Buying cryptocurrency may seem intimidating. You may feel you do not have the technical know-how on how cryptos work. You may also wonder whether trading in cryptos is the same as buying and selling traditional investments like stocks.
The good news is that buying and selling cryptocurrencies is easy thanks to the work various companies have done to automate and streamline the whole process. You should remember, however, that even though it is easy, it still carries a lot of speculative risks that could cost you dearly.
With that caveat emptor out of the way, here are the steps to take when buying cryptocurrency for the first time.
#1. Get a Crypto Wallet
If you wanted to start a business, you want first to open a bank account where your clients will send payments. The same goes for buying cryptos. You will need a crypto wallet to store any cryptos you buy. When choosing a wallet, pick one that offers you both safety and convenience. Some of the options you have are:
- Coinbase – by far the most popular wallet in the United States
- Blockchain – connected to a crypto exchange
- Mycelium – focusing more on security, it may be a bit harder to use
- Electrum – open-source desktop wallet
- Trezor – hardware offline wallet
- Ledge – also hardware offline wallet
#2. Join a Crypto Exchange
Next, you need to join a crypto exchange where you can purchase cryptocurrencies like Bitcoin, Litecoin, Bitcoin Cash, and others. There are hundreds of exchanges you can choose from. However, a rule of thumb is to ask whether the exchange has a good track record and where it is registered.
For example, Coinbase is registered in the United States and has a strong track record. They also keep 90% of client funds offline, which makes it one of the securest exchanges available.
Other options you can consider are:
- Square Cash – great for mobility and business use cases (well-integrated with Square’s other business services)
- Robinhood – great for smaller investments
- Coinbase Pro – great for advanced traders with larger trading amounts
- Peer-to-peer exchanges – allow you to buy and sell cryptos directly with other individuals
#3. Connect a Payment Method
The next step is to connect a payment method. If your wallet and exchange are from the same provider, you can add your payment method directly. However, if you are using separate service providers, add your payment method to your wallet.
This way, you will be able to add cash to your wallet, then buy cryptocurrency with it. If your wallet supports it, you can withdraw cash to your payment method. Most crypto wallets support three payment methods:
- Credit or debit cards – allow you to buy cryptos instantly but have low transaction limits.
- Bank account – afford you higher transaction limits, but transactions can take days to complete.
- PayPal – great for smaller transactions but may be subject to more restrictions than the other methods.
#4. Purchase Crypto Currency
Now you are ready to buy cryptocurrency. The actual process will differ based on the wallet and exchange you are using, but these are the general steps:
- Start purchase process by clicking buy cryptocurrency
- Pick the cryptocurrency you want to buy (most wallets will only allow you to buy a handful of cryptocurrencies for cash. If you wish to, you can exchange these for other altcoins).
- Pick the amount of money you want to spend or crypto you want to buy.
- Complete the purchase.
The purchase may take a few minutes to a few hours to complete depending on the amount of activity on the network. Once complete, you can now spend your crypto or trade with it on the exchange.