conduct person-to-person transactions, which is a private form of trading.
• Additionally, there are some people who prefer to buy and sell cryptos privately without taking assistance from a third-party.
• There are also crypto ATMs available for traders to purchase cryptos through cash or card by visiting an ATM physically.

Tips To Prevent Cryptocurrency Scams

It is easier to identify crypto scams for older cryptocurrencies. However, traders need to be careful at every step of their trading journey because many con artists who scam innocent people usually present themselves as professional brokers. Some of the most common crypto scams appear on the following:

• Fake Websites

There are various websites that appear as crypto exchanges, crypto brokerage sites or crypto gambling pages. But, in reality, they are fake, tending to lure innocent people by offering them freebies and bonuses that are too good to be true. 

• Social Media Scams

If you find any social media account with a huge amount of followers, be cautious, as they might or might not be legit. Most of them have a lot of freebies and huge bonuses, which are actually very unrealistic. Recently, a very high-profile Twitter handle was hacked, where the hackers posted free Bitcoin giveaways. 

Video Source: Petko Aleksandrov

• Phishing Scams:

One of the oldest digital scams is considered to be the phishing scam. It involves targeting the user’s mobile phone, e-mail address or even physical address. It basically happens when there has been a data leak at the crypto exchange, leading to your personal information getting out in the hands of the phishers.

• Unregulated Crypto Exchanges

The very first word that will come to the mind of any crypto trader when he hears about a scam is “unregulated exchanges”. However, they seem to offer the same services just as other exchanges; they are not backed by any regulator. The main reason you see so many crypto exchanges that are not regulated is that it is much easier to set up a crypto exchange that does not consider the basic human rights of investors.