Learn how to buy cryptocurrency for beginners step-by-step and compare the top cryptocurrency exchanges 2023.
A few things you'll learn from this post:
- A few dead simple principles to win in the crypto game
- A step by step guide on how to buy cryptocurrency for beginners – without all the complexity and terminology jargong
- Where to buy cryptocurrency – a comparison of the top crypto exchanges
Are you also thinking about buying cryptocurrency?
Welcome on board.
Many people are getting curious about this new world.
A few years ago, I dived deep into the the rabbit hole of cryptocurrency. And I'm glad I did.
The last 3 months, the value of my cryptocurrency portfolio increased by 149% – returns you would never expect from other investments.
Don't get me wrong though, thats definitely not something everybody should expect. I got lucky and timed the bull-run well.
In fact, if you just wanna go in for the short-term, you better stay out of the cryptocurrency game. It's too volatile right now (and for some time – probably).
However, if you're willing to stay in it for the long-term, I believe you can make some serious gains.
Let me share some of my own insights and guide you through the process of where and how to buy cryptocurrency.
How to buy cryptocurrency – Step by step
Buying cryptocurrency is a pretty straight forward process and doesn't have to take more than 10 minutes. Follow the steps below to learn how to buy cryptocurrency for the first time.
Typically, you can start trading immediately. Sometimes, depending on the crypto exchange, you'll need to wait a few days to get your identity verified and transfer to reach your account.
Step 1: Decide your trade
To know how to buy cryptocurrency, you need to first know what cryptocurrency you're buying.
There's literally thousands of coins out there.
It largely comes down to your risk appetite. The higher market cap, the less risk – generally.
Here's the top 10 cryptocurrencies based on market cap (excluding stable coins)
I would recommend you to start with one of the coins above if you're new to cryptocurrency.
Since most first-time-buyers wants to get Bitcoin, that's what we're going with in this example.
Step 2: Sign up to a cryptocurrency exchange
1. Find a crypto exchange
When you know what coin you're going to buy, find a cryptocurrency exchange that supports that coin.
In the comparison of the top crypto exchanges further up in this article, you can find exchanges that supports all coins.
In this example, I'll use Coinbase as that's one of the top cryptocurrency exchanges, and a great place to start for beginners who wants to learn how to buy cryptocurrency for the first time. Coinbase supports all the biggest coins.
2. Register on the exchange
Now, let's register on the exchange. This will just take a few minutes.
Click here to sign up to Coinbase, or choose the crypto exchange you want to use.
Typically you'll fill in some basic account information and state your citizenship and/or residence. It's important to fill this in correctly as you will need to verify it later.
3. Verify your identity
Due to regulations, in most countries you need to verify your identity to be able to buy cryptocurrency.
Usually, a painless process. You just need to fill out some information about your funds, employment, and upload a valid identity document.
Typically it will take up to a few hours to get approved after you have done the verification process.
Step 3: Do your first trade
1. Add payment method
The first step is to add funds to buy cryptocurrency with.
Do this by clicking “Buy/Sell” in Coinbase.
You have two options to add funds:
- Credit card. Fastest, highest fees
- Bank account. Minimum 2-3 days, low fees
2. Make a purchase
Once the funds are in your account, you can buy cryptocurrency.
Click on “Trade” in the left hand menu. A list of the available cryptocurrencies will be shown on that page. Coinbase has currently 78 different coins.
To buy cryptocurrency, all you have to do is click “Buy” on the coin you want to buy. Choose the amount (choose €10 for the sake of this test buy).
Most purchases should go through almost immediately.
3. Sell for a profit
You're now a cryptocurrency investor. Welcome to the club.
Now, let's bring this full circle. For most of us, the point of investing is to make money. To make money, you got to sell.
Just for the sake of learning, we'll now sell the crypto you bought.
Obviously, you're not going to make any money on this trade.
As a beginner, it's good to understand the whole process.
On the “Trade” page, you can find a tab called “Sell” on your right hand menu.
Choose the coin you just bought, and the amount you want to sell. Click”Sell Bitcoin”, and you'll now get your fiat currency back.
So that was how to buy and sell cryptocurrency. I hope this guide helped you out to get started and find the best cryptocurrency exchange.
Happy trading and enjoy the ride!
Top cryptocurrency exchanges 2022
Find the top-rated and biggest cryptocurrency exchanges below.
|0.75% - 4.5%
|0.15% - 0.2%
|0.01% - 0.075%
|0.1% - 0.2%
|0.16% - 0.26%
|0.02% - 0.07%
Should you buy cryptocurrencies?
Should you buy cryptocurrency? That's the question everybody keeps asking.
Before we get into that, let me just clarify: I'm not a financial advisor, and nothing in this blog post should be seen as financial advice. I'm just yet another guy who has his opinion and unique experiences. Do your own research – always.
One thing for sure, nobody has the answer. Be vary of anyone claiming to know how the future is going to play out.
You hear the experts saying:
“I estimate coin X doing a 8x return within 3 months”
I want to ask: based on what hundreds of dynamic variables? Their guess is just as good as anyone's.
Truth is, we just don't know, and if you want to buy cryptocurrency as a beginner, you need to be okay with some risk. It could either crash or go to the moon tomorrow.
However, it's highly unlikely that cryptocurrency is going to die out and go away at this point. We see a lot of promising signs of its long-term establishment and a bright future.
My view on cryptocurrencies
Although I started buying crypto 2017, I wasn't a real crypto-believer until end of 2020, when I actually took a bit of time to research how the Blockchain technology and cryptocurrency model works.
When I understood the real application of cryptocurrency, I also understood the immense benefits it could have for the world, as soon as we would find real usage areas for it.
In this blog post, I'm not gonna into the details of what cryptocurrency. There's people who can explain that much better. Besides, you're probably here because you already understood the concept.
My job is not to sell you on anything, and you must do your own research.
But, if I were to say something, I'd say that cryptocurrency has the potential to become as big of a shift as when the internet came. We won't see the real benefits until it becomes widely accepted and mainstream as a currency.
Once it becomes more mainstream with real-world utility, we also won't see the same kind of volatility that we're seeing right now, which will help to create more stability and even more acceptance from the public.
Upsides with cryptocurrency
Say what you want about its flaws (yes, there are some serious flaws), but there's some real value in cryptocurrency.
The benefits of using blockchain technology are countless, and every cryptocurrency is different, but here's some main concepts:
- No banking fees.
- Low transaction cost for international payments.
- Easier international trades.
- Protection against inflation.
It's been around since 2009
One of the most common argument against cryptocurrency by the public is that it's just a “passing phenomena”. A fly.
Most people heard about cryptocurrency for the first time around the crypto boom of 2017.
But it's actually been around since 2009, and has been gaining more stable ground every year. So it's not something that comes and goes. It's been growing on average 86.6% every year since the start.
At this point, there's less risk to get involved compared to some years ago. While it is likely that the price will stay volatile for quite some time to come, we're pretty sure that it will likely never just drop to zero. It's too established at this point.
Cryptocurrency is here to stay. That is at least my opinion.
4 keys to succeed when investing in crypto
Before we jump into this, let me just say, I'm really not a skilled trader, experienced investor or particularly well researched on the topic. But I am successful with money, and I understand the basic laws of psychology and economics.
Here's some basic principles that I use myself when trading crypto, I hope it helps you as a beginner.
1. Understand cycles
The first rule of investing in cryptocurrency is to understand cycles.
Instead of saying that cryptocurrency is a good or a bad investment, it's much better to think of cycles. There's bull-runs and there's bear-runs.
Cryptocurrency is one of the most volatile trading instruments at this moment. In the end of 2017, a Bitcoin was worth 19400 USD. April 2019, it was down to 4100 USD.
For the person who invested at the top and sold at the bottom, cryptocurrency was a very bad investment.
But for the person who bought Bitcoin in June 2011 for 29.60 USD and sold it April 2021 when it reached 64 000 USD, it was a pretty decent investment. That's a return of 22 0589%.
In other words, sell when it's high, and buy when it's low. Sounds simple – of course it's not always easy to know when it's “high” and “low”. Looking at trends and market indicators, you can at least get an idea of where the market is.
If people are greedy (i.e, everyone wants to buy cryptocurrency), be careful and consider selling off a portion of your investment. On the other hand, don't be afraid to buy when the fear is high (i.e, people are not willing to buy).
2. Invest money you don't need
The second most important rule of any high risk investment is to never invest any money you might need in the near future.
In fact, you should assume that any money you invest, you'll never see again. That frees you of any emotional attachment and it will be easier to not jump on the emotional roller-coaster every time there's a dip (or spike).
Not only does it prevent sleepless nights and anxiety, but it's also more likely that you'll make good decisions. Instead of fearfully pulling out your money as soon as you see the price dipping, you'll be more resilient and look at your investment from a more long-term perspective.
Don't invest your rent money. Clear all emotional attachment to the money you've invested and only sell when the price hits a predefined target, or based on a time – regardless of how we market moves or what the news says.
3. Increase the odds by research
To an extent, investing in cryptocurrency is a bit like gambling.
The difference is that it's not all luck, and you can definitely alter the odds by investing in the right coins at the right time. Of course, that requires research.
It's tempting to jump into unknown fairy-tale coins that appears to be going up like rockets. But try to avoid those temptations. FOMO (fear of missing out) is not a bias that will serve your investing decisions.
I highly recommend to do a bit of research and try to understand what you're investing in. By doing proper search and learning how to read the indicators, you can avoid some of your bad investments.
Things to look at when researching a coin:
- Social media profiles: how active is the team and community?
- Upcoming events: is there any new launches or major events in the pipeline?
- Unique selling proposition: does the coin bring something new to the table?
- Real world application: can you see the coin being utilized in the real world anytime soon?
- Team & founder: who are the people behind the coin and do they have any history of success in other projects?
- Transaction volume: is the transaction volume increasing steadily the last 12 months?
- Popularity: are the searches trending upwards?
Spend at least 2 hours researching the cryptocurrency. The more research you make, the higher odds that your investment will pay off.
4. Trade on top cryptocurrency exchanges
Choose one of the top cryptocurrency exchanges with high security.
A lot of cryptocurrency exchanges got hacked throughout the years. While the security has been vastly improved, it's important to remember that you literally have zero security or guarantees to get back your money, should your account or the crypto exchange itself get hacked.
Don't let this deter you from investing though. The odds of this happening in 2022 are pretty low, and they're constantly working on the security aspect.
You can even make a good amount of money if you are good at trading cryptos considering they are highly volatile. It's better to consult crypto tax advisors to know how much taxes you'd need to pay on gains from cryptocurrency trading.
Always stick with the biggest crypto exchanges and don't put too much money in the same platform.
I hope this step by step guide on how to buy cryptocurrency for beginners have helped you.
Common questions about buying cryptocurrency for beginners
How old do you have to be to buy cryptocurrency?
The legal age for buying cryptocurrency varies by country and by platform.
In the United States, the legal age to buy cryptocurrency is 18 years old. This applies to all exchanges and platforms operating within the country.
Individuals under 18 years of age are not permitted to open a trading account and buy cryptocurrencies.
These age restrictions are in place to prevent minors from engaging in financial transactions they may not fully understand and to comply with federal regulations.
Additionally, ID verification and other forms of identification are required by most platforms to confirm one's identity and age before allowing them to buy cryptocurrency.
When is the best time to buy cryptocurrency?
The best time to buy cryptocurrency can be subjective and depends on an individual's investment goals and risk tolerance.
Some investors believe that buying when prices are low and holding for the long-term can be a good strategy, while others prefer to buy during periods of high volatility when prices are likely to increase quickly.
It's important to research and understand the fundamentals of the specific cryptocurrency you're interested in buying, as well as to keep an eye on news and developments in the broader crypto market.
Which crypto exchanges do not report to IRS?
It's important to note that all crypto exchanges operating in the United States are required to report transactions to the IRS, regardless of the amount.
However, some crypto exchanges based in other countries may not have the same reporting requirements. For example, some crypto exchanges based in privacy-friendly jurisdictions like Switzerland or Hong Kong may not be required to report transactions to their respective government.
It's important to be aware that even if an exchange is not reporting to the IRS, as a U.S citizen you are still responsible to report any transactions on your tax returns.
Why are crypto prices different on exchanges?
Crypto prices can vary across different exchanges due to a number of factors. One of the main reasons is liquidity – some exchanges have more trading volume than others, which can affect the price of a cryptocurrency.
Another reason can be the difference in order book depth – some exchanges have more buy and sell orders than others, which can also affect the price. Additionally, different exchanges may have different fees and trading pairs, which can also influence the price.
What crypto should I buy as a beginner?
As a beginner, it's important to do your own research and understand the fundamentals of the cryptocurrency you're interested in buying.
Bitcoin and Ethereum are two of the most popular and widely-traded cryptocurrencies and can be a good starting point for beginners.
Bitcoin is the first and most well-known cryptocurrency and has a strong track record of performance, while Ethereum is the second-largest by market cap and is known for its smart contract capabilities.
What can you buy with cryptocurrency?
Cryptocurrency can be used to purchase a wide variety of goods and services.
Some popular items that can be purchased with cryptocurrency include electronics and tech devices, gift cards, travel-related expenses, online marketplaces, virtual and physical goods in video games, and other items.
The acceptance of cryptocurrency as a form of payment varies by merchant, and more and more merchants are beginning to accept it as a form of payment.