There are many options to buy cryptocurrency beyond what is presented here. This article is intended for readers who have never bought crypto before and only have exposure to traditional financial systems. At the end, I will also discuss alternative ways to get exposure to Crypto.
1: Select a Platform (Exchange or Broker)
Some considerations you have to make when selecting where to buy crypto are the following:
- Is the platform legally allowed to operate in your country?
- Is the specific cryptocurrency or crypto-asset you want to buy available?
- Is the payment method you want to use accepted?
- Are the fees affordable to you?
- Can you transfer your cryptocurrency off the platform?
This information should be readily available on the website of the platform you want to use and most often have an FAQ section answering these very questions.
2: Create An Account
After you have settled on a platform you want to use, you must create and verify your account. Many cryptocurrency platforms will not let you buy beyond a certain amount without some form of KYC (Know your customer) verification due to regulations. If it is available you should enable whatever security options are available to restrict access to the account at this point.
3: Connect A Payment Method and Deposit Cash
There will typically be number of payment methods available. The most common is an ACH transfer or wire transfer from a bank account. You may also be able to use a credit or debit card as well. Connect whichever method you want then initiate a deposit to your account.
If you decide to use a credit card, be aware that cash deposited from the credit card may be considered a cash advance and will possibly have associated fees.
4: Place An Order
After you see the cash available in your account you need to select the cryptocurrency you want to buy and place an order to buy a certain amount. If you are using a less trader focused platform, you will not see different options for order types and your order will usually be set at the market exchange rate at the time of the order.
If you are using a more advanced platform, you will see the option to place different types of orders. The most common is a market order meaning the trade will be executed using the current market rate. Another common type you will see is a limit order where you specify the rate at which you want to buy the cryptocurrency at. You can view the different order types here.
5: Store Your Crypto
If the platform you use does not allow transfers, you will have to keep it on the platform. Otherwise, once you have your cryptocurrency, you have several options as to where you can store it.
- Keep it on the exchange. This means you do not own the crypto you just bought, but the platform will custody it for you similar to how stock brokers custody stocks for investors. This means you are subject to whims of the platform and whatever attacks might come to the platform since it is an entity with a lot of assets. However investing in security and insurance is in their best interest.
- Transfer to a hot wallet. A hot wallet is digital storage device that keeps your key codes needed to access and exchange your crypto. It is usually connected to the web. They provide a high level of control and convenience, but pose a security risk largely dependent on user behavior.
- Transfer to a cold wallet. A cold wallet usually takes the form of some external device like a USB drive. They provide a high level of control and security since the user is expected to maintain the key codes needed to access it. If you lose your keycode, you will not be able to recover your assets.
Alternative Methods
That’s the most direct route to getting some Crypto, but I understand that not all may be comfortable with the tradeoffs of security or asset volatility. Some alternative methods may be to invest in ETFs that directly custody crypto so that the burden of security and maintenance falls on the ETF. It also provides diversification so you aren’t having to manage multiple cryptocurrencies yourself.
The 2nd alternative is to buy the stocks of companies who use or own crypto. Companies are subject to regulatory oversight and if it is publicly owned, they do have a vested interest in the returns of shareholders.
None of this should be construed as financial advice. Cryptocurrency in this day and age is very volatile and full of fraudulent activity, but the technology and innovations are worth it. This is nothing more than an educational guide, so do your best to educate yourself on what is happening.
Thanks for reading and check in next time.
Kakavarna.eth — Automation Engineer(9–5), crypto investor, and gamer with opinions
