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How to Buy Cryptocurrency: A Step-by-Step Guide for Beginners

It can be scary for people who are not familiar with cryptocurrencies to know how to buy Ethereum, Dogecoin, Bitcoin, and other tokens. The good news is that learning the fundamentals is not that hard. Just follow these 5 easy steps below to start investing in cryptocurrencies.

1. Choose a Broker or Crypto Exchange

Choose a broker or cryptocurrency exchange. The pinnacle of buying cryptocurrency is selecting a broker or cryptocurrency exchange. List sites provide a way to buy cryptocurrencies but with a few important differences.

What Is a Cryptocurrency Exchange?

A cryptocurrency exchange is a trading platform (digital platform) that allows an individual to buy, sell, or in some cases simply store such digital currencies. While exchanges offer pocketbook complementary and trades maintenance - free of charge trades, they can sometimes be clunky, making your job of selling and buying a pain. New Traders that are not the advanced will frequently revert to the simplicity of a service such as BitFlyer.

Two of the most popular cryptocurrency exchanges are Binance and Bittrex. US, Coinbase, and Gemini. Many of these companies have rather confusing regular trading interfaces, which can be off putting to newbies, particularly those with no background in stock trading, although they do offer fundamental and straightforward buy buttons.

What Is a Cryptocurrency Broker?

The interfaces of the cryptocurrency brokers make it simple to buy crypto. However, some of them charge very high fees, and in some cases, they sell user data. Privatization of Holdings is Restricted — Some of the most popular brokers, like Robinhood and SoFi, rope users into never pulling holdings off of their platforms, which means you do not have true control nor security over your real assets. More advanced investors pick wallets that are also receiving crypto for added security, some going to a point of using offline hardware wallets.

2. Create and Verify Your Account

After you choose a cryptocurrency broker or exchange, you will be able to sign up and create a new account. Depending on what platform and how much you are buying, you may need to show identification. This prevents fraud and is important to align with federal regulations.

You may not be able to buy or sell cryptocurrencies until you verify yourself successfully. The platform might also ask you to take a selfie and submit documents like a copy of your passport or driver's license to confirm that the photo you download is your own photo.

3. Deposit Cash to Invest

Before taking the leap into buying any cryptocurrency you need to ensure you have money in your account. You can connect your bank account, transfer money through a wire,, and use a debit card or credit card to pay, enabling you to deposit money to your cryptocurrency account. However, you may have to wait at least a couple of days to be able to spend the money you deposited to buy cryptocurrency, depending on the exchange/broker you are using and your payment method.

Credit cards may not be the best idea because of the processing fees and your credit card interest rate will be equivalent to CASH ADVANCE fees. Credit card companies will charge cash advance fees (usually 5%) on your money. Plus, if you have been trading on exchanges or brokerages that could potentially mean an extra 5% in fees then you could realize up to a 10% loss of your money in cryptocurrencies. Warning: Be very careful - evaluating all the other funding opportunities that could save you from a great deal of cash.

4. Place Your Cryptocurrency Order

When your account has been funded, you are ready to place an order to buy your first cryptocurrency. There are literally hundreds of cryptocurrencies with such market sentiments, from some that are well-known like Ethereum and Bitcoin to others much less well known like Theta Fuel or Holo.

Once you've chosen a cryptocurrency, you can enter its ticker symbol (Bitcoin is BTC, for example) and the number of coins you wish to buy. Most exchanges and brokers allow you to buy fractional shares of cryptocurrency, which enables you to purchase a small portion of expensive tokens like Bitcoin or Ethereum that would otherwise require thousands of dollars to own.

The following are the symbols for the top 10 cryptocurrencies by market capitalization:

  1. Bitcoin (BTC)
  2. Ethereum (ETH)
  3. Tether (USDT)
  4. Binance Coin (BNB)
  5. Cardana (ADA)
  6. Dogecoin (DOGE)
  7. XRP (XRP)
  8. USD Coin (USDC)
  9. Polkadot (DOT)
  10. Uniswap (UNI)

5. Select a Storage Method

Since the Federal Deposit Insurance Corp. (FDIC) does not protect them, most exchanges are subject to theft and hacking.

You might even be lucky enough to have not only lost your millions of dollars worth of Bitcoin, but also all of the codes to access your account. This demonstrates that a secure place to store your cryptocurrency is important.

As mentioned, this will give you little control as to where or how your cryptocurrency is stored if you buy them from a broker. Buying cryptocurrency through an exchange gives you more options:

  • Leave the crypto on the exchange: When you buy crypto, it is often held in a wallet on the exchange itself. If you don't trust your exchange because of their provider or your protection you can move it off the exchange to another hot or cold wallet. To do this would likely have a small cost, synonymous with the exchange as well as exchange total.
  • Hot wallets: These are online-based wallets used in iPhone, Tablet, PC, and they are left online. Hot wallets, being online at all times, are more convenient but are associated with greater theft risk.
  • Cold wallets: Cold wallets, such as USB disk, hard disk, and so on, they are the top secure storage to hold the crypto offline. However, if you lose the associated keycode or device, the funds will become unrecoverable. While custodial-backed hot wallets assist in the event of a lockout, cold wallets must be treated with caution to mitigate potential irreparable losses.

Alternatives Ways to Buy Cryptocurrency

While buying crypto is all the rage right now, it is a risky and volatile investment. If you feel that investing in cryptocurrency is right for you, but you do not know how to buy Bitcoin and other cryptocurrencies through a broker or on an exchange, here are some indirect ways that you can buy Bitcoin and other cryptocurrencies.

1. Wait for Crypto Exchange-Traded Funds (ETFs)

Due to the diversified nature of the investments in the ETF, ETFs offer a lower level of risk than individual investments. One solution would be to create a basket of cryptocurrency ETFs, which many investors are waiting for. As of today, none are available to retail investors, but the SEC is reviewing applications from Kryptcoin, VanEck, and WisdomTree to potentially make them available soon.

2. Invest in Companies Connected to Cryptocurrency

It is a valid way to get exposure to the cryptocurrency market through investing in companies trading physical goods or services regulated by law. You can buy shares of companies that use or own cryptocurrencies and the blockchain technology that cryptocurrencies are built on. Shares, ETFs and other publicly traded company.

  • Nvidia Corporation (NVDA): This technology was responsible for the creation of the graphics processing units which power cryptocurrency mining systems.
  • PayPal: Another payments platform already widely used for online purchases and money transfers to friends and family, PayPal, also has a few options for users to buy and sell bitcoin with your PayPal or Venmo account.
  • Square (SQ): This small business payment services provider has brought on more than $220 million in Bitcoin since October 2020. This after the company, in February 2021 disclosed that 5% of its cash holding was actually Bitcoin. Users can also invest in, trade, and store digital assets through Square's Cash App.

As with any investment whether it be in cryptocurrencies or a specific company that has some serious holdings in these markets, you should asses your financial situation and investment goals prior to investing anything. No hopes of investing in cryptocurrency, even this is one of the most volatile investments and its price can plummet after a mere tweet. To this end, it also means you should wisely and selectivity invest.

Conclusion

Buy cryptocurrency carefully use a good exchange or broker service, according to fees and safety. Confirm and deposit your account and then place buy orders of the cryptocurrencies you wish to acquire. Invest in cold wallets/hot wallets or physical secure storage solutions. Traditional investments also offer indirect access to alternative assets by way of exchange traded funds (ETFs) and crypto-related companies.

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