Cryptocurrency How to Buy For Beginners
Cryptocurrencies can be described as digital assets that are traded on a global marketplace 24 hours a day. There are many options available to you if you want to add cryptocurrencies such as Bitcoin, Dogecoin, and Ethereum to your investment portfolio.
It can seem overwhelming to learn how to buy crypto currency if you are new to the crypto world. It’s actually quite simple to understand the process.
Before making any decisions, it is a good idea to learn about cryptocurrency. You may check our blockchain education page for more information.
These five steps will help you learn how to invest in crypto currency if you have decided that cryptocurrency is worth your investment.
Step1. Decide where to buy it? From a broker or a cryptocurrency exchange?
Centralized Crypto Currency Exchange: There are many central cryptocurrency exchanges that you can choose from. Each one offers a variety of services, including wallet storage, interest-bearing accounts, and cryptocurrencies. Coinbase, FTX, and Binance are some of the most popular centralized cryptocurrency exchanges. These companies’ standard trading interfaces can be overwhelming for beginners, especially those who don’t have any stock trading experience. So we offer a guide on how to buy crypto currency using Coinbase in the later of this post. When comparing platforms, be sure to take into account things such as supported cryptocurrencies and storage and withdrawal options.
Decentralized Crypto Currency Exchange: A decentralized exchange (DEX), a peer-to-peer exchange, is a marketplace that allows users to trade cryptocurrencies in a noncustodial way without the need for intermediaries. A DEX does not offer custody of crypto assets. Instead, all assets are kept in the users’ own crypto wallets, such as Metamask. DEXs do not allow for crypto and fiat exchanges. Instead, they trade only cryptocurrency tokens for another cryptocurrency token.
Uniswap is the largest DEX. It was founded on the Ethereum blockchain in 2018 and created by a former mechanical engineer, who learned code after being laid off by Siemens. It was processing transactions in excess of $1 billion per day by the end of 2021. Learn how to buy crypto currency with Uniswap later.
Traditional brokerages: For investors who are more comfortable with traditional brokerage accounts, there is a handful of online brokers that allow access to cryptocurrencies and stocks. These include Robinhood and Webull as well TradeStation. Traditional brokers offer easy-to-use interfaces to interact with the users. Although they are convenient, brokers can put restrictions to move your cryptocurrency holdings from the platform. Robinhood is one example of brokers that prohibit you from transferring your crypto holdings outside your account.
Step2. Sign up for your account and ID verification
Once you have selected a broker/exchange to use, now it is the time to sign up for an account. Depending on the exchange or broker you use and how much you plan to buy, you may need to verify who you are. This is an important step to prevent fraud and conform to federal regulations.
You may not be able to buy or sell cryptocurrency after you have completed the ID verification process. A copy of your passport or driver’s license may be required. To verify your identity, you may be asked to take a selfie.
For DEX, no need to sign up and ID verification, just need a crypto wallet.
Step3. Deposit into your account
You will need funds to buy crypto. You can link your bank account to your cryptocurrency account, or authorize a wire transfer. You can also pay with a debit card or credit card. Depending on the exchange or broker that you used to fund your purchase of cryptocurrency, it may take several days for the payment to be processed.
Crypto purchases made with credit cards can be extremely risky and costly. Credit card companies treat cryptocurrency purchases made with credit cards like cash advances. These transactions are subject to higher interest rates than regular purchases and will also be subject to additional cash advance fees. In addition, crypto transactions are not allowed by some credit card companies.
You can also transfer cryptocurrency that you already own into your Metamask cryptocurrency wallet. Once it is in your Metamask cryptocurrency wallet, you can use it to trade on decentralized exchanges. Make sure that you verify that the decentralized exchange permits trading between assets. Some cryptocurrencies cannot be traded directly for each other, and there are more trading pairs on some platforms than on others.
Step4. Start to place an order
Once you have money in your account, you may start to place your order. There are many cryptocurrencies available, from the well-known Bitcoin Cash and Ethereum to lesser-known altcoins like Matic and Bitcoin Cash.
Once you have decided which cryptocurrency you want to buy, you will need to enter the ticker symbol (e.g. Ethereum is ETH, Bitcoin Cash is BCH) and how many coins you want to buy. You can buy fractional shares of cryptocurrency on most brokers and exchanges. For expensive tokens such as Ethereum or Bitcoin, you can just buy a small amount.
Step5. Decide how to store your cryptocurrency
You will need to keep your cryptocurrency safe after you have purchased it. As we have already mentioned above, if you buy cryptocurrency from a broker, you may not be able to control how your cryptocurrency is stored. However, if you purchase through a centralized cryptocurrency exchange, you have 3 options.
- Leave the crypto on the exchange. The crypto wallet is usually attached to an exchange when you buy cryptocurrency. You can transfer your cryptocurrency out to your hot or cold wallet or want to move it to another secure location. You may need to pay a fee depending on the exchange and the amount of the transfer.
- Hot wallets. These wallets are online crypto wallets such as Metamask and can be accessed via internet-connected devices such as smartphones, tablets, computers, or phones. Although hot wallets can be convenient, it is less secure than a cold wallet, check this post to learn more about Cryptocurrency security.
- Cold wallets, such as Ledger Nano s. These cold crypto wallets don’t connect to the internet and are therefore your best option for holding cryptocurrency. These can be external devices such as a USB drive, hard drive, or other storage media.
Other ways to buy crypto currency
There are many other options available to you when buying crypto. Payment services such as Venmo, Cash App, and PayPal have all increased their acceptance of payment options over the past year. This allows you to purchase, sell or hold cryptocurrencies like Bitcoin, Bitcoin Cash, and Ethereum.
Guide to buying and selling cryptocurrency on Coinbase (Centralized crypto currency exchange)
1st. Register a Coinbase Account
It is easy to open a Coinbase bank account. A government-issued photo ID is required, along with information such as your phone number and the last four digits from your Social Security number. Be prepared to answer any questions regarding the purpose of the platform. Use cyber hygiene when choosing a password. This includes a unique password that you haven’t seen anywhere else and multi-factor authentication in order to prevent hackers from gaining access to your account.
You will need to add a payment method before you can trade. You can use a bank, debit card, or wire transfer to pay your Coinbase account in the United States. However, you cannot currently sell digital currency through a PayPal account. However, withdrawals can be made.
Once your account is set up, it’s ready to trade. Coinbase does not offer to trade for all cryptocurrency, but it regularly adds new coins.
2nd. You can buy and sell cryptocurrency
1. Click on the upper right-hand corner to select Buy or Sell.
2. To select the cryptocurrency that you wish to buy, click the Buy button. Select your payment method.
3. Enter the amount that you would like to purchase in crypto or local currency.
4. To confirm your purchase, click Preview Buy. You can also click the back arrow for a change.
5. Click Buy if the information is correct.
If you worry about keeping cryptocurrency in Coinbase. You always have the choice to transfer your cryptocurrency to a hot or cold wallet.
A step-by-step guide to buying and selling cryptocurrency on Uniswap (Decentralized crypto currency exchange)
Uniswap is a decentralized exchange and has some of the best cryptocurrencies.
You will need a crypto wallet with some Ethereum to buy any tokens or cryptocurrency on Uniswap.
Step 1: Setup and prepare your Metamask wallet
Learn about how to set up a crypto wallet, please check this post to prepare your Metamask wallet.
Step 2: Send Ethereum to your Metamask wallet
- You can buy Ethereum on your preferred exchange (Coinbase or Binance or other exchanges).
- Copy the Metamask wallet address. It can be found at the top of Metamask window. If you hover your mouse over it, you’ll see “Copy To Clipboard”. Click the mouse left to copy it.
- Find the Withdraw/send option in your exchange. Select Ethereum. When asked where you would like to send it, enter the Metamask address.
Important: Make sure you verify the crypto address before you send it!
Step 3: Let’s start to buy in Uniswap. (example only, not an investment recommendation)
You now have some Ethereum in your Metamask wallet, and you are ready to purchase!
1. Go to Unswap, and connect your Metamask wallet
2. Click on ETH up, then click on Select a token/crypto down.
3. Find the token/crypto that you wish to purchase. Eg: X2Y2
4. You can choose the amount you wish to spend in ETH and see how much X2Y2 will be received.
5. Click Swap
6. Metamask will open another window and ask for confirmation. Confirm. Wait until the transaction is complete. It can take a while, so be patient.
7. If all is well, you’ll see the new coins that you purchased in the bottom Balance.
8. Import the crypto or token into the Metamask, you will need the contract address of the crypto or token
