How to buy Crypto? A complete guide for Taiwanese investors to purchase Bitcoin

Want to enter the crypto world but don’t know where to start? Actually, the process of buying cryptocurrencies is not complicated; the key is to choose the right trading method. This article will guide you on how to purchase cryptocurrencies, what trading channels are available, and which type of trading suits different investment goals.

Five Steps for Beginners to Buy Cryptocurrencies

The purchasing process on all mainstream crypto trading platforms is basically the same, with differences in trading conditions, fees, and available trading pairs. Here is the standard buying route:

Step 1: Choose the right trading platform
Trading platforms come in different types, and you need to decide based on your investment goals. Want to hold spot assets long-term? Or do you want to engage in short-term contract trading? Different platforms have very different features.

Step 2: Complete identity verification
New users need to register an account and undergo KYC verification. Most compliant trading platforms require users to submit ID documents and basic information for verification.

Step 3: Deposit funds
After verification, you can deposit funds. Most platforms support direct fiat-to-crypto purchases or deposits via bank transfer and electronic payments.

Step 4: Place orders and trade
Once funds are deposited, you can start trading. You can place spot buy orders or engage in contract trading based on the platform’s offerings.

Step 5: Withdraw or transfer tokens
After trading, you can convert assets into stablecoins or withdraw fiat currency back to your bank account.

Comparison of Cryptocurrency Trading Methods

Before buying cryptocurrencies, you need to understand the three main trading methods, each with different risks and opportunities.

Centralized Exchange Spot Trading

A centralized exchange is like a stock broker, where user assets are held in custody by the platform. This is the most common trading method.

Advantages:

• Deep liquidity, easy to execute orders
• Wide range of trading pairs and tokens
• User-friendly, beginner-friendly
• Relatively low trading fees

Disadvantages:

• Platform risk, assets may be compromised if hacked
• Lower privacy protection
• Requires submitting identity information for KYC

Suitable for: Beginners, medium- to long-term investors, investors seeking stable trading experience.

Decentralized Exchange

Decentralized exchanges trade via blockchain smart contracts, with no middleman holding assets, and users fully control their private keys.

Advantages:

• High transparency, every transaction recorded on-chain
• No KYC required, stronger privacy
• Less affected by central platforms, risk is more dispersed
• Assets are fully controlled by users

Disadvantages:

• More complex operation, requires wallet management skills
• Lower liquidity, possible slippage
• Transaction speed depends on blockchain confirmation times
• No rollback if errors occur; risks are borne by users

Suitable for: Tech-savvy investors, users who prioritize privacy and asset control.

Contract Trading Platforms

Contract trading involves derivatives based on cryptocurrency price movements, allowing investors to trade without holding actual assets, using margin for leverage.

Advantages:

• High leverage (usually 1-100x), control large positions with small capital
• Dual-direction trading: long and short
• 24/7 trading, abundant opportunities
• Low barrier to entry, flexible entry and exit

Disadvantages:

• Extremely high risk, easy to get liquidated
• Market volatility can force liquidation
• Requires real-time position monitoring
• Not suitable for beginners with low risk tolerance

Suitable for: Experienced traders, professional traders with high risk appetite, short-term speculators.

Bitcoin Spot Trading vs Derivative Contract Trading

Spot Trading Characteristics

In spot trading, you buy real crypto assets that need to be stored in a wallet. This method is suitable for medium- to long-term investment.

• Assets traded: Actual holdings of Bitcoin or other cryptocurrencies
• Investment cycle: Medium to long-term holding, usually months or years
• Initial capital: Larger amounts needed to buy a certain quantity of assets
• Trading direction: Only buy long; no shorting
• Risk level: Relatively low, only price fluctuation risk

Spot trading is suitable for investors who believe in the long-term prospects of cryptocurrencies, holding purchased assets securely in a wallet for the long term.

Derivative Contract Characteristics

Derivatives include futures, perpetual contracts, CFDs, etc. Investors trade based on price movements for short-term gains.

• Assets traded: Price movement rights, no need to hold actual assets
• Investment cycle: Short-term, often days or hours
• Initial capital: Low barrier to entry, only margin needed
• Trading direction: Long (bullish) or short (bearish)
• Leverage: Usually 1-100x, amplifying position size
• Risk level: High, risk of liquidation

Derivatives are attractive for short-term traders and those seeking to leverage gains, but require good risk management skills.

How to Choose the Right Trading Method

How should you select the appropriate trading method? The key is to understand your investment goals and risk tolerance.

If you are a beginner:
Choose a centralized exchange to buy spot Bitcoin. This method is simple, direct, and offers good trading experience. It’s recommended to start with small amounts and gradually increase.

If you value privacy and asset security:
Try decentralized exchanges or buy spot assets and transfer them into a self-custody wallet. Be sure to learn how to safeguard your private keys to avoid asset loss.

If you have trading experience and seek short-term gains:
Contract trading platforms offer flexibility to go long or short, with 24/7 trading. But always learn risk management, set stop-loss and take-profit orders, and avoid over-leverage.

If you have a specific direction but limited capital:
Contract trading’s low entry barrier allows participation with small funds. However, this comes with higher risks, requiring precise technical analysis and risk control.

Common Mistakes in Crypto Investment

Myth 1: No difference between spot and contract trading
Spot involves real assets; contracts are derivatives. Their trading logic is completely different, with different risk levels.

Myth 2: Overusing leverage
Leverage is a double-edged sword. High leverage may seem to bring quick profits but also greatly increases liquidation risk. Beginners should limit leverage to 2-5x.

Myth 3: No stop-loss or take-profit plan
Always set stop-loss and take-profit levels before trading. This is basic risk management.

Myth 4: Chasing highs and selling lows, frequent trading
Crypto markets are volatile. Many beginners are misled by false signals and trade excessively, leading to losses. Establish a clear investment strategy before trading.

Myth 5: Ignoring trading fees
Frequent trading can eat into profits. Choose platforms with reasonable fees or adopt a passive holding strategy to reduce costs.

Trading Strategies for Different Investment Periods

Ultra-Short-Term Trading (Intraday swings)

Traders in this category enter and exit multiple times within a day, aiming for small price movements. Requires real-time market monitoring and quick reactions.

Features: Frequent trading, high technical analysis demand, high psychological pressure
Suitable for: Investors with ample time to monitor markets, with some technical analysis skills

Short- to Medium-Term Trading (Days to weeks)

Based on personal analysis and predictions, set take-profit and stop-loss points for medium-term swings. Usually based on technical or news analysis.

Features: Moderate trading frequency, requires good market insight, relatively controllable risk
Suitable for: Investors with some experience, seeking a balance of risk and reward

Long-Term Investment (Months to years)

Believing in the long-term prospects of cryptocurrencies, buy spot assets and hold long-term. Suitable for investors optimistic about Bitcoin’s future.

Features: Low trading frequency, fundamental analysis focus, low psychological stress
Suitable for: Beginners, investors confident in the long-term value of crypto assets

Practical Steps to Start Buying Cryptocurrencies

Step 1: Choose a trading platform

When evaluating platforms, consider:

• Regulatory compliance and security ratings
• Supported trading products (spot, contracts, leverage)
• Fee levels
• Deposit and withdrawal methods
• User reputation and platform stability
• Whether they offer demo accounts

Step 2: Register and complete identity verification

Most platforms follow similar procedures:

• Fill in basic info and email
• Set login and fund passwords
• Submit ID documents
• Wait for approval (usually 1-24 hours)

Step 3: Deposit funds

Platforms typically support various deposit methods:

• Bank transfer
• E-wallet payments
• Credit card (supported on some platforms)
• Crypto transfers

Note that each platform has different deposit limits, fees, and processing times.

Step 4: Place orders and trade

• Spot trading: Select trading pair, set buy price and amount, place order and wait for fill
• Contract trading: Choose leverage, select long or short, place order to enter position

Step 5: Manage funds and control risks

• Set stop-loss and take-profit before each trade
• Regularly check position status
• Avoid over-leverage
• Keep sufficient liquid funds to handle risks

Step 6: Withdraw or transfer tokens

After trading:

• For spot assets, withdraw to wallet or transfer to stablecoins for further trading
• For withdrawals, transfer funds back to bank account
• Be aware of withdrawal approval times and fees

Important Risk Warnings Before Buying Cryptocurrencies

Market risk: Cryptocurrency prices are highly volatile; they can drop sharply in a short time, risking significant losses.

Platform risk: Exchanges may be hacked or go bankrupt; even large platforms cannot guarantee 100% security.

Operational risk: Mistakes like password mismanagement, private key leaks, phishing links can lead to asset loss.

Leverage risk: Using leverage can lead to instant liquidation and total loss of principal.

Regulatory risk: Regulations vary by country and may change, impacting the market.

Based on these risks, before investing you should:

• Assess your risk tolerance
• Invest only within your capacity
• Learn basic risk management
• Start small and increase gradually
• Stay alert to scams

Summary of Key Points

✓ There are five basic steps to buy cryptocurrencies: choose platform - verify identity - deposit funds - place orders - withdraw or transfer tokens

✓ The three main trading methods each have pros and cons: centralized exchanges are beginner-friendly, decentralized exchanges prioritize privacy, and contract trading suits experienced short-term traders

✓ Spot trading is suitable for medium- to long-term investment; contract trading is for short-term speculation; choose based on your investment goals

✓ Crypto investment carries high risks; proper risk management, setting stop-loss and take-profit, and avoiding excessive leverage are essential

✓ Beginners are advised to start with small spot trades, learn market knowledge gradually, then consider advanced products

✓ When choosing a platform, focus on security, regulation, user experience, and fee levels

Buying cryptocurrencies is not complicated, but successful investing requires understanding the market, choosing the right tools, and managing risks. Wishing you success on your investment journey!