Cryptocurrency has gained popularity over the past two years, and that has many people asking how to purchase cryptocurrency. There are several different ways to purchase cryptocurrencies — with conventional currency, and with other cryptocurrencies as well. The process of purchasing digital currencies entails a few steps, but it will be easier to trade them after doing so.
A good first step to take (and the best) is to purchase Bitcoin and Ethereum, which opens the door to purchase any other cryptocurrency. Reading my Bitcoin and Ethereum guides will clarify how these cryptocurrencies operate.
First Step: Sign up for a cryptocurrency exchange such as Binance, Coinbase, Coinspot (for Australian users). Please use a very strong password and a create a new e-mail address for that exchange account only. Ensure that you don’t use that e-mail to sign up anywhere else. Don’t post that e-mail anywhere and don’t send it to anyone. Your email is half of your login credentials at most places.
Ensure that your password contains a combination of upper and lowercase letters, numbers, and symbols. It should also be at least 8 characters long. Don’t use any of the passwords that you used to log into other apps or online services. Another crucial piece of advice is to ensure that you check your browsers address bar to ensure that you are at the exchange’s correct website.
Phishers create fake websites with misspelt domain names to trick you into thinking they’re legitimate. Those fake websites get you to enter your username and password and then steal your coins off the exchange. Also look for the padlock in your address bar and click it to ensure the SSL certificate is valid.
Create An Exchange Account
Create an account at a cryptocurrency exchange without KYC (unless you are required to), as KYC data is sometimes stolen from exchanges. Stolen KYC data poses the risk of identity theft. If you want to purchase Bitcoin or Ethereum with a bank account or card, then you may be required to KYC.
Cryptocurrency exchanges – Where To Buy Bitcoin Or Ethereum:
- Coinbase (United States) – coinbase.com
- Kraken (United States) – kraken.com
- Binance (International) – binance.com
- Binance.us (United States)
- Coinspot (Australia) – coinspot.com.au
- BitPay app (International) – bitpay.com
- ShapeShift app – shapeshift.com
- Bisq (decentralized exchange) – bisq.network
- Uniswap (decentralized exchange, only supports Ethereum-based tokens and does not support fiat currency). – uniswap.org. Read my Uniswap guide.
- MetaMask (built-in swap feature that utilizes multiple decentralized exchanges) – Provides non-custodial wallet, which is ideal to have.
- Trust Wallet (built-in swap feature) – Provides non-custodial wallet.
If you’re going to use any of their mobile apps, please review app store listings carefully due to the high risk of counterfeit cryptocurrency apps in app stores (counterfeit apps will steal your login credentials and coins). Google and Apple can’t keep up with all of them, so as it always has been — the responsibility falls on you to exercise caution. You can also go to the exchange websites linked above and then follow their links to their respective apps in the app stores (the safest option).
A Few Tips To Protect Your E-Mail
In order for your cryptocurrency exchange account to be secure, your e-mail account must be secure as well — this is because your e-mail can be used to gain access to your exchange account. It helps to:
- Use end-to-end encrypted e-mail. Two great providers are ProtonMail and Tutanota. They provide free accounts with limited storage and a daily email limit. Free accounts are subsidized by revenue from paid accounts, not ads nor tracking.
- Use a provider that lets you create a separate e-mail address that you can’t use to login to the provider with. Example: ProtonMail (if using a Plus or Professional account, which is not free) lets you create an e-mail that you log into ProtonMail with (let’s call this ‘email@example.com’ for example), and you can create a new address under that account (let’s call this ‘firstname.lastname@example.org’). A hacker won’t be able to log into your ProtonMail account with that address (‘email@example.com’). Only ‘firstname.lastname@example.org’, which is an address you should never give anyone, even if for that reason alone.
- Use a very strong password to sign up for your e-mail account. Don’t use that password for anything else.
- Don’t go anywhere that may try to install malware (avoid any websites involved in unscrupulous or illegal activity). Malware may steal your e-mail or exchange account credentials as you type them (these are keyloggers).
- Enable the PIN lock feature on your ProtonMail mobile app.
- Don’t click links in e-mails.
Once you have created your e-mail and exchange accounts, you can link your bank account or credit/debit card and deposit USD or another currency to the exchange. You would then look for the exchange’s trading section and find the appropriate trading pair. For example: BTC/USD if you’re buying Bitcoin with USD. Review the exchange rates carefully and set your preferred exchange rate, then submit your buy order. A buy order is an offer to buy Bitcoin at a set price.
There are market orders, limit orders, margin trading orders, derivatives, among others. For starters, avoid margin trading and start with a small market order just to familiarize yourself with it first. A market order lets the exchange set the price for your buy order based on market conditions. This doesn’t necessarily result in the best exchange rate, but we all have to start somewhere! Limit orders enable you to set a price below the current market price, and that order would be fulfilled if Bitcoin’s price falls to that level. Margin trading is extremely risky and should be avoided for now, until you feel comfortable enough to take that on.
Transaction Fees And Trading Fees
Cryptocurrency exchanges often charge trading fees to help cover the cost of their services. Cryptocurrency network fees are paid to miners for helping to secure the blockchain. Network fees are not paid to exchanges, and they are added to other trading fees if you are using a decentralized exchange. Withdrawing coins from a centralized exchange incurs network fees. Liquidity fees are charged by decentralized exchanges to pay liquidity providers for providing liquidity.
Some exchanges, most notably Binance and KuCoin have their own tokens that are can be used to pay your trading fees. For example: Binance charges lower trading fees if you use their token (BNB) to pay for them.
There are tokens pegged to the price of national currencies such as the USD, AUD, GBP and more that enable you to ‘take profits’ or sell your cryptocurrency quickly and easily for the digital equivalent of your country’s national currency. This can be done without actually dealing with your bank. You can trade these tokens for ‘real’ money later.
Such tokens can be used to protect you from a fall in cryptocurrency prices due to their (relative) stability. For example: If the price of Bitcoin falls against the US Dollar by $10,000 USD while you’re holding USDT — a US Dollar-backed stablecoin, you can buy back 1 Bitcoin for $10,000 USDT less. This enables you to acquire more Bitcoins). Examples of stablecoins:
All of the tokens above are available in popular decentralized exchanges such as Uniswap.
Can’t Buy Certain Cryptocurrencies?
There is a chance that you won’t have the ability to buy some cryptocurrencies directly on some of these exchanges. For example: Monero (XMR) or EOS. In that case, you can transfer your Bitcoin to another exchange that does support these cryptocurrencies such as Binance, Kraken, or Bisq and use it to buy the currencies there instead.
There are hundreds, if not thousands of cryptocurrencies that are not available on most of the exchanges listed above. In many cases you can obtain them via Uniswap (requires Ethereum wallet), EOSDAQ (requires EOS wallet), PancakeSwap (requires a Binance Smart Chain wallet).
Security tip: Don’t leave cryptocurrency on exchanges after you’re done purchasing or trading them. Hackers target exchanges profusely. Withdraw your coins to a non-custodial wallet. Also note that exchanges often don’t offer adequate fraud or theft protection.
If you don’t want to sign up for an exchange, there are mobile wallet apps such as ShapeShift and BitPay that will let you purchase cryptocurrency with your credit card or even via Apple Pay. However, it’s best to avoid storing large quantities of cryptocurrency on your phone due to the high risk of phone loss or theft.
Direct Person-To-Person Trades
Another way to buy cryptocurrency is to find someone that has it, send them money, and then have them send the coins to your wallet. However, there is a risk of being robbed. The person may accept your payment and take off without sending you the coins.
How To Buy Non-Fungible Tokens (NFTs)
In order to purchase other types of tokens such as Non-Fungible Tokens (NFTs), you need to go to a platform for NFTs such as OpenSea (Ethereum) or Kalamint (Tezos). You can purchase them using a non-custodial wallet such as MetaMask (if you’re on Ethereum) by visiting OpenSea.io and signing up. OpenSea will walk you through the process.
In many cases there are individual NFT marketplaces within blockchain games. For example: Axie Infinity and CryptoKitties. Visit their respective websites for instructions, and you won’t have to use OpenSea in those cases.