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

Written by Daisie Team

Published on 24 May 2023 11 min read

Are you curious about how to buy cryptocurrency but not sure where to start? Don't worry; you're not alone. Buying cryptocurrency can seem a bit intimidating at first. But, with the right guidance and a bit of patience, you'll be on your way to becoming a crypto pro. In this step-by-step guide, we'll cover the basics of cryptocurrency, help you choose a secure exchange, set up a wallet, and walk you through the purchase process. Let's dive in!

Understanding Cryptocurrency Basics

Before we talk about how to buy cryptocurrency, it's important to understand the fundamentals. In this section, we'll cover what cryptocurrency is, how it works, and the different types of cryptocurrencies available.

What is Cryptocurrency?

Cryptocurrency is a digital or virtual form of money that uses cryptography—a fancy word for secret codes—for security. Unlike traditional currencies like dollars or euros, cryptocurrencies are decentralized, meaning they're not controlled by a single government or organization. The most well-known cryptocurrency is Bitcoin, but there are thousands of others available, each with their unique features.

One of the main reasons people buy cryptocurrency is to use it as an investment, hoping that its value will increase over time. Others use it for online transactions, as it can offer faster and cheaper ways to send money across borders. It's essential to understand the risks and potential rewards before diving in.

How Cryptocurrency Works

At the heart of cryptocurrency is a technology called blockchain. A blockchain is a public, digital ledger that records transactions made with cryptocurrency. Each time someone sends or receives cryptocurrency, that transaction is added to the blockchain. The transactions are grouped into blocks, which are then linked together in a chain—hence the name, blockchain.

Blockchain technology is what makes cryptocurrency secure and decentralized. It's designed so that no single person, organization, or government can control it. This means that when you buy cryptocurrency, you're not only investing in the currency itself but also the technology behind it.

Different Types of Cryptocurrencies

As mentioned earlier, there are thousands of cryptocurrencies available, each with its unique features and uses. Some of the most popular ones include:

Bitcoin (BTC) – The first and most well-known cryptocurrency, often referred to as "digital gold."
Ethereum (ETH) – A cryptocurrency that also allows developers to build and deploy smart contracts and decentralized applications (dApps) on its platform.
Ripple (XRP) – A cryptocurrency designed to facilitate fast, low-cost global money transfers.
Litecoin (LTC) – A lighter, faster version of Bitcoin, often referred to as "digital silver."

When deciding which cryptocurrencies to invest in, it's important to do your research and understand the differences between them. This will help you make informed decisions when you're ready to buy cryptocurrency.

Choosing a Cryptocurrency Exchange

Now that you have a better understanding of cryptocurrencies, let's move on to the next step in learning how to buy cryptocurrency: selecting a cryptocurrency exchange. An exchange is a platform where you can buy, sell, and trade cryptocurrencies. There are various factors to consider when choosing an exchange, such as fees, security, and available currencies. In this section, we'll go over these factors, introduce some popular exchanges, and discuss how to ensure your chosen exchange is secure.

Factors to Consider

When selecting an exchange, keep the following factors in mind:

Fees: Exchanges typically charge fees for transactions, such as deposits, withdrawals, and trading. Compare these fees across different exchanges to find the most cost-effective option for you.
Security: Look for exchanges that prioritize security features, such as two-factor authentication (2FA) and cold storage (offline storage) for users' funds. This will help protect your investments from hackers.
Supported currencies: Not all exchanges support every cryptocurrency. Be sure to choose an exchange that supports the specific currencies you're interested in buying.
Reputation: Research reviews and testimonials to gauge an exchange's trustworthiness and reliability. Stick to well-known and established exchanges for extra peace of mind.

By considering these factors, you'll be better equipped to find an exchange that meets your needs and makes it easy for you to buy cryptocurrency.

Popular Cryptocurrency Exchanges

There are numerous cryptocurrency exchanges available, but some of the most popular and reputable ones include:

Coinbase: A user-friendly exchange that supports various cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. It's an excellent option for beginners learning how to buy cryptocurrency.
Binance: One of the largest cryptocurrency exchanges in terms of trading volume, Binance supports a wide range of cryptocurrencies and offers advanced trading features for more experienced users.
Kraken: Known for its strong security measures, Kraken is a popular choice for those who prioritize the safety of their investments. It supports a variety of cryptocurrencies, making it suitable for different investment strategies.

Remember, it's essential to do your research and choose an exchange that aligns with your specific needs and preferences when buying cryptocurrency.

Ensuring Exchange Security

Security is a top priority when it comes to buying cryptocurrency. To ensure your chosen exchange is secure, follow these tips:

Use 2FA: Two-factor authentication adds an extra layer of security by requiring you to input a unique code (usually sent to your phone) in addition to your password. Enable 2FA on your exchange account to keep your funds safe.
Check for HTTPS: Ensure the exchange's website uses HTTPS (look for the padlock icon in your browser's address bar), which encrypts your data and protects it from hackers.
Research the exchange's history: Look into any past security breaches or issues the exchange may have had. A history of security problems could be a red flag.

By taking these precautions, you can minimize the risk of security issues and feel more confident as you learn how to buy cryptocurrency.

Setting Up a Cryptocurrency Wallet

Great! You've chosen a cryptocurrency exchange that fits your needs. Now, let's move on to the next step in learning how to buy cryptocurrency: setting up a wallet. A cryptocurrency wallet is like your digital bank account, where you store, send, and receive your cryptocurrencies. In this section, we'll explore different types of wallets, discuss how to secure your wallet, and go over how to back up your wallet to ensure your investments stay safe.

Types of Cryptocurrency Wallets

There are various types of cryptocurrency wallets, each with its own unique features and levels of security. Here are the most common types:

Software wallets: These are computer programs or mobile apps that store your cryptocurrencies on your device. They're convenient for everyday use but can be vulnerable to hacks and malware.
Hardware wallets: These are physical devices, like USB drives, that store your cryptocurrencies offline. They're more secure than software wallets since they're not constantly connected to the internet, but they can be more expensive and less convenient for frequent transactions.
Web wallets: These are online wallets that you can access through a website. They're easy to use but can be riskier than other options since your private keys are stored on a third-party server.
Paper wallets: As the name suggests, these are physical pieces of paper on which your cryptocurrency private keys are printed. They're a secure, low-tech option but can be lost or damaged easily.

When deciding which wallet type to use, consider your needs and preferences for convenience, security, and cost. Remember, there's no one-size-fits-all solution, so take your time and choose the best wallet for your how to buy cryptocurrency journey.

Securing Your Wallet

Keeping your wallet secure is essential to protect your investments. Here are some tips to help you safeguard your wallet:

Choose a strong password: Use a unique, complex password for your wallet, and avoid using the same password for multiple accounts.
Enable 2FA: Just like with your exchange account, enabling two-factor authentication (2FA) for your wallet can add an extra layer of security.
Keep your private keys safe: Your private keys are like the keys to your digital bank account. Never share them with anyone, and store them in a secure location, such as an encrypted USB drive or a safe deposit box.

By taking these steps, you'll be better prepared to keep your wallet and your cryptocurrencies safe as you learn how to buy cryptocurrency.

Backing Up Your Wallet

Backing up your wallet is a crucial step to ensure you don't lose access to your cryptocurrencies. Here's what you need to do:

Save your seed phrase: When you set up a wallet, you'll typically receive a seed phrase—a series of words that can be used to recover your wallet if you lose access. Write down this phrase and store it in a secure location, separate from your wallet.
Regularly update your backup: Make sure to update your wallet backup whenever you create a new receiving address or change your wallet's settings. This will help ensure that your backup remains accurate and up-to-date.
Store multiple backups: To further safeguard your wallet, consider storing multiple backups in different locations. For example, you could keep one backup on an encrypted USB drive and another in a safe deposit box at a bank.

With your wallet backed up and secure, you're ready to dive into the world of cryptocurrency and learn how to buy cryptocurrency with confidence!

How to Buy Cryptocurrency: The Purchase Process

Now that you have a solid understanding of cryptocurrency basics and have set up a secure wallet, it's time to get into the exciting part—buying cryptocurrency! In this section, we'll walk you through the step-by-step process of how to buy cryptocurrency, from creating an exchange account to making your first purchase. Let's get started!

Creating an Exchange Account

First things first, you'll need to create an account on the cryptocurrency exchange you chose earlier. Here's a simple guide to help you get started:

Visit the exchange's website: Head over to the website of your chosen exchange and look for a "Sign Up" or "Register" button, usually located on the top right corner of the page.
Provide your personal information: Fill out the required fields with your personal information, such as your name, email address, and phone number. Make sure to use accurate information, as you may be asked to verify your identity later on.
Verify your email and phone number: Check your inbox for a verification email and follow the instructions to confirm your email address. You may also be asked to verify your phone number by entering a code sent via SMS.
Complete the KYC process: Some exchanges require you to complete a Know Your Customer (KYC) process to verify your identity. This may involve uploading a photo of your government-issued ID and a selfie to confirm your identity.

Once your account is created and verified, you're one step closer to buying your first cryptocurrency!

Funding Your Account

Before you can start buying cryptocurrency, you'll need to fund your exchange account. Here's how to do it:

Choose a funding method: Most exchanges allow you to fund your account using a variety of methods, such as bank transfers, credit or debit cards, and even other cryptocurrencies. Pick the method that works best for you and your financial needs.
Link your bank account or card: If you're using a bank transfer or a card, you'll need to link your bank account or card to your exchange account. Follow the instructions provided by the exchange to do so.
Deposit funds: Once your bank account or card is linked, you can deposit funds into your exchange account. Keep in mind that deposit times and fees may vary depending on the funding method you choose.

With your account funded, you're now ready to learn how to buy cryptocurrency and make your first purchase!

Buying Your First Cryptocurrency

It's finally time to buy some cryptocurrency! Here's a simple step-by-step guide to help you make your first purchase:

Select the cryptocurrency: On your exchange's trading platform, search for the cryptocurrency you want to buy. Remember, there are many different types of cryptocurrencies, so make sure to choose the one that aligns with your investment goals.
Choose the order type: There are various order types available, such as market, limit, and stop orders. For beginners, a market order is usually the easiest option, as it allows you to buy cryptocurrency at the current market price.
Enter the amount: Specify the amount of cryptocurrency you want to buy. You can enter the amount in either the cryptocurrency itself or your local currency, depending on your exchange's options.
Review and confirm: Double-check the details of your order, including the cryptocurrency, amount, and price. If everything looks good, click the "Buy" button to complete your purchase.

Congratulations! You've successfully learned how to buy cryptocurrency and made your first purchase. But what's next? In the following section, we'll explore some cryptocurrency investment strategies to help you make the most of your new investment.

Cryptocurrency Investment Strategies

Now that you've learned how to buy cryptocurrency and made your first purchase, you might be wondering how to grow your investment and make the most out of it. In this section, we'll discuss various cryptocurrency investment strategies that can help you achieve your financial goals. Remember, there's no one-size-fits-all approach, so take the time to consider which strategy best suits your needs and risk tolerance.

Long-Term Investing

Long-term investing, often referred to as "HODLing" in the crypto world—derived from a misspelling of "hold"—is a strategy where you buy and hold onto your cryptocurrency for an extended period, typically for a year or more. This approach is based on the belief that the value of your chosen cryptocurrency will increase over time, despite short-term price fluctuations. Here are some key points to consider for long-term investing:

Research: Before committing to long-term investing, thoroughly research the cryptocurrency you plan to buy. Look into its development team, technology, use case, and potential for real-world adoption.
Diversification: Don't put all your eggs in one basket. Consider investing in multiple cryptocurrencies to spread your risk and increase your chances of gaining from the growth of the overall market.
Patience: Long-term investing requires patience, as you'll need to withstand market volatility and resist the urge to sell during temporary price drops.

Long-term investing can be a relatively low-stress strategy, as you won't need to constantly monitor the market or make frequent trades. Just remember that the value of your investment isn't guaranteed, so only invest what you can afford to lose.

Short-Term Trading

If you're looking for potentially higher returns and don't mind putting in more effort, you might consider short-term trading. This strategy involves buying and selling cryptocurrency within a shorter timeframe—such as days, weeks, or months—to capitalize on price fluctuations. Here are some tips for successful short-term trading:

Technical analysis: Learn how to read and analyze price charts, as well as understand various technical indicators to help you make informed trading decisions.
Set profit and loss targets: Establish clear goals for each trade, including the profit you aim to achieve and the maximum loss you're willing to accept.
Stay informed: Keep up-to-date with cryptocurrency news, as market sentiment and global events can have a significant impact on short-term price movements.

While short-term trading may offer higher potential returns, it also carries greater risks and can be more time-consuming than long-term investing. Be prepared to dedicate time and effort to learning the ropes and monitoring the market.

Managing Risks

Regardless of the investment strategy you choose, it's important to manage risks effectively to protect your hard-earned money. Here are some risk-management practices to consider when investing in cryptocurrency:

Invest only what you can afford to lose: Cryptocurrency markets can be highly volatile. Make sure you're comfortable with the possibility of losing your investment.
Portfolio diversification: As mentioned earlier, diversifying your investment across multiple cryptocurrencies can help spread your risk and potentially improve your overall returns.
Regularly reevaluate your strategy: Periodically review your investment strategy to ensure it's still aligned with your financial goals and risk tolerance. Don't be afraid to make adjustments as needed.

By following these risk-management practices, you'll be better equipped to navigate the unpredictable world of cryptocurrency investing and make the most of your investment journey.

In conclusion, learning how to buy cryptocurrency is just the beginning of your investment journey. By exploring different investment strategies and managing risks effectively, you can work towards achieving your financial goals. Remember, success in the cryptocurrency market requires patience, discipline, and a willingness to learn. Good luck, and happy investing!

If you're looking to dive deeper into the world of cryptocurrency after reading our beginner's guide, we highly recommend checking out the workshop 'Unboxing Blockchain' by Altcoin Sara. This workshop will provide you with a comprehensive understanding of blockchain technology and its applications, helping you make informed decisions when it comes to buying and investing in cryptocurrencies.