5 Steps to Buy Your First Cryptocurrency – Beginners Guide
As we know Crypto markets are rapidly gaining popularity while encountering some wild swings in their price along the way. Especially in recent years many investors have invested in bitcoins and have made millions. However, investing in cryptocurrency seems complex, but it is much more convenient and easier when you break it into tiny steps. Making an investment or practicing trading only requires an account on the exchange along with digital wallets for secure storage.
However, if you are determined to buy, invest or trade the decentralized form of currency, you have various ways to accomplish your goal. You can either buy from crypto-brokers directly or indirectly, as well as from new startups. Following are five steps that can help you make your first crypto purchase.
Top 5 Crucial Steps to Buying Cryptocurrencies for the First Time
#1 Research Thoroughly
Before making an investment of a significant amount of money or picking a digital currency exchange, you need to spend hours getting to know about the technology behind the cryptocurrencies, the value proposition, and the potential risk of loss or crime associated with the cryptocurrencies. To do so, go to the crypto meetups, ask questions from the well-known traders, and still, if you don’t understand, get enrolled, don’t feel shy to ask someone to explain for you. Additionally, courses regarding mastering the art of trading or basic crypto investment are easily available on the internet that can help to gain enough knowledge to become part of the crypto ecosystem.
#2 Choose a Crypto Exchange or Platform
Once you get sound knowledge regarding cryptocurrencies and the basics of trading, you need to pick a cryptocurrency trading service provider. Such entities include brokerages, payment service providers, and exchanges. Out of all legit options, digital crypto money exchanges are the most viable and convenient option because they provide a wide range of features along with innovative services.
Making an account on cryptocurrency exchange will permit you to purchase, sell and trade digital currencies. However, it’s considered best practice to buy through a well-reputable exchange that enables you to withdraw your assets while keeping them secure in your personal digital crypto wallets. However, there are hundreds of exchanges across the globe. As the cryptocurrencies ethos is all about decentralization and keeping the individuals’ sovereignty anonymous, some online exchanges or platforms permit the users to stay under the radar, and don’t request them to provide personally identifiable information. Such exchanges are known as decentralized exchanges that are not controlled or governed by any central authority.
In addition to this, exchanges can also provide nefarious benefits; they can facilitate the world’s unbanked population in order to bring them into the mainstream financial economy. However, you need to also look for security measures before creating the account. Measures include 2FA and a distinctive password consisting of upper, and lower cases letters, special characters, and numbers.
#3 Connect your Exchange to a Payment Option
After you have picked an online exchange, you will need to gather government-issued documents depending on the exchange you have onboarded. Documents usually include ID cards, social security cards, or driver’s licenses, as well as financial documents like bank statements. However, the extent of data collection totally depends on the jurisdiction you live in and the regulation within it. However, the whole procedure is quite similar to setting up a brokerage account.
Once the platform has authenticated your identity documents and source of earning, you will be requested to choose your payment option. However, most digital currency exchanges and platforms allow you to connect your bank account or debit/credit cards. Although buying crypto with a credit card is not a good idea as the crypto currencies’ price variance can increase the cost of the coin you are going to buy. Additionally, there is a fee for bank or credit card deposits that varies from 0.5 to 5%, which also depends on the type and size of the exchange. Therefore, it’s suggested that you must have done your homework associated with the trading fee, this will surely help you to pick the exchange that suits you the most.
#4 Place an Order
Once the exchange has been chosen and the digital payment gateway is connected, you can easily buy cryptocurrencies. In past years, digital crypto money exchanges have become mainstream as the conventional stock service providers. The global digital exchanges have immensely grown in terms of both market liquidity along with the list of features. However, the exchange operation changes parallel to the transformation in the perception of digital currencies.
However, the cryptocurrency industry was and still has an impression of questionable practice and scams but is slowly becoming legit one that has gained the interest as well as the attraction of the global community, financial industry, and governments.
Thus, global digital currency exchanges and platforms have now reached the point where they are providing the same level of services in terms of both security and ease as stock market or stock brokerage houses. However, the features vary from the market, limit orders, and stop-loss orders. Among various exchanges, Kraken offers multiple order types including market, stop-loss, stop-limit, and take-profit limit orders.
#5 Safe storage – Choose Digital Wallets
To hold cryptocurrencies you will require safe storage where your assets can be placed securely. Thus, digital wallets for cryptocurrency are used to accomplish this goal. Having a personal cryptocurrency wallet outside the exchange gives you more control over your assets including the public and private keys. Additionally, it also helps you to hold cryptocurrencies without the exchange’s restriction and avoid the risk of a financial loss if the platform security systems get compromised.
However, most of the digital crypto wallets and exchanges and platforms do offer their own digital wallets to their customers, yet, security is not their primary goal. Therefore, it’s not considered a good practice to use exchange wallets for long-term and large digital currency holdings. In addition to this, there is also a wide range of cryptocurrency wallets, cold and hot wallets that are further divided into various categories depending on the features. Therefore, when it comes to choosing crypto wallets, you might go through numerous options. The first thing you need to do is, shortlist your goals and understand the concept of wallets.
If you are looking to buy cryptocurrencies or make an investment, it’s viable to keep the first transaction cost to a minimum. Given the volatility of the digital crypto market, many exchanges and brokers love to increase their fees, thus, this will eat the maximum part of your profits. Therefore, you need to keep in mind all the aspects before you make your first transaction.