How to Buy Cryptocurrencies
If you’re wondering how to buy cryptocurrency, chances are good that you’re also a little nervous about that first purchase. You aren’t alone! Everyone is nervous the first time because it’s so new, but once you’ve made that first purchase you’ll see that it’s easier than you expected it to be.
Start small. If you only purchase a few dollars worth of a particular asset, you aren’t as upset if you make a mistake as you would be if you made a mistake with hundreds of dollars. Also, keep in mind, you can buy a fraction of a coin. People sometimes think they can’t buy Bitcoin because they don’t have $40,000+ to purchase one coin. The truth is, you can buy $10 of Bitcoin if you want, and add to that amount any time you like.
Choose a cryptocurrency exchange.
Your first step in buying cryptocurrency is to choose an exchange. Uphold, eToro, Robinhood and Webull are some of the best known and safest exchanges, but they aren’t the only ones.
Steer clear of exchanges that are new unless you know they are well established and trusted. If you are a complete beginner, Uphold is always a great choice. The interface is very user-friendly and they offer over 50 altcoins for investing and trading. It also offers a wide variety of different cryptos and you can even trade stocks and precious metals on the platform too.
Gemini is also excellent for beginners, while also offering features for more advanced traders. This exchange has over 40 cryptocurrencies to choose from and they have other nice perks as well, like Gemini Earn which allows you to earn up to 7.4% APY on your crypto.
eToro has a unique program called CopyTrader that allows you to copy the transactions of successful traders and learn from them. This is an amazing way to learn the ins and outs of trading if you’re worried about trying it on your own.
Webull and Robinhood are great because you can not only invest in cryptocurrencies, but you can purchase stocks as well.
Create an account.
Once you’ve chosen your exchange, you’ll need to create an account. While each exchange may be set up a little differently from another, the basics are pretty much the same.
First, go to the registration page where you will be prompted to enter your email address and a strong password. When that is done, you should receive an email with a code that must be entered on the website. This verifies your email address.
After you are verified, you will likely be prompted to enable two-factor authentication or 2FA. This is important to add an extra layer of security to your account. After all, you don’t want someone else to access your account and take your valuable assets.
Now you’ll need to take one more step before you are able to make your first purchase. Know Your Customer, or KYC, is a process of verifying your identification to ensure that you are who you claim to be. You’ll be asked to submit certain documentation; usually, this is a picture of your driver’s license, passport, social security card or another form of ID. Some may also require a picture of you holding your driver’s license.
Usually, this step takes only a few minutes but sometimes you may be asked to provide additional information. Don’t let this concern you. The sooner you get them the needed information, the sooner you can make your first purchase!
Fund your account.
Now that you are verified and approved, you can fund your account. Often you need only to connect your account to your bank account. Some exchanges also allow you to use a credit card.
Whichever method you use, you can now deposit the amount that you feel secure starting with. It’s okay to start with small amounts until you feel comfortable.
Make your purchase.
Now that your account has funds, you can make your first purchase. For most people, this is simply a little bit of whatever cryptocurrency they have decided to start with. Soon, however, you’ll realize that this is only the beginning.
When you make an order to buy or sell crypto at the current market price, this is called a market order. However, if you only want to buy or sell at a specific price, this is called a limit order. There is also a stop limit order which is when a pre-determined stop price triggers the buy or sell order at the limit price.
There are also trading pairs, such as Bitcoin/Ethereum or Bitcoin/Litecoin pairs. The first currency listed in the pair is called the “base currency”. The second currency is called the “quote currency” or “term currency”.
Trading Bitcoin pairs means you can trade any coin that lists Bitcoin with it as the base currency. The pair indicates how much of the term currency is equal to the amount of Bitcoin listed.
Similarly, USD pairs use USD as the base currency and are basically a price quote of the exchange rate between the two currencies.
Buy a cryptocurrency wallet (optional).
Now that you’ve made your purchase, you’ll likely want to keep it safe in some type of wallet.
Usually, exchanges will allow you to keep your crypto there, but this is never a wise choice unless you plan to sell or trade it immediately. This is because there is always a chance of an exchange being hacked or frozen. If this happens, you no longer have access to your assets.