Step-by-Step Guide to Buying your first Cryptocurrency

Fredrick Awino

Cryptocurrency, Exchanges, Trading, Trading in Cryptocurrency

26.06.2022

335 Views

Cryptocurrency, especially bitcoin has almost become a buzzword today as more and more people consider trading in them. Equally, a lot of mixed stories keep emerging about the possibilities that cryptocurrency offers with critics chiding it for being an avenue for fraudsters and scammers while proponents see it as a next frontier in fiscal liberation. Whichever side one chooses to take, one thing that can’t be taken away from cryptocurrency is its signature identity of eliminating fiat agencies such as banks and governments thus allowing people to directly control their finances. 

Emotions aside, we will all agree that today a lot more people would not have wild thoughts against cryptocurrency as was the case a few years ago. The reality is that whether for good or bad reasons, cryptocurrency offerings are gaining popularity which then makes it an important thing for everyone to continue learning how it works. It is better to oppose cryptocurrency based on proper information than sheer rumours. 

Considering trading in cryptocurrency? Here is a basic guide

If you are considering boarding a cryptocurrency bandwagon, this is the right place for you. However, before you hurry into buying your first cryptocurrency, it is important to understand how the entire system of that investment works, in addition to what you are buying. 

Cryptocurrency investment is not a new thing currently, as millions of people across the world are heavily profiting from it.  Ideally, a number of cryptocurrencies exist, with Bitcoin (BTC) leading the way due to a significant growth over the past few years.  

Interestingly, the cryptocurrency investment is still burning luxuriantly despite the illustrious volatility, making most investors determined to profit on its white-hot rise. Investing in cryptocurrency is all about taking risks and being prepared for any eventuality. Cryptos such as Ethereum and Bitcoin sometimes demonstrate signs of ebbing, but later rise  without deviating. Such investment is definitely a magical adventure. It is now time to learn how to select the best currency for your portfolio. 

You might be still asking yourself, “How do I buy my first cryptocurrency?” In this guide, I will provide systematic and detailed information you need about investing your cryptocurrency. Let us get started. 

• Choose a Cryptocurrency and an Exchange

The first and foremost step in buying your cryptocurrency and consequently investing it is to decide what you want to buy. Some of the most traded coins include Bitcoin, Ethereum, Dogecoin, Litecoin, Cardano and XRP. Before investing, have a better understanding of the possible benefits and drawbacks of each coin. In this case, let us go for Bitcoin (BTC) because it is possible to buy the majority of other cryptocurrencies with it. 

• Choose a crypto exchange or trading service

Next, you will need to choose a crypto exchange, or trading service. In other words, this is just deciding where you will buy your Bitcoin. The common way of doing this is by choosing a crypto exchange and it is important to go for a reputable crypto exchange or the trading service.  Ideally, you should make an effort of setting on the right one that is trusted within the type of crypto investment you are looking to make a killing. 

Many exchange or trade services will permit you to buy cryptocurrencies directly. On the other hand, others will only expose you to the prevailing crypto prices without holding your own funds. Either way, you should not have a daunting task in finding a reputable exchange when using Bitcoin, as it is the most popular crypto currently.  

You should however remain ever vigilant when choosing an exchange. Most traders have fallen prey to some deceitful platforms that looked legitimate. Take your time to research about their transactional fees, their registration process and the conditions and terms of service. A perfect rule of thumb in this case is to utilize more established exchange platforms that have developed indisputable reputation. We recommend a number of exchanges such as Etoro, Binance, and Plus500. 

You can also read this article:-Practice Trading with Etoro

• Decide on a Payment Option 

The next step will involve settling on your most preferred payment options. You should know that exchanges have differences when it comes to the terms of payment methods they accept. However, most reputable platforms will allow you to link your bank account with your account for easy wire transfers.

You can use your debit card or credit card in such scenarios. PayPal is also another common acceptable payment method and therefore you should be able to link one if you have it. 

After creating an account with the exchange, you will need to add personal details. Most of the exchanges have the KYC form (Know Your Customer). You will provide details of yourself (pictures), your identity card, your passport or driving license (for Americans). It is important to know that you must authenticate your identity regardless of whatever options you settle on. 

In case you are requested to submit the scanned copies of your documents, always oblige as those requirements depends on your jurisdiction and the platform you chose.  

• Deposit some fiat currency 

It is now time for you to deposit some fiat currency into your exchange accounts. Once you have logged in and validated your exchange account, you can proceed to deposit your fiat currency (USD, EUR, or GBP). Some of the exchange platforms will allow you to link your bank account directly to your exchange account.

The deposit transaction will take at least 2 days but this also varies depending on the platform you chose. It takes up to 10 days for some. Always ensure that the name in your bank account that one displayed in your exchange account is the same. Otherwise, the currency might be sent back to your bank account if at all that you do not adhere to such conformity. 

• Place Your Order 

You will experience varying methods of placing orders depending on the exchange platform you choose. Ideally, the amount of fees can differ as well based on this factor. Some exchanges will allow you to purchase or sell BTC by just pressing the “BUY”, “ACQUIRE” or “SELL” button, and subsequently entering the amount that you want to buy (or sell).

Generally, the majority of the exchange platform will provide three basic order types, which include Market Order, Stop Order and Limit Order. You can click your exchange’s home screen to access the three menus. Each section has Buy and Sell options and you can always place your order on the same. 

• Organize your Wallets to Store your Bitcoins 

One most important thing to do before jumping on the train of Bitcoin investment is to set up your crypto wallet. Although it is true that larger exchanges are becoming safer because of the blockchain technology, the Bitcoin investment is still marred with numerous incidents of hacking and fraud.

If you want to store a large sum of money, then consider storing the BTC yourself. Financial experts say that investors with plethora of experience especially in cybersecurity prefer to own their wallets to reduce incidences of theft and hacking. Doing so will enable you transfer your crypto at your discretion without the need of an exchange. 

The crypto wallets are not forthright as your everyday wallet. It is good to understand how they work. They include: 

• Hot wallet: This one has some similarities to your everyday physical wallet. It is ‘hot’ in the sense that you have regular access to your digital currency. 
• Cold Wallet: Here, your digital currency is stored for a long period, in a fashion similar to storing money in your bank account. It is therefore secured offline and can protect from any potential online attackers and malware. 
• Hardware wallet: Here, you can store your digital currency in physical devices like an external hard drive or USB disk. Be sure to purchase your devices from legitimate companies. 

Now that you’re gearing up to buy your first Bitcoin cryptocurrency, why don’t you also learn about buying your first Ethereum?