Best Crypto Exchange in Germany – Compare the Top 5 in 2022

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Cryptocurrency is a topic all over the news in recent years. It is hard not to hear the term “Bitcoin”. But what is Bitcoin or cryptocurrency exactly? In this guide, you will learn everything about cryptocurrency, including its pros and cons, its usage, taxation, how blockchain technology works, and how to buy cryptocurrency in Germany. We will also compare the 5 best crypto exchanges to use in Germany.

A short comparison of the 5 best crypto exchanges in Germany

If you don’t have much time, here are the highlights of the 5 best crypto exchanges in Germany: 

Coinbase – One of the largest crypto exchanges to use in Germany. Availability of crypto wallet. You can schedule your buys and earn crypto rewards just by learning about crypto.

Coinsmart – Low trading fees. Advanced crypto trading tools. Availability of crypto wallet. Educational material and learning tools. 

Coinmama – A large crypto exchange that works in most countries, including Germany. High spending limits for buying crypto coins.

Cex.io – Low trading fees. A wide selection of cryptocurrencies and a rich variety of trading tools. Availability of crypto wallet.

Paybis – Receive your Bitcoin as soon as you make the payment. More than 30 types of cryptocurrencies and 47 fiat currencies.

 

Coinbase

Coinsmart

Coinmama

Cex.io

Paybis

Founded in year

2012

2018

2013

2013

2014

Based in country

U.S.

Canada

Ireland

UK

UK

Crypto wallet

Χ

Χ

No. of operating countries

100+

40+

188

220+

180+

No. of users

73m+

152k+

3.2m

4m+

700k+

Two-factor authentication

Χ

Minimum deposit

50 €

50€ (SEPA), 100€ (debit/credit card)

N/A

$20

N/A

Transaction fees*

Taker fee: up to 0.6%,

Maker fee: up to 0.4%

0.2% for trading with Bitcoin or Canadian Dollars. Otherwise, 0.3%

From 2.93% to 3.9%

Taker fee: up to 0.25%, Maker fee: up to 0.15%

0.99% (Bank transfer in EUR)

 

More Info

More Info

More Info

More Info

More Info

*Fees may vary based on factors such as the size of your order, payment method, type of currency, etc. Other additional fees such as deposit and withdrawal fees may apply.

Keep on reading for more details about each of these best crypto exchanges in Germany. 


Please note that this article does not substitute any professional investment advice. You are responsible for your own risk if you decide to participate in any form of investment.

Introduction

Cryptocurrency has become an alternative investment option besides stocks and bonds. It may even become a medium for retail transactions one day. In 2021, 60% of German people know about cryptocurrency and 10% own cryptocurrency. While the number is not high compared to other European countries, the popularity of cryptocurrency is growing.

If you are interested in owning some cryptocurrencies as well, you should first understand what is behind cryptocurrencies and how they work. 

What is cryptocurrency?

Cryptocurrency is a digital currency that is based on blockchain technology. The first blockchain was created in 2008 by a person (or a group) called Satoshi Nakamoto. Bitcoin was created at that time. It was the first cryptocurrency. Until today, it is the biggest and the most well-known cryptocurrency. 

Cryptocurrency uses a public ledger to record all the transactions. When you own cryptocurrencies, you do not own anything physically. Instead, you own a key that enables you to transfer your cryptocurrencies to another person. The transaction is simply a digital entry in an online database called the blockchain. It is done without any middlemen such as the banks.

Thanks to blockchain technology, transactions are very secure and are almost impossible to hack. Removing the middlemen also means faster and cheaper transactions. Cryptocurrency is also immune to inflation as no government can manipulate the supply by printing more money.

Over the years, cryptocurrencies are gaining a lot of popularity. More and more retailers start to accept cryptocurrencies such as Bitcoin as a medium of exchange.

Nowadays, you can use cryptocurrencies to purchase certain goods and services. Some people like to hold cryptocurrencies as they believe that their values will rise in the long run. Since the price of cryptocurrencies is very volatile, some others like to trade them for profit.

Read also: Opening a Bank Account in Germany – Compare the Best Bank Accounts With English Services

What is a blockchain?

Let’s imagine this. There is a digital book. And each page in the book has a page number in chronological order. Whenever someone creates a new page, everyone who has access to the book needs to verify if the content of the new page is correct. If so, they can agree to assign a page number to that new page. That is how a new page is created and the digital book will have more and more pages over time.

A blockchain is a similar concept. When someone sends or receives cryptocurrency, the transaction is documented in a “block” in the form of encrypted data. Every block has a unique code called a “hash”, which distinguishes it from other blocks. 

When the transaction or the block is validated by each member in the network (the nodes), it will be added to the last block created. Now, the new block is linked together with the other older blocks chronologically. And the “chain” is where all these blocks are stored and linked together. 

You can imagine that each “block” is a new page in the digital book. And the digital book itself is the “blockchain”. The page number is the “hash”.

The “chain” will be constantly getting bigger since transactions are being made continuously. More and more “blocks” will be added to the “chain”. Therefore, a blockchain is a record of all the transactions that ever happened to a specific cryptocurrency. Each cryptocurrency has its own blockchain.

Why is it secure?

As every transaction needs to be checked by each node before being added to the blockchain, it is almost impossible to manipulate the transaction history. Transactions are irreversible in the blockchain. You can only add new transactions. Since every block has a unique hash, it prevents people from duplicating a transaction or a block.

Think about the digital book example again. Each page has its unique page number. You can only add new pages, which need to be validated by all the other people. So, it will be very difficult to manipulate the pages.

Since the data of the blocks are distributed to thousands or millions of nodes worldwide at the same time, the blockchain is like a decentralized network. With this peer-to-peer network, every node confirms a new transaction and adds it to the chain. 

No central authority such as banks is needed. And no single party can control the validation of a transaction. Not any government, not any country, and not any company. The network is decentralized and everyone can participate.

How are cryptocurrency transactions validated?

As mentioned before, before the transactions are added to the blockchain, they need to be checked by each member in the network.

There are two types of validation processes

Proof of work

Have you heard of the term “mining”? It is the process where users earn cryptocurrency by solving a mathematical problem. Before new transactions can be created, users need to compete to solve a difficult puzzle that helps to verify the transactions and add them to the blockchain. These users are called miners. The one who wins can create a block and will be rewarded with a small amount of cryptocurrency. This provides an incentive for users to try to validate transactions and thus keep the record on the blockchain accurate.

To solve the mathematical problem, users need to spend a huge amount of energy costs and computing resources. If a miner solves the puzzle and wins the right the create a block, he would want to earn some cryptocurrency in return so that he can cover the huge energy and computing costs he has spent.

It is unlikely that he will mess around with the record. Remember, the new block he created also needs to be checked by the majority of the ledger holders in the blockchain network. Submitting invalid transactions means that he will risk losing his cryptocurrency reward plus the energy and computing costs. 

Proof of stake

Proof of stake is another validation method used to verify transactions before adding them to the blockchain. For users who want to create a new block on the blockchain, they have to put some cryptocurrency at stake. The winner will be chosen based on the size of the stake and how long he has held it. The more cryptocurrency they put at stake, the higher the chance to be chosen to create a new block. 

Users will earn some cryptocurrency as a reward if they are selected to create a new block. If a user verifies invalid transactions, they can risk losing the cryptocurrency they put at stake. This provides the incentive for users to verify transactions and keep the record on the blockchain accurate.

Compared to proof of work, proof of stack requires much less energy and computing power to check transactions. So, it is more efficient and the transactions can be verified faster.

For cryptocurrencies that use the proof of stake validation process, you can put some of your cryptocurrencies into a staking pool and earn a percentage-rate reward over time. This is called staking and it works a bit like an interest-bearing saving account.

High security

Note that even though both proof of work and proof of stake require only an individual user to verify transactions, the verified transactions must be approved by the majority of the users in the network afterward. Therefore, it is almost impossible for someone to mess around with the blockchain ledger. 

To do so, a hacker will have to control more than 50% of the blockchain ledgers that approve his wrong version of the record. This will require a huge amount of resources and it makes the hacking attempt very unlikely.

Can you mine cryptocurrency?

As mentioned before, cryptocurrency is created as a reward for verifying transactions through proof of work or proof of stack. This process is called mining. Mining helps to add new transactions and verify the blockchain continuously. In theory, it is possible to just use your regular computer to mine cryptocurrency. However, it is getting more and more difficult to do so in reality.

As the proof of work process involves significant energy and computing costs, the chance of earning cryptocurrency is very low without major investment. In fact, most mining nowadays is done by specialized mining companies, who use special computers to mine cryptocurrency. These computers are designed solely for mining and they are mining all the time. Some miners join a mining pool, where they mine together and share the reward. This also increases their chances to earn some cryptocurrency.

Therefore, mining may not be profitable for everyone. It depends on the speed of your computer, the cost of energy, and the type of cryptocurrency that you are mining. You may end up spending more energy costs than what you earn as a reward.

For cryptocurrencies that use proof of stake to verify transactions, the validators will be chosen based on the amount they stake. So, if you want to mine, you will have to own some cryptocurrencies first so that you have something to stake.

Read also: 20 Ideas to Make Money from Home – Anyone Can Do

How to buy cryptocurrency in Germany?

There are different ways to buy cryptocurrency in Germany. Some popular ways include buying via crypto exchange platforms or through brokers in Germany. In general, below are the steps to buy cryptocurrency in Germany.

1. Decide where to buy cryptocurrency in Germany

First, you need to decide where you want to buy your cryptocurrency in Germany. One way is to buy it via traditional brokers, which also offer other investment products such as stocks and bonds. The drawback is that they usually do not offer a wide range of crypto products.

If you buy cryptocurrency in Germany via a crypto exchange platform, you can have a much better selection of cryptocurrencies. Many crypto exchanges also offer other crypto services such as digital wallets and staking.

Another alternative is to buy cryptocurrency in Germany via peer-to-peer exchanges, where you can trade directly with another person. The seller states the price and the payment method. And you can buy from him directly without a middleman. 

Last but not least, you can buy cryptocurrency at a crypto ATM in Germany. The drawback is that buying cryptocurrency in Germany at an ATM may involve high fees.

2. Decide how you want to pay

If you are just starting out, you will probably use fiat money to buy cryptocurrency in Germany. For experienced investors, you can also choose to buy cryptocurrency with your existing cryptocurrency. For example, trading Ripple for Bitcoin.

Read also: Free Credit Card in Germany – Best For Travel and Cashback

3. Create your account

If you decide to buy cryptocurrencies in Germany via a crypto exchange platform or broker, you will need to sign up there. In Germany, you will need to prove your identity, which is known as the “Know-Your-Customer (KYC)” process. So, you should have your passport or ID document ready. And you may need to take a selfie.

4. Fund your account

Once your account is open, you will need to fund your account. Depending on the platform, you may be able to fund your account with different fiat currencies via bank transfer or debit card. 

Some platforms may not let you fund your account with credit cards. Note that you should not use a loan to fund your crypto investment because the cryptocurrency market is highly volatile and risky. Before funding your account, make sure to check the fees. Some platforms charge a deposit fee.

If you want to trade your existing cryptocurrencies for another type of cryptocurrency, you will have to transfer your existing cryptocurrencies first into your account. Make sure your platform supports the two different types of cryptocurrencies that you plan to trade.

Read also: Transfer Money Internationally – Best Ways To Send Money To Or From Germany

5. Place your order

Once your account is funded, you can now buy and sell cryptocurrencies on the platform. Make sure to do your research before selecting your cryptocurrencies to buy. Note that you do not need to buy the whole coin, but just a fraction of it. Analyze the market and find the best time to buy your cryptocurrency in Germany.

How to store your cryptocurrencies?

For fiat money, we can put it physically in our wallet, or save it in a bank. But how about our cryptocurrencies? It is important to think about how you want to store your cryptocurrencies. 

One way to store your cryptocurrencies is with a crypto wallet. There are two types of keys when using a crypto wallet: 

Private keys

You can access your cryptocurrencies via your private key. You need this private key if you want to make a transaction with your cryptocurrencies. You will lose your cryptocurrencies if you lose this key. Never tell anyone your private keys or they will have access to your cryptocurrencies.

Public keys

Don’t confuse the private key with the public key. You can safely share your public key with other people. It acts similarly to a bank account number so that other people can send cryptocurrencies to your digital wallet. It is impossible to guess your private key by knowing your public key.


When you are using a crypto wallet, you are not storing your cryptocurrencies in your wallet. Instead, you are storing your private key in your wallet, which gives you access to your cryptocurrencies.

In general, there are two types of crypto wallets:

A hot wallet

You can store your private key online in software called a hot wallet. It is convenient because you don’t need to have any physical device and you can save your private key online.

However, it is less secure because someone may be able to hack your hot wallet online.

A cold wallet

A cold wallet works similarly to a hot wallet, except that your private key is saved offline with a physical electronic device that looks like a normal USB. It is the safest way to store your cryptocurrencies as someone cannot hack your device online. You just need to make sure that you do not lose your device.

Storing your cryptocurrencies in Germany on a crypto exchange platform

This is an easy way to store your cryptocurrencies. Simply store them on the crypto exchange platform. It is easy because you just need to log in to the platform and then you have access to your cryptocurrencies. You don’t have to use your own private keys.

The disadvantage of this is that your cryptocurrencies in Germany may not be safe in case someone hacks your crypto exchange platform. Besides, hackers may also get access to your cryptocurrencies in case they steal your login data.

Storing cryptocurrencies on the crypto exchange platform is good for people who are holding their cryptocurrencies for the short term. For example, if they plan to sell their cryptocurrencies soon. Or for someone who participates in staking.

The 5 Best Crypto Exchange in Germany

1.Coinbase

Based in the U.S., Coinbase is one of the world’s largest crypto exchanges. It operates in more than 100 countries and enables over 73 million users worldwide to buy, sell, trade, and discover cryptos like bitcoin, Ethereum, and more. 

The mission of Coinbase is to bring more financial freedom, innovation, and equality to everyone around the world. Coinbase helps to make sending payments as fast, cheap, and easy as sending an email. Its goal is to grow and maintain a global financial system that serves all people in a way that’s better, smarter, and fairer.

Some highlights:

  • 2-step identity verification
  • High security with 98% of customer funds stored offline
  • 24/7 customer support
  • Multiple ways to pay, including PayPal, bank transfer, debit or credit card
  • Website and app are clear and easy to navigate
  • Offer a crypto wallet
  • You can plan and schedule your buys daily, weekly, or monthly
  • New cryptocurrencies are added regularly
  • Earn crypto rewards just by learning about crypto

coinbase banner_best crypto exchange in Germany_how to buy cryptocurrency in Germany_My life in germany_hkwomanabroad

Sign up with Coinbase now!

2.Coinsmart

Based in Canada, Coinsmart is one of the easiest cryptocurrency trading platforms to use. It operates in more than 40 countries and its mission is to make cryptocurrency accessible to everyone. You can buy and sell bitcoin and other digital currencies quickly and easily on desktop and mobile.

Some highlights:

  • Two-factor authentication
  • Create your account in minutes and start trading
  • Access your funds the same day you make a deposit
  • Comply with all the licensing and legal requirements in its operating countries
  • Industry-leading security with top custody providers and the use of cold storage
  • Multiple ways to pay, including SEPA, wire transfer, visa, etc.
  • Simple and easy-to-understand trading platform
  • 24/7 customer support
  • 97% customer satisfaction rate
  • Advanced crypto trading tools such as limit orders, stop loss, and real-time charting
  • Offer crypto knowledge and learning tools
  • Offer a crypto wallet
  • New cryptocurrencies are added regularly
  • Get CAD $30 of BTC when you fund your account with a minimum of CAD $100

coinsmart banner_best crypto exchange in Germany_how to buy cryptocurrency in Germany_My life in germany_hkwomanabroad

Sign up with Coinsmart now!

3.Coinmama

Registered in Ireland, Coinmama is a financial service that makes it fast, safe and fun to buy digital currency, anywhere in the world. It believes that people should be in control of their own economy without middlemen, hidden fees, and fine print. With Coinmama, buying and selling cryptocurrencies becomes very easy. It is used by over 3.2 million people across 188 countries.

Some highlights:

      • Two-factor authentication
      • Create your account and start trading in minutes
      • Multiple ways to pay, including debit card, credit card, Apple Pay, and bank transfer
      • High spending limits for buying crypto coins

Sign up with Coinmama now!

4.Cex.io

Cex.io is a regulated multi-functional crypto exchange based in the UK. It has more than 4 million customers worldwide. CEX.IO was one of the first platforms to make fiat-to-crypto transactions accessible by offering card payments and bank transfers to clients. Its mission is to provide a gateway into the world of an open financial system.

Some highlights:

      • Two-factor authentication
      • A wide selection of cryptocurrencies
      • Multiple ways to pay, including credit card, debit card, E-wallet, and cryptocurrencies.
      • Offer a rich variety of trading tools
      • Offer a crypto wallet

BuyBitcoinswithVisaMcCard

Sign up with Cex.io now!

5.Paybis

Based in the UK, Paybis is a platform that allows you to trade cryptocurrencies using a variety of payment methods. It has a global coverage of more than 180 countries. 

Some highlights:

  • Fast security checks with instant verification
  • Comply with all legal requirements in its operating countries
  • Industry-leading security standards to keep your data and money safe Multiple ways to pay, including debit card, credit card, bank transfer, bitcoin, etc.
  • Receive your Bitcoin as soon as you make the payment
  • More than 30 types of cryptocurrencies and 47 fiat currencies
  • Transparent fee structure with no hidden fees
  • 24/7 customer support

paybis banner_best crypto exchange in Germany_how to buy cryptocurrency in Germany_My life in germany_hkwomanabroad

Sign up with Paybis now!

Factors to consider when choosing a crypto platform

Below are some factors to consider when choosing a crypto platform.

Security

As a crypto exchange platform involves a huge amount of crypto assets, it is often the target of hackers. To protect your cryptocurrencies, it is important to choose a secure platform. Check what security features are used by the platforms and if there was any security breach in the past.

Fees

Read the fine print to understand what costs are charged by the platform. There can be trading fees and administrative fees.

Is the platform regulated?

Check if any regulatory requirements are applicable to the platform and choose a reputed platform. You won’t want to find out that your platform disappears with your invested cryptocurrencies from one day to another.

Type of cryptocurrencies

As mentioned before, it is better to diversify your crypto portfolio to minimize risks. Some platforms only support a few biggest cryptocurrencies, while some others have a wider range of selection. Choose the one that best suits your investment strategy.

Storage option

If you want to store your cryptocurrency directly on the platform, you will need to choose one that supports the storage. On the other hand, not all platforms let you move your cryptocurrencies off their platforms. 

You need to first think about how you want to store your cryptocurrencies and look for a platform that suits your needs.

Restriction

Check if there are any restrictions on transaction amount, withdrawal amount, or any other trading limitations.

Features

Professional traders may look for more advanced trading features such as different tools or charts. People who want to engage in crypto staking should also look for a platform that offers this service.

Review

Read reviews of the platform to get an understanding of its reputation.

Educational resources

This is especially useful for beginners. Some platforms provide learning resources for people to learn more about cryptocurrency trading.

Customer support

What kind of customer support does the platform offer? For example, phone, chat, email, etc. What is the response time? It is important especially if you encounter any problem with your cryptocurrency transactions.

Pros and cons of cryptocurrency

Pros of cryptocurrency

A decentralized system

Fiat currency is money that is issued by the government and is not backed by a commodity like gold. Most currencies in the world now are a form of fiat currency. For example, USD, EUR, and GBP.

Traditional fiat currency gives governments a lot of power because they can control how much money they want to print. When our government prints more money, our money loses value. This is called inflation. It means that the purchasing power of our money decreases. We need to pay more money to buy the same amount of goods and services.

Cryptocurrencies, on the other hand, are not issued or controlled by any central authorities. Instead, they are managed by peer-to-peer networks. This decentralized network allows people to send and receive cryptocurrencies without the help of a bank. Anyone can become part of the network if they want. 

The value of cryptocurrencies cannot be manipulated by the government. Instead, it is based on how much people are willing to trade for them. 

Read also: The Best Investment to Profit From Inflation in Germany

Security

Blockchain technology works in the way that all the transactions need to be checked constantly by the majority of the network computers. In theory, hacking is still possible if a hacker controls 51% of the blockchain network. However, the chance of this happening is very unlikely due to the high amount of effort and computing power needed.

All the cryptocurrency transactions are published publicly. There is no room for manipulation. There is also no central database to be hacked due to the decentralized network. Cryptocurrency payments are irreversible, which avoids many fraudulent practices for companies.

Privacy

For traditional currencies, governments or banks can easily track down large cash withdrawals or a large sum of bank transfers. This is a good thing to avoid criminal activities like money laundering.

Unlike traditional currencies, cryptocurrency holders can use digital wallets to store their cryptocurrencies. Even though every cryptocurrency transaction is publicly published worldwide, the identity of the digital wallets is kept mostly anonymously. I said mostly anonymously because it is still possible to track down the identity of the digital wallets with advanced technology.

The good thing about using cryptocurrency is that you can protect your personal data better. You do not have to share unnecessary personal data with third parties like banks, payment service providers, or credit agencies. This reduces your chance to become a victim of cybercrime.

Borderless

Cryptocurrency is like a global currency. It does not tie to a specific country, government, or bank. So, it doesn’t matter where you are in the world and if anything happens to a country or a financial institution such as a bank crash.

Investment opportunities 

Cryptocurrency has value because of scarcity. Take Bitcoin as an example. The maximum amount of bitcoins is limited to around 21 million. Therefore, unlike fiat currency, you are protected against inflation with cryptocurrency. No government can steal your purchasing power by simply printing more money.

Some people see cryptocurrency as an investment opportunity. This can be done in 3 ways. If you believe in the future of cryptocurrency, you can buy cryptocurrency in Germany and hold it for the long term. You may make a profit if its value increases in the future due to wider adoption and scarcity that generates demand.

Another way is to trade cryptocurrencies actively by taking advantage of the high level of volatility. It means to buy your cryptocurrency in Germany at a low price and then sell it at a high price. 

If you do not want to trade actively, stacking can be another alternative. Stacking is for cryptocurrencies that use the proof of stake validation process. You can put some of your cryptocurrencies into a staking pool and earn a percentage-rate reward over time. This works a bit like an interest-bearing saving account.

Fast and cheap transfer

Traditionally, international money transfer is a painful process. It is slow, bureaucratic, and expensive. The main problem is that we need a middleman (normally a bank) to make the transfer happens.

With cryptocurrency, two people who do not know each other can make secure payments without using a third party like a bank. Transfer happens at a one-to-one level, regardless of which country you want to send your cryptocurrency to. It is fast, digital, smooth, secure, and inexpensive because no middleman is needed. For example, a traditional bank transfer may take days to complete, while cryptocurrency transfers only take minutes.

Fraud is also minimized because of the decentralized system. Hacking is almost impossible because there is no central point of failure, like in the example of a bank. Unlike bank transfer, there is also no upper limits on how much cryptocurrency you can send. It is also more flexible than stocks or bonds because you can transfer your cryptocurrency easily to anyone else.

Divisible

Cryptocurrency is much more divisible than fiat currency. For example, you do not need to own a whole Bitcoin. Instead, you can buy cryptocurrency in Germany for as little money as you want and own a fractional coin.

Other applications

Cryptocurrency is just one of the many uses of blockchain technology. Blockchain technology also enables the use of smart contracts. Any transactions that can be recorded can make use of the blockchain. Some examples include voting, insurance policies, and medical records.

Cons of cryptocurrency

False decentralization

As mentioned before, to manipulate the record, one needs to control over 50% of the blockchain network. Even though this is highly unlikely, it is not completely impossible. For example, this can happen If miners join together and form a large enough entity that is more than 50% of the blockchain network.

This is more likely to happen when a cryptocurrency is just starting out. The risk reduces when a cryptocurrency grows over time as the network is growing bigger.

Energy consumption

Cryptocurrencies that use proof of work as the validation method consume a huge amount of energy. For example, the annual electricity use of Bitcoin mining is more than the electricity use of all of Finland, and it is almost 0.5% of all electricity consumption worldwide. Some argue that energy should be used in a more beneficial way and mining is an inefficient use of energy.

Hacking

Even though blockchain technology is secure and almost impossible to hack, this is not the case for the crypto exchange platform. Even a very big crypto exchange platform can be hacked. For example, Poly Network was hacked in 2021 and $610m was stolen. 

Your cryptocurrency in Germany is not completely safe if you store it on a crypto exchange platform. The safest way is to save it in your cold wallet instead.

Readl also: VPN in Germany – Comparison of the 5 best VPNs

Cryptocurrency scams

Since cryptocurrencies are gaining more and more popularity, there is also an increase in scams. Some scammers build fake websites, attract people to invest there, and steal their money. Some others pretend to be cryptocurrency traders and ask people to send them money. 

Cryptocurrency scams come in all different forms. It is important to choose a legitimate crypto exchange platform to use in Germany. Do not easily trust strangers online for investment opportunities. 

Price volatility

Take a look at the price of Bitcoin in the last year. It was almost 60k EUR in Nov 2021. And it dropped to 30k EUR in Jan 2022. This shows that the price of the cryptocurrency can be extremely volatile (much more than the stock markets). Some people consider that investing in cryptocurrencies is highly risky and speculative. You can lose all the money you put in.

The price volatility also makes it unfavorable for people to adopt cryptocurrencies as a payment system.bitcoin price history_best crypto exchange in Germany_how to buy cryptocurrency in Germany_My life in germany_hkwomanabroad

Not widely adopted

Unlike fiat currency, not everywhere accepts cryptocurrency payments. Even though more and more companies start to accept cryptocurrencies now, cryptocurrencies are still not widely accepted yet for retail transactions.

Regulation

Governments in different countries have different approaches relating to cryptocurrencies. While some governments are supportive, some may impose regulations. Even though you are protected against inflation when owning cryptocurrencies, the worth of your cryptocurrencies can be affected by external factors. These include regulatory changes or other political events that are unpredictable and out of your control.

Transactions are not anonymous

Some cryptocurrencies market anonymity as their focus. However, other cryptocurrencies like Bitcoin do not have such a focus. For example, all Bitcoin transactions are made on a public blockchain. Everyone can see your public address and the details of your transactions. It means that there is a digital trail if the government wants to track your financial transactions.

Different types of cryptocurrency

Bitcoin is the first cryptocurrency that was introduced in 2008. Since then, thousands of different cryptocurrencies are created over the years. They are called “altcoin”, which stands for “alternative to Bitcoin”. 

Each cryptocurrency is marketed for its different functions. For example, Ethereum focuses on smart contracts; Ripple focuses on international transactions, etc.

There is also something called a stablecoin. The value of a stablecoin is linked to a cryptocurrency, fiat money, or a commodity such as gold. 

One example of a stablecoin is the USD coin, whose value is linked to the U.S. dollar. It is like the digital form of the U.S. dollar. People who use USD coins can feel safe because their value is stable. At the same time, they can also enjoy the benefits of using cryptocurrencies, such as cheap and fast international transfers.

Is cryptocurrency legal?

The answer varies from country to country. For example, cryptocurrency transactions are banned in China. Instead, the Chinese government is issuing its own form of digital currency. On the other hand, El Salvador allows Bitcoin as legal tender in the country. 

Cryptocurrencies are legal in the EU. In Germany, crypto exchanges are classified as financial institutions. Crypto exchanges, custodians, brokers, and wallet providers in Germany are regulated by the Federal Financial Supervisory Authority (BaFin). Bafin is an independent federal institution that supervises financial companies including banks, financial service providers, insurance companies, and securities trading.

With cryptocurrencies gaining popularity, more government regulations are probably going to happen in the future. Regulations can be both good and bad for cryptocurrency investors. On one hand, more regulation can stabilize the crypto market and reduce speculation. This in turn gives more confidence to long-term investors because the market is safer.

On the other hand, too much regulation goes against the goal of cryptocurrency, which focuses on decentralization and protects against government manipulation.

What can you buy with your cryptocurrency in Germany?

Even though some big companies such as Microsoft and Paypal accept Bitcoin payments, cryptocurrency is not widely adopted as a means of payment in retail business (yet). However, you can still find some businesses on this map where you can pay with your cryptocurrencies. 

Besides using your cryptocurrencies for shopping, you can also use them for donationtipping, or sending them as gifts to your family and friends.

How to cash out your cryptocurrency?

One way to cash out your cryptocurrency is to use a cryptocurrency ATM. You can find the location of these ATMs on this map.

Another way is to sell your cryptocurrency in Germany on a crypto exchange platform. If you are using a wallet, make sure the crypto exchange platform supports your wallet and your type of cryptocurrency. Then you can transfer your cryptocurrency in Germany to the crypto exchange platform and sell it there. Afterward, you can send the sales proceeds to your bank account. Don’t forget that your profit from the sale may be taxed.

Read also: 9 ways to earn money in Germany as a student

How about tax?

If you are buying cryptocurrency in Germany for investment, here is the good news. In Germany, if you buy and own the cryptocurrency for more than a year, the profit on the sale will be tax-free. Besides, if your profit is below 600 Euros, you will also be exempted from tax even if you hold your cryptocurrencies for less than a year.

In the past, if you earn cryptocurrencies from staking or mining, you will have to hold your cryptocurrencies for more than 10 years to be exempted from tax. Recently, the law has changed and you only need to hole your cryptocurrencies for more than 1 year to be tax-free.

Read also: Tax Return in Germany – Expat English Guide

Should you invest in cryptocurrencies?

Disclaimer: I am not a financial advisor and I cannot give you any investment advice! Below is simply my personal opinion. This is not a recommendation for investment. Read it at your own risk.

Cryptocurrency is considered to be a highly speculative and risky investment because of its price volatility. Besides, it is not backed by any government. You should only invest if you have spare money and if you believe in the future of cryptocurrency.

As a rule of thumb, you should not invest more than 5% of your overall portfolio in cryptocurrency. You should ask yourself: how much money can you afford to lose? And only invest so much so that it will not intervene with your life in case you lose all your invested money. Never invest in cryptocurrency to get rich quickly.

The majority of your money should be invested in something more stable, such as stocks and bonds. Check out here for the different ways you can invest in Germany: Invest in Germany to Make Money – English Guide

And here for some best brokers to use in case you are interested in stocks: Best Online Broker Germany – Top 5 Comparison

Different ways to invest in cryptocurrency

The direct way would be to hold some cryptocurrencies for the long term. But you can also invest in stocks of crypto companies that engage in cryptocurrency business or mining. 

Another alternative would be to invest in big companies that adopt blockchain technology such as Microsoft and Amazon.

5 tips if you want to invest in cryptocurrency

1. Choose a crypto exchange to use in Germany carefully

We make this easier for you by writing this guide and suggesting some of the best crypto exchange platforms for you to use in Germany. You should compare these crypto exchanges and choose the best one which suits best to your individual needs.

2. Think about how to store your cryptocurrencies

As mentioned before, there are different ways to store your cryptocurrencies. For example, on a crypto exchange, or in a hot or cold wallet. You should educate yourself about how the storage works and decide on the best way for you to store your cryptocurrencies.

3. Do your research

Before buying any cryptocurrency in Germany, you should do some research and learn about the features of the cryptocurrency. There are great cryptocurrencies out there in the market, with a good track record and business model. But there are also some which are terrible and probably will not survive in the market for long.

If you buy any stock, you should read about the company behind the stock to see if the company has a bright future. Similarly, you should do the same with cryptocurrency and do your research before investing.

For me personally, I only invest in established cryptocurrencies. Even though early investors may earn a higher reward in the long run if they invest in a cryptocurrency that is just starting, the risk is high. There are thousands of cryptocurrencies out there in the market and not every one of them will be successful. I do not like to gamble and so I only stick with cryptocurrencies that are already developed.

4. Diversify your investment

As cryptocurrency investment is highly risky, you should have a balanced portfolio instead of holding one single type of cryptocurrency. This can reduce your risk if something happens to one particular cryptocurrency.

5. Prepare for the loss

As mentioned before, cryptocurrency investment is highly risky. If you decide to invest, you should be mentally prepared that you can lose all your invested money. Cryptocurrency investment is only suitable for people who have spare money to play with. Do not gamble with the money that you need for your living.

In my opinion, it makes sense to put some money in cryptocurrencies if one can afford it. More businesses accepting cryptocurrency payments is a sign that cryptocurrency may have a good future. One can also see how fast the adoption grows since 2008 when Bitcoin was just invented. 

However, cryptocurrency is something fairly new and nobody knows what can happen to it in the future. Therefore, you must do research and handle your cryptocurrency investment carefully. Invest in it at your own risk.

Conclusion

We hope this article helps you understand more about cryptocurrency. Cryptocurrency is definitely a very interesting topic. Even though the future seems bright, nothing is guaranteed. If you decide to invest in it, make sure you do your homework and buy it carefully.

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DISCLAIMER

Please be aware that this article is intended to provide you with a general overview of cryptocurrency and it is for informational purposes only. It does not substitute any professional investment or financial advice. This article is not a recommendation to trade or invest in cryptocurrencies.

Investing in cryptocurrencies is highly risky, complex, and speculative. Performance is unpredictable and past performance is not indicative of future results. Cryptocurrencies are subject to high fluctuations in value and your investment may result in a complete loss at any time.

You are responsible for your own risk if you decide to participate in any form of investment. Any losses you may incur are your responsibility. You should consult a qualified professional before making any financial decisions. Our blog makes no guarantee as to the accuracy or timeliness of the information in this article. 

This blog is not a financial consultant by law and we do not accept any form of liability resulting from reading this article. We cannot give you investment advice or financial services. For the latest information, please refer to the websites of the crypto exchange platforms directly. 

You should also verify the legal status and the associated regulatory requirements of any products and services offered by the crypto exchange platforms. Consult the related regulators’ websites before making any investment.


Do you plan to buy cryptocurrency in Germany? Which crypto exchange do you think is the best to use in Germany? What do you think about the future of cryptocurrency? Leave a comment below and share your thoughts!

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