The next two sections here will focus on the different ways you can buy and sell cryptocurrency through the more popular exchanges. There are two basic ways set up for you to buy and sell digital currency through an exchange, as opposed to approaching other investors directly (this will be discussed in the next section).
The first way is through the exchange itself; with this method there are no other investors involved, and you are buying directly from the exchange's holdings of a particular currency. In order to make this work, most exchanges based in the United States have what's called US bank integration; this means they have an agreement with most banks in the country that allows using traditional bill-and-coin currency to purchase cryptocurrency. When you provide your bank account information, the exchange will transform an agreed amount of dollars into digital currency. Do keep in mind that some exchanges that are based overseas don't have US bank integration, and American customers must use wire transfers in order to invest. Another point to consider is that most exchanges charge a small fee when you make a purchase through them.
The other method is where the exchange plays more of a “middleman” role between two investors. Some do this in the form of eBay-style bidding, whereas others simply provide a request form; with the latter, you submit how much digital currency you'd like to buy, and at what price. The exchange will then shop around for potential sellers who agree to your price, and will mediate the sale from there. Many investors prefer this method because the exchange plays an impartial role between the two parties involved, and ideally there's less risk of anyone getting burned on a transaction. Though exchanges vary, you may pay a small fee for this service; check with your exchange representative when in doubt. Once again, you can discuss this topic and others on our SliceFeeds social network consisting of like-minded investors and miners.
Next Exchanges Topic: Trading with Other Investors