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Compound is an Ethereum-based project that attempts to provide peer-to-peer lending solutions through decentralized finance applications. Put simply, Compound users can deposit cryptocurrency into lending pools for access by borrowers. Lenders then earn interest on the assets they deposit.
An emerging project in the decentralized finance sphere, investing in Compound’s token, COMP, can grant investors early access to governance rights on the network. Learn more about Compound and how it’s used with our guide for beginners.
- Brief History of Compound
- How to Buy Compound (COMP)
- Best Cryptocurrency Exchanges
- Best Crypto Wallets
- Trade or Sell Your Cryptocurrency
- Current Crypto Prices
- Adding COMP to Your Crypto Portfolio
Brief History of Compound
When most people think of cryptocurrencies like Bitcoin, their minds immediately go to anonymous payment methods. For example, you can send Bitcoin to your friend using the Bitcoin network instead of a centralized payment system. However, financial institutions do much more than only facilitate payments between 2 parties — they also provide checking and savings account services, loans and more.
The decentralized finance (DiFi) sphere intends to use blockchain technology and the Ethereum network to provide a full range of decentralized services that would typically be provided by a bank or other central service. Compound is a lending platform built on the Ethereum network that provides peer-to-peer cryptocurrency loan services. Compound users can lock in collateral and provide loans to other users in exchange for a predetermined interest rate based on market demand. The Compound token (COMP) acts as a governance token that provides owners with voting rights. COMP is an ERC-20 token, and is currently the 90ty largest cryptocurrency project when measured by total market capitalization.
How to Buy Compound (COMP)
- Open an Online Account.
Before you can invest in Compound, you’ll typically want to open an account with a cryptocurrency broker. A cryptocurrency broker is a financial service provider that allows you to buy and sell cryptocurrencies using a convenient online trading platform.
- Buy a Wallet.
After you complete your first cryptocurrency purchase, it’s a good idea to transfer your coins or tokens to a wallet. A crypto wallet is a device or program that provides you with a private address that you can use to store your investments off-exchange. This helps limit your liability in the event of a hack or security breach.
- Make your Purchase.
After your account has been set up and you know how you want to store your tokens, open your brokerage platform and place a buy order for Compound. Depending on your broker, you may be able to purchase cryptocurrency using a bank transfer, credit card or through a payment service like PayPal. After placing your order, you can sit back and relax — your broker will finish filling your order according to your specification as soon as possible.
Best Cryptocurrency Exchanges
The broker that you choose to open an account with will determine the types of cryptocurrencies you can invest in, the order types available to you, any fees you’ll pay for your account maintenance or per trade and more. This makes it important to take some time and compare brokers before you open your account. Browse a few of our top-rated cryptocurrency brokers for beginners below.
Gemini is a cryptocurrency exchange and custodian that offers investors access to over 100 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
- New investors looking for a simple mobile and web app
- Day traders looking to use technical analysis tools
- Users looking for a 1-stop-shop to buy, sell and store all of their cryptos
- Easy and quick signups — can get started in as little as a 5 minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
Voyager is a leading name in the sphere of cryptocurrency investing, giving you access to over 50 tokens and coins. Buy, sell and swap assets using Voyager Crypto’s simple mobile platform available as a free download for iOS and Android users.
When you invest through Voyager, you’ll pay nothing in commissions, which is a major benefit when compared to other cryptocurrency brokers. Voyager is also one of the only brokers we’ve seen that allows users to earn interest on their crypto investments.
Though the broker could do more to improve its customer service, it’s an excellent option for beginner investors and seasoned professionals alike.
- Cryptocurrency investors looking for a wide selection of supported projects.
- Investors who prefer mobile trading.
- Anyone interested in earning interest on their crypto investments.
- Simple, straightforward and intuitive mobile platform
- Wealth of investment opportunities
- Allows users to earn interest on select crypto investments
- Only available for mobile users — no desktop platform
- Limited routes to contact customer service team
Binance is the largest cryptocurrency exchange in the world by trading volume. In fact, it tops the ranks of cryptocurrency exchanges maintained by CoinMarketCap, which are ranked based on 24-hour trading volumes, exchange score and average liquidity. Binance triumphs over exchanges like Huobi Global and Coinbase, which follow closely in 2nd and 3rd places, respectively.
Previously based in Malta, the Binance Group is now based in the Cayman Islands. Binance has several locations and entities registered across the globe. In the United States, it’s known as Binance.US. The exchange in the U.S. uses the same cutting-edge technology and trading services as its global counterparts with the difference being U.S. regulatory compliance. It is operated by San Francisco-based BAM Trading Services.
Binance.US ranks 9th on CoinMarketCap’s list of the top 10 exchanges based on metrics like 24-hour trading volume, exchange score and average liquidity. Binance could be a good platform for you to invest in cryptocurrencies if you are a U.S.-based trader who trades frequently, doesn’t intend to pay high trading fees and needs access to a large number of cryptocurrencies.
- US Citizens
- Frequent day traders
- Users interested in Binance Smart Chain (BSC) and Binance Coin (BNB)
- Low trading fees
- Easy-to-use platform
- Wide selection of altcoins — it offers 51 cryptocurrencies apart from Bitcoin (BTC)
- Good customer service
- High liquidity because of large trading volumes
- Only residents of 43 states in the U.S. can trade on Binance.US. You cannot trade on this platform in New York, Connecticut, Hawaii, Texas, Vermont, Idaho and Louisiana
- Despite the wide selection of altcoins, the number of tokens offered on the U.S. platform is not comparable to the hundreds of choices available on the Binance global platform
- There is no option for telephonic customer support
Best Crypto Wallets
There are 2 types of cryptocurrency wallets that you can choose from: hardware wallets and software wallets. Let’s take a look at some of the advantages and disadvantages that come with both options.
A hardware wallet is a device that connects directly to your phone or desktop computer and allows you to transfer your investments to offline storage. If you’ve ever used a USB drive to transfer files from your computer or an online file storage system to a portable device, you’re likely already familiar with how hardware wallets operate. Hardware wallets are sometimes referred to as “cold storage” options.
Some of the advantages that come with choosing a hardware wallet for your cryptocurrency include:
- Maximum security: Cold storage wallets keep your coins safe offline and don’t need to be connected to the internet. This provides you with the highest possible level of security for your coins and tokens.
- Managing holdings on-the-go: Most hardware wallets include a touch screen that allows you to view and track your cryptocurrencies without connecting to Bluetooth or public Wi-Fi. This means that you can safely manage your holdings securely no matter where you are.
Some of the downsides of hardware wallets include:
- Higher price points: Some hardware wallets can cost nearly $100. If you’re a new investor or you only need to store a small amount of crypto, hardware wallets might present too high of an initial expense.
- Fewer token holdings: Hardware wallets usually hold fewer tokens and coins when compared to software wallets. This can create a problem if you have a diverse portfolio that you want to store on a single device.
Software wallets are desktop or mobile platforms that provide you with a private set of online keys that you can use to store your crypto investments. Unlike hardware wallets, software wallets must always be connected to the internet to access your investments and they are unable to store your cryptocurrency offline. They do, however, provide a flexible and accommodating option for almost every project currently on the market. Some investors refer to software wallets as “hot storage” or “hot wallets.”
Some of the advantages that come with choosing a software wallet include:
- Free storage: Software wallets are free to use, and there are plenty of options available. No matter if you’re looking for an Apple-compatible desktop wallet or a mobile wallet for a Windows phone, there’s a software wallet for you.
- More customization options: Many software wallet projects are open source, which means that developers are constantly updating them to fit the changing needs of the market. This means that software wallets are more likely to provide you with more features, access to decentralized applications and support for more investments.
One of the drawbacks that come with choosing a software wallet includes:
- Less security: While software wallets are less likely to be hacked than exchange wallets, they still cannot provide as much security as a hardware wallet because they must be connected to the internet to access your holdings. If security is your highest priority or you’re a large value crypto investor, you might want to choose a hardware wallet.
Still hunting for the perfect wallet? Consider our top choices below.
Best Hardware Wallet: SecuX W20 Hardware Wallet
The SecuX W20 hardware wallet is an all-inclusive, secure option that you can use to store a wide range of cryptocurrencies. From Bitcoin to Litecoin and from Ethereum to any ERC-20 token, the wallet supports all major investments with military grade security elements. The W20’s full touch screen allows you to view your cryptocurrency investments anywhere without connecting to an unsecure internet connection, and a beginner-friendly setup means that it’s ideal for those investing in their first wallet.
Best Software Wallet: MyEtherWallet
The original wallet created for Ethereum, MyEtherWallet has expanded to support all ERC-20 tokens. MyEtherWallet is a desktop and mobile application that’s compatible with almost any device. To connect to the desktop version, use its app to scan a custom QR code. This creates a local connection that allows you to access your tokens securely. If you move too far away from the desktop, MyEtherWallet will automatically disconnect from your wallet to ensure that no one else can access or view your tokens when you aren’t nearby. With a quick setup and a wealth of unique tech features, MyEtherWallet is the ideal software wallet for new investors and professionals alike.
Buying and selling Compound isn’t the only way to use the Compound network to earn a return on your investment. The protocol currently offers lending and interest services across 9 cryptocurrency projects. There are currently more than $14 billion worth of crypto assets on the Compound network earning interest, with development plans in place to roll out additional options. These developments could cause the value of the Compound token to increase in the coming years.
Trade or Sell Your Cryptocurrency
If you do decide to hold onto your Compound governance tokens in the long-term, you’ll want to transfer your investment to your wallet as soon as possible to prevent the possibility of a hack. Both software and hardware options will allow you to track the value of your Compound investment over time, and you can transfer your tokens back to your exchange wallet when you decide to take profits.
You can also earn a return on your investment by capitalizing on short-term price movements within the crypto market. Cryptocurrencies like Compound show a higher level of volatility when compared to assets like blue cap stocks and bonds, which means that you can buy and sell your investment when it’s advantageous to you. If you decide to actively trade your Compound tokens, consider creating a brokerage account with a few of our favorite low-cost selections below.
Current Crypto Prices
The cryptocurrency market is fast-paced, and the value of your Compound tokens can change on a minute-to-minute basis. Understanding how the cryptocurrency market is changing today can help you plan your trading strategy. Browse a few of the market’s biggest movers today using the chart below.
Adding COMP to Your Crypto Portfolio
Compound can make an excellent addition to any cryptocurrency portfolio, especially if you intend to hold the governance token for a long period and use your voting rights. Before you invest in Compound, you might want to stake another cryptocurrency using the application to get a feel for current interest rates and compatible tokens. This will allow you to learn more about Compound while also earning interest on your cryptocurrency investment.