So you want to buy cryptocurrency? Well, you’ve come to the right place! In this guide, we will teach you everything you need to know in order to purchase your first digital coins. We’ll cover a variety of topics, including what cryptocurrencies are, how to store them safely, and how to buy cryptocurrency. By the time you finish reading this guide, you’ll be ready to start investing in digital currencies!
Why is it Important to Learn How to Buy Cryptocurrency?
Over the past few years, the cryptocurrency market has skyrocketed. With almost 20,000 cryptocurrencies and hundreds of exchanges, getting into crypto can be quite intimidating. Thankfully, buying crypto isn’t as hard as it seems. In just a few minutes, you can own your own crypto! Follow our step-by-step how to guide on how to buy cryptocurrency for beginners.
Step-by-Step Guide on How to Buy Cryptocurrency
If you’re new to the crypto trading world, follow our step-by-step guide below to get started on your crypto portfolio.
Step 1: Choose a Crypto Exchange
Cryptocurrency is bought and sold on an exchange. There are many different crypto exchanges available, so it’s important to choose one that is right for you. When selecting a cryptocurrency exchange, you should consider factors such as which cryptocurrencies it supports, trading fees, payment methods, and security. To see a reviewed list of crypto exchanges, check out our article, “69 Best Cryptocurrency Exchanges.”
Step 2: Make an Account
In order to actively trade on a crypto exchange, you’ll need to make a crypto account. This usually involves providing some personal information, such as your name and email address. Once you’ve registered for an account, you’ll likely need to verify your identity before being able to trade. In order to trade crypto or even make a crypto account, most cryptocurrency exchanges require you to be at least 18 years of age.
Step 3: Connect a Payment Method
Just like a regular brokerage account, you’ll need to connect a payment method in order to buy cryptocurrency. When you sell cryptocurrency you can transfer the funds back into your connected bank account. Depending on the cryptocurrency exchange you use, there are fees for transferring money to your bank. We recommend familiarizing yourself with these fees before choosing your cryptocurrency exchange.
Step 4: Research Coins You’re Interested In
Researching cryptocurrency involves looking at the history of the coin. There are coins that have been around for a long time like BitCoin, but also thousands of coins that have minted within the past year. Using your crypto exchange, you can see how volatile the coin has been over a set period of time. This will help you understand when the coin is in a high or low period.
Step 5: Buy Your First Crypto
Now for what you’ve been waiting for, and perhaps the most daunting choice of this whole process… purchasing your first cryptocurrency.
When you want to buy crypto, you’ll need to decide how much you want to buy and which currency you’d like to purchase. For example, will you buy Bitcoin or Ethereum? How much are you willing to spend? If you’re looking for a good place to learn how to buy Bitcoin, read “How to Buy Bitcoin in 2022.”
Some people use a buying technique called dollar cost averaging which is great for long term investors. This means that rather than buying all your crypto at once, you spread out your purchases over time. This technique can help to mitigate some of the risks associated with investing in volatile assets like cryptocurrency.
Step 6: Monitor Your Positions
Now that you own cryptocurrency, it’s time to monitor your positions. Keep an eye on the prices of the currencies you’ve purchased and be prepared to when you’ve reached your target return. A lot of cryptocurrency exchanges have settings you can adjust to track certain coins. You can also set up price alerts which will notify you when the currency reaches a certain price point.
Step 7: Sell Your Cryptocurrency
One of the hardest parts of trading is knowing when to sell cryptocurrency. If you’re not careful, you can end up losing money by holding on to a position for too long or selling too soon.
When you’re ready to sell, simply log into your exchange account and select the currency you’d like to sell. You’ll then need to decide how much you want to sell and at what price. Once you’ve made your decision, hit the sell button and confirm the transaction. The funds from the sale will then be added into your crypto exchange account. You can decide to keep them in your crypto exchange or transfer them to your bank account.
Step 8: Look for More Buy-ins & Repeat the Process
You’ve completed your first cryptocurrency transaction! All that’s left to do now is keep an eye out for more opportunities to buy crypto and repeat the process. Remember, it’s important to do your own research before investing in cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual asset that uses cryptography for security. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, thousands of other digital currencies have been created. These are often called “altcoins”, short for alternative coins.
Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services. Some people use crypto as an investment, hoping that the value of their coins will go up over time. Others use it for practical purposes, such as buying products or services online or sending money to friends and family overseas.
Why is Cryptocurrency Perceived as Volatile?
Cryptocurrency is often perceived as volatile because the prices can fluctuate dramatically in a short period of time. For example, Bitcoin’s price went from around $800 in January 2017 to over $19,000 by December of that same year. While this may seem like a good thing for people who invested early on, it can be scary for those who are new to the space. It’s important to remember that cryptocurrency is still a relatively new asset class and its prices will likely continue to be volatile in the future.
If you’re interested in buying cryptocurrency but are worried about the volatility, there are a few things you can do. One option is to purchase crypto with a stablecoin. A stablecoin is a cryptocurrency that is pegged to a stable asset, such as gold or the US dollar. This means that the price of the stablecoin is less likely to fluctuate dramatically. Stablecoins are offered on all of the most popular cryptocurrency exchanges.
What is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform where you can buy, sell, or trade cryptocurrencies. Crypto exchanges are online platforms that allow you to use fiat currency (like USD) to purchase cryptocurrency. Some exchanges also allow you to trade one cryptocurrency for another. As you research different crypto exchanges, you’ll notice that some have different fee structures than others. Another important aspect is the number of coins the exchange supports. Some exchanges support hundreds of exchanges while others support only a couple dozen.
Why are There so Many Crypto Exchanges?
Dozens of crypto exchanges exist because there is no one-size-fits all solution when it comes to exchanging cryptocurrency. Some people value low fees, while others place a higher importance on security or the number of coins supported. It’s important to find an exchange that meets your needs.
What are Crypto Credit Cards?
Crypto credit cards are like a regular credit card, which allows you to earn crypto rewards on your purchases. There are a lot of exchanges that offer crypto credit cards. Read our article “Which Crypto Card is Best?” to find the best crypto credit card for you.
Do I Need to Pay Taxes on my Crypto?
The answer to this question depends on your country’s tax laws. In the United States, for example, you are required to pay taxes on any capital gains. This means that if you purchase cryptocurrency and then sell it at a later date for a higher price, you will need to pay taxes on the difference. Be sure to consult with a tax professional to ensure that you are complying with all applicable laws.
Thankfully, there are companies that offer a crypto tax software that allows you to connect multiple crypto exchanges. This software looks at your crypto portfolio and calculates your taxes for you. Some crypto tax software companies also fill out the necessary forms for you! If you’re wondering what crypto tax software exists, read “The Best 15 Crypto Tax Software.“
Wrap Up
Buying cryptocurrency can be a daunting task for beginners, but it doesn’t have to be. However, as you can tell, our biggest recommendation is to do your own research. With this guide, you should now have a better understanding of what cryptocurrency is, how to buy it, and where to store it.
