What Is a Cryptocurrency Broker?

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Contributor, Benzinga
November 30, 2022

Investors access different markets in many ways, but one of the most popular routes is using a brokerage account. Brokerage accounts allow investors to put funds in and have a licensed investment professional use them to build out a robust portfolio. As a result, brokerage accounts are one of the best ways to build a diverse portfolio with investments that are most likely to achieve financial gain. 

Many types of brokerage accounts are available. Investors interested in cryptocurrency may want to look into working with a crypto broker. There are many reasons to use a cryptocurrency broker, but the main one is that they are most likely to help investors gain a profit in the long run.

What Does a Crypto Broker Do?

A cryptocurrency broker is similar to a traditional investment broker. Crypto brokers are experts on everything cryptocurrency and can help their clients build successful portfolios. Investors interested in investing in and trading crypto can partner with brokers to become educated on crypto, trade crypto, and build a diverse portfolio. A broker is a great resource to offer guidance on valuable assets based on fundamental analysis, not just buzz and social media. 

The biggest value of a crypto broker is the personalized investment education an investor can receive based on their financial goals, risk tolerance and current portfolio. Investing in crypto can be confusing and rocky sometimes, and a broker can help investors navigate the entire process.

5 Benefits of Using a Crypto Broker

Crypto brokers help provide investors with a high quality investing experience including valuable education that can take your portfolio a long way.

Security

The lack of regulation in the crypto market can be liberating, but it also adds an extra layer of risk. Occasionally, crypto investors can lose their investments because of hackers, user error, and many other hazards. Unfortunately, if an investor’s cryptocurrency is lost, there’s no good way to get it back.

Crypto brokers provide investors with a storage system guarded against these risks. Although self custody may be one of the safest solutions. Working with a broker safely takes care of storage for you while you focus on your investments. Crypto brokers with cold storage solutions are typically the safest and most reliable. Using a crypto broke is one of the safest ways to store your crypto assets. 

Portfolio Diversification

Many investment professionals agree that a diverse portfolio is the key to success. Diversification means getting exposure to different kinds of investments in your portfolio. This varied exposure helps mitigate your portfolio against risk. As an investor, it can be hard to know which investments will help build a diverse portfolio. Brokers have the expert knowledge to educate crypto investors on a variety of cryptocurrencies to them achieve their goals.

More Services

The other popular way investors gain exposure to the crypto market is through crypto exchanges. They give investors access to the market but don’t provide nearly as many services as brokers. Brokers provide personalized education and risk mitigation and take responsibility for all trades. This takes the pressure off the investors and allows them to make better-informed decisions while buying crypto. You also have the ability to trade as an individual, company, trust, or self-managed retirement fund. Brokers often offer unlimited pairing for all 300 assets at one flat rate and give you access to institutional liquidity provers and OTC desks.

Easy Conversion to Fiat Currency

Fiat currency is a currency that a government issues and backs, such as the U.S. dollar. Many people like cryptocurrency because it is decentralized and not backed by a government, making it harder to convert crypto to fiat currency and vice versa. Some crypto exchanges don’t even allow for fiat conversion. Crypto brokers, on the other hand, provide investors with more liquidity by making crypto-to-fiat currency conversion easy. 

More Payment Options

Crypto brokers also make depositing and withdrawing money from an investment account easier. This may vary from broker to broker and exchange to exchange, but brokers typically accept debit cards, wire transfers and electronic transfers. Exchanges tend to be more limited in the forms of payment they accept.

Crypto Broker Versus Crypto Exchange

Crypto brokers and crypto exchanges are two ways for investors to access the crypto market. They both allow investors to deposit fiat currency that can then be used for buying crypto. When an investor uses an exchange, they are on their own to make all investment decisions as well as the execution of transactions. A cryptocurrency broker acts as an intermediary between investors and platforms, helping to explain the process, advise on investments and execute trades.

Experienced crypto investors who are digitally native may want to take advantage of a crypto exchange’s low fees and direct trading process. However, investors new to crypto who want a ‘white glove service’ may benefit from having a broker. 

Brokers are great at demystifying the crypto process, explaining what makes a valuable investment and advising on investment best practices. Investing in crypto isn’t always easy, and many people may benefit from having access to a crypto expert who can educate them on crypto assets. If you don’t live and breathe crypto, why not get an education from someone who does?

Deciding between a broker and an exchange depends on the individual investor and their goals. Still, brokers are typically the best option for those new to crypto who are looking for extra guidance. Exchanges will offer some convenience, but they won’t offer the same level of personalized service as a crypto brokerage.

Investing in Crypto is Easier Than Ever

Crypto has become a popular investment option for many, from new traders to experienced investing professionals. However, investing in crypto can be daunting, and many investors don’t know where to start. 
Crypto brokers can provide the education and service for beginners to start their crypto journey. From educating investors about blockchain technology to executing trades, cryptocurrency brokers make investing much more accessible to investors of all expertise. If you’re interested in crypto but don’t know where to begin, look into partnering with a reputable cryptocurrency broker.

Frequently Asked Questions

Q

Should you use a crypto broker for crypto?

A

Cryptocurrency brokers make investing in crypto more accessible and can provide investors with valuable analysis.

Q

How much do cryptocurrency brokers charge?

A

Cryptocurrency brokers typically charge a trading fee. The price of this fee will vary from crypto broker to crypto broker.

Q

How do you start crypto trading?

A

Investors new to crypto can start investing by signing up to a crypto exchange or cryptocurrency brokerage. Crypto brokers are great for new crypto investors who need guidance on buying crypto.