How to Buy Terra - Where to Purchase LUNA?

What is Terra?

Terra is a project that combines the price stability of fiat currencies with the fast, low-cost and borderless nature of blockchain technology, while Terra’s programmability enables an ecosystem of dApps and real-world payment solutions. The network is secured through a Proof of Stake consensus mechanism that uses the native LUNA token. Validators and delegators stake their LUNA in return for staking rewards.

Terra issues a series of stablecoins—crypto tokens that are pegged to the value of real-world assets like the U.S. dollar. For people who want to access the features of crypto (such as DeFi), but are deterred by the price volatility of assets such as Bitcoin, stablecoins provide a perfect on-ramp. Terra’s native token, LUNA, is used to algorithmically maintain the prices of Terra’s stablecoins. In simple terms, as new stablecoins are minted, part of the LUNA supply is removed from circulation in a process called “burning”.

Thanks to the inter-blockchain communication (IBC) protocol, Terra-based decentralised applications (dApps) can run on multiple chains and the project aims to expose dApp userbases to Terra’s payment services — of which stablecoins are the centrepiece. TerraUSD (UST) is the most popular of Terra’s fiat-pegged stablecoins.

Should I buy Terra now?

This is a personal decision but the information in this guide should help you make it. The Terra ecosystem appears to show a lot of promise. While Ethereum uses the energy-intensive Proof of Work system, suffering from soaring gas fees and a lack of scalability, dApp developers and users are looking for other options. Terra’s cheap, efficient and scalable blockchain could be an ideal alternative.

This view was bolstered by the “Columbus-5” upgrade. Previously, Terra was home to a few select apps, limited by its lack of scalability, but Columbus-5 brings with it a much higher rate of transactions per second, paving the way for a large and vibrant Terra dApp ecosystem.

The growth of the Terra ecosystem, along with the IBC integration, will likely mean greater demand for UST. As the supply of UST grows, the supply of LUNA shrinks through burning. With sustained LUNA demand, this could be very positive for LUNA price over the coming months and years.

Different ways to buy Terra

Terra can be bought in different ways — some people want to invest in it for the long term, while others prefer to trade it on a much shorter timescale. This is a personal choice and what you decide will depend on your own experience, strategy and investment goals.

Buy and hold Terra

LUNA is becoming increasingly popular as a long-term investment, and there are some good reasons for this. LUNA can be staked, which means your tokens won’t just be sitting idle while you’re invested. Instead, you can delegate your tokens to a validator and earn regular staking rewards. Meanwhile, growing UST popularity puts upward pressure on LUNA price.

Investors should also be mindful of events that could depress the price of LUNA, at least in the short term, such as market-wide crashes and the activity of competitor blockchains, especially Ethereum if it successfully rolls out Ethereum 2.0.

Trade Terra

Like most cryptocurrencies, LUNA is far more volatile than traditional financial assets. While this can make investors nervous, it also presents an opportunity for traders.  They can take advantage of regular price fluctuations to buy and sell crypto more quickly, making more frequent profits. 

Traders don’t even have to hold LUNA — they can trade derivatives to profit from price fluctuations without the hassle of actually owning and custodying LUNA. Available derivatives products include contracts for difference (CFDs), futures and options. Traders can additionally use leverage to increase profits — but beware that this can also increase losses. 

Do I need a wallet?

If you buy LUNA, you will need to keep it somewhere — and there are a range of wallets available. It may be stored somewhere for you automatically by your trading platform when you buy it, but you can always set up your own secure wallet if you want to.

It should be noted that those trading CFDs and other derivatives of LUNA don’t require a wallet as they don’t actually hold any LUNA tokens.

Setting up a wallet

Different wallets provide different features and levels of security, so the amount of LUNA you hold and what you plan to do with it will likely affect whether you decide to set up your own wallet and which type you choose.

• Web wallets — These wallets are usually free but also tend to be the least secure. Exchanges and brokerages often provide web wallets, which are very convenient, especially for those with a small amount of LUNA or who will be making frequent trades.

• Desktop wallets — Free software wallets that can be downloaded onto desktops, these tend to be a bit more secure than web wallets and are almost as convenient. They are therefore also suitable for small-time LUNA holders and somewhat frequent traders.

• Mobile wallets — Another type of free software wallet, these are similar to desktop wallets but are downloaded onto mobiles. Their features and benefits are similar to desktop wallets, with the added convenience of having access to your funds on the move.

• Hardware wallets — These physical storage devices are available from Ledger, Trezor and KeepKey. They can be expensive but users are paying for the strongest possible security. Hardware wallets are ideal for long-term investors with a lot of LUNA.