5 Steps You Need to Follow to Buy Your First Cryptocurrency

Cryptocurrency has become the most commonly used medium for all transactions. The perks of buying, investing, and trading with cryptocurrency are why there are over 300 million users worldwide. However, those looking to buy cryptocurrency often report challenges navigating the process. 

Although buying crypto may seem like a daunting process, it’s easier when explained in simple steps. Therefore, this article discusses what factors to consider before buying crypto, the processes involved, and the different alternatives available.

Let’s get started. 

A step-by-step guide to buying cryptocurrency for the first time 

Buying cryptocurrency doesn’t have to be challenging, even if it’s your first time. Below is a simple guide to purchasing cryptocurrency for beginners. 

Step1: Select a cryptocurrency trading service or platform 

First, select a trading platform that works for you. There are different trading platforms and venues to choose from. They include cryptocurrency exchanges, brokerages, payment services, etc. 

Cryptocurrency exchanges are the easiest options because they offer several features users can trade with. Examples include MoonPay, Binance, Coinbase, Kraken, etc. 

When you use a cryptocurrency exchange, you can buy, hold and sell crypto. There are several crypto exchanges, and each comes with its peculiarities and benefits. 

For example, cryptocurrency exchanges like MoonPay support Apple Pay as a payment method to deposit funds in an account to buy Bitcoin. Also, if you buy Bitcoin with Apple Pay on a platform like MoonPay, you can enjoy a simpler and faster process than using a physical card. 

Cryptocurrency is helpful for different categories of people, including the unbanked users residing in places without banking structures and systems. Moreover, its anonymous form allows users to trade with high confidentiality. 

However, the downside of using cryptocurrency exchanges is that the government monitors it in some countries. So, some require steps that mandate users to input means of identification. 

Also, not all tokens are acceptable at all exchanges. So, while you may find Bitcoin and other famous coins like Ethereum at most exchanges, you may not find the others. Essentially, every exchange platform has unique policies governing the type of token it accepts. 

It’s essential to take protective measures when signing into a cryptocurrency exchange account. To do this, adopt two-factor authentication, a unique password, including lower case letters, special characters, numbers, etc. 

Step 2: Link your exchange to a payment platform 

The next step after choosing a cryptocurrency account is connecting your payment platform. This requires providing your details depending on your exchange demands. Your personal information may include your social security card, a driver’s license, and job or employment status details. 

After you’ve provided the required details, the exchange will verify your identity and request that you link your payment option. You may connect your bank account, debit, or credit card. However, be sure your bank supports cryptocurrency transactions before doing this. 

Cryptocurrency is not acceptable in all states. So, it’s essential to review your state’s and banks’ policies before linking a payment option. 

It’s also crucial to note that fees are associated with each transaction. So, review the costs of all the payment options to select the best one for you. 

Step 3: Deposit cash 

You must have funds in your account to buy crypto. You can do this after linking your bank account to the exchange, paying through your debit or credit card, or authorizing a wire transfer. However, it may take some time (about a few days) before you can buy crypto with the money deposited.

While you can link your bank account or authorize a wire transfer, using a credit card isn’t cost-effective. Credit cards are prone to higher interest rates compared to standard purchases. It also demands paying additional cash advance charges. This includes 5 to 10% of the amount transacted using a cash advance, leading to a 10% loss of your crypto purchases for extra charges.

Step 4: Place your cryptocurrency order

Now that you’ve deposited money into your account, the next step is to place your first crypto currency order. First, choose from the tons of cryptocurrency coins available, including Bitcoin, Dogecoin, Ethereum, Holo, etc. Afterward, input your selected cryptocurrency sticker symbol and the number of coins you want to buy. 

Below are symbols of the most popular currencies: 

• Bitcoin (BTC)
• Binance Coin (BNB)
• Dogecoin (DOGE)
• USD Coin (USDC)
• Ethereum (ETH)
• Tether (USDT)
• Cardano (ADA)
• Polkadot (DOT)

Step 5: Choose a storage method 

Although cryptocurrency exchanges offer wallets, they are not safeguarded by the Federal Deposit Insurance Corp. (FDIC) and other similar bodies. Hence, they are at risk of attacks. 

On the other hand, Bitcoin and cryptocurrency wallets are safer places to store your cryptocurrency. You have better control if your coin is outside the exchange because you have direct and secured access. It also helps avoid any breaches, theft, or other attacks that may affect your funds in a cryptocurrency wallet. 

Essentially, there are three ways to store your cryptocurrency. They include: 

• Hot wallets: Hot wallets are kept online and operated on digital devices, including tablets, phones, and computers. Although hot wallets are easier to work with, they are exposed to higher risks. 
• Cold wallet: Cold wallets are the safest storage option because they are not on the web. They are stored in external devices, including USB drives or hard drives. However, using a cold wallet means you mustn't forget your password, break, or misplace your cold wallet.
• Crypto exchange: You can leave your crypto in the cryptocurrency exchange wallet. But this isn't the safest option, so it’s best to move it to a better-secured location, such as a hot or cold wallet.

Alternative ways to buy cryptocurrency 

Since buying and trading with cryptocurrency on exchange services could be risky, it’s best to have other alternatives. Let’s examine other ways to buy and invest with cryptocurrency.

1. Invest in companies that are connected to cryptocurrency 

You can buy stocks from companies that use or own cryptocurrencies with a brokerage account. Below are examples of companies you can buy shares from. 

• Square (SQ): Square is a payment service provider for small businesses with more than $220 Bitcoin. You can buy, sell and hold cryptocurrency with Square. 
• Nvidia (NVDA): Nvidia is a technology company designing and selling graphics processing units. They are fully invested in cryptocurrency and allow people to buy and hold crypto through them.
• PayPal (PYPL): You can buy and hold cryptocurrency with your PayPal and Venmo accounts. 

2. Bitcoin ATMs

Bitcoin ATMs let you load cash into a machine and use it to buy Bitcoin. Afterward, the money is transferred to online wallets. However, although they are an excellent alternative to cryptocurrency exchanges, they are pretty expensive. For example, they demand two charges—a purchase and a conversion fee to change a fiat currency to Bitcoin.

3. P2P exchanges 

Peer-to-peer exchange services offer direct links between users. For example, LocalBitcoins is a type of Peer-to-peer transaction you can use. After creating an account, you can post requests to buy and sell cryptocurrency with a preferred payment method and price. Afterward, users can check through the lists and select traders they’d like to work with.

A prominent advantage of peer-to-peer transactions is that they let you browse through and select your most suitable offer. However, they don’t provide anonymity as decentralized exchanges do. 

4. Wait for ETFs 

Crypto Exchange-Traded Funds (ETFs) introduce you to several investments at a glance, allowing you to offer diversification instantly. The main benefit of this is that you can invest in many cryptocurrencies. 

Tips for buying your first cryptocurrency 

Below are the top tips to consider when purchasing cryptocurrency for the first time.

1.Choose a reliable purchase method

It’s best to choose the most convenient purchase platform for your goal. Exchange cryptocurrencies like Binance, Coinbase, MoonPay, etc., are the most suitable purchase methods for trading cryptocurrency. 

If you’re going to convert a fiat currency into cryptocurrency, a LocalBitcoins website may be better. This is because it allows you to choose a seller close to you. However, ensure the person you choose has positive reviews if you are using a LocalBitcoins website.

2. Buy, hold, and wait

The excitement of purchasing your first crypto currency may trigger you to make quick decisions. However, it’s advisable to observe the market to guide you on what to do next. The cryptocurrency market is volatile and highly susceptible to changes at any minute. So, conduct research, watch for trends and take calculated moves after your first purchase. 

3. Manage your risk 

Risk management is a critical strategy to control losses when trading cryptocurrency. So, develop different risk management practices. For example, you can: 

• Create policies around what to buy and sell. 
• Set aside some amount for trading and use only part of it at first. 
• As a long-term investor, you may decide not to sell, no matter the price. 

Adopting these safety policies will help manage risks to mitigate losses when buying and trading with cryptocurrency.

Conclusion 

Buying your first cryptocurrency successfully requires following the correct procedures. This article provides a practical step-by-step guide to purchasing cryptocurrency as a beginner.