How Do You Buy Cryptocurrency? A Beginners Guide to Cryptocurrency

How Do You Buy Cryptocurrency? A Beginners Guide to Cryptocurrency

by GM Malik

In November 2021, the global cryptocurrency market value reached $2.9 trillion. Then, in June 2022, it lost nearly $2 trillion, with its total worth plunging to $926 billion. The last time it fell below the $1 trillion mark was in January 2021.

Despite that, 90% of surveyed Americans said they still plan to buy crypto throughout 2022. With crypto prices still reeling, that may be wise, as it’s often best to invest when prices are low.

So if you’ve always wanted to dabble in crypto, now may be a good time.

But how do you buy cryptocurrency in the first place? Should you sign up somewhere, and if so, where? What about the requirements?

This crypto-buying guide lists the steps addressing all those questions, so read on.

How Do You Buy Cryptocurrency?

The first step to buying cryptocurrency is deciding on the currencies you want. Next, choose where to get them, register, and select a payment method. Afterward, you can place your order and select a storage location for your crypto.

Step 1. Choose Your Preferred Crypto

There are over 19,000 cryptocurrencies currently in circulation.

Bitcoin (BTC), the original crypto, still leads the way. Ether (ETH) is the second-most valuable, while Tether (USDT) ranks third. However, the rest are gaining traction and are slightly less volatile.

BTC, ETH, and USDT remain the best options, so it still pays to invest in them.

Research your other options, such as Binance Coin (BNB), U.S. Dollar Coin (USDC), and Solana (SOL). Consider buying these, too, as they carry a risk slightly lower than the top 3. That can help expand and diversify your portfolio. 

Step 2. Decide Where to Buy Cryptocurrency

You have three primary options: crypto brokers, exchanges, and automated teller machines (ATMs).

An online crypto broker is an intermediary or middleman between a buyer and a crypto market. It lets buyers purchase smaller portions of crypto at prices the broker sets. It charges a fee for using its simplified platform.

If you want to buy and trade crypto, you may consider using an exchange platform. Crypto exchanges are marketplaces wherein buyers and sellers trade crypto with each other. There’s no intermediary, making the process more complex and best for advanced traders.

A crypto ATM looks much like a regular ATM, except it lets you buy and, sometimes, sell crypto for cash. It connects to a crypto exchange but, unlike traditional platforms, processes transactions immediately. You can check out this page to learn more about crypto ATM locations.

Step 3. Register With the Platform

With crypto brokers and exchanges, user registration is necessary. It involves signing up to open an account, often requiring you to provide a few personal details. It may also ask for your email address or phone number for authentication purposes.

User registration with crypto brokers and exchanges also requires verifying your identity. You may have to submit a copy of a government-issued photo I.D., such as a passport or driver’s license. Another possible requirement is a selfie with you holding your photo I.D.

Many crypto ATMs also require registration, but not as stringent as the above. For example, they may only ask for your mobile number. That’s where they’ll send a code you need to input into the ATM to proceed with the transaction.

With other ATMs, you may have to verify your identity at the machine with a photo I.D. and a selfie taken by the ATMs’ camera.

The less stringent crypto ATM requirements only apply to smaller transactions, though. So, to buy crypto worth thousands of dollars, you must register with the crypto ATM operator first. One reason is that their teller machines have maximum daily limits.

Step 4. Fund Your Crypto Purchases

If you choose a crypto broker or an exchange, you must deposit funds into the platform. You can do this by linking your bank account with your platform account. You can then choose your bank account as your payment method.

Alternatively, you can authorize a wire transfer. In this case, money from your bank account gets transferred to your platform account.

Another option is to pay with a debit or credit card. You only have to enter your 16-digit card number, 3- or 4-digit card security code (CSC), and expiration date.

Some card issuers now use multi-factor authentication, though. For example, they may send you a one-time pin (OTP) to your registered mobile number. You then have to provide this for your crypto purchase to push through.

It’s best to avoid using a credit card, as you may face exorbitant cash advance fees. For instance, some issuers may charge a flat rate between 3% and 5% per transaction. On top of that is the interest rate applied to the cash advance, which can be over 20%.

With a crypto ATM, you can deposit cold, hard cash into the machine’s receptacle. Some teller machines also accept debit and credit cards.

Step 5. Order Your Cryptocurrency

Once you’re ready to buy, choose or enter the ticker symbol of your desired cryptocurrency. It’s the “acronym” of the currency, such as BTC for Bitcoin, ETH for Ether, and USDT for Tether.

Next, enter the number of coins or amount (in fiat currency) you want to purchase. For instance, suppose you’d like to buy 0.05 BTC; enter that figure and authorize the payment. Conversely, you can also input $1,000, which, at the current rate of Bitcoin, should get you about 0.057 BTC.

Review your choices, and confirm the purchase if everything is in order.

A note about crypto ATMs: You must include their transaction fees in your cash deposit.

Depending on the crypto ATMs you use, transaction fees can range from as low as 2% to as high as 20% or even more. The average is around 15%, though.

So, let’s say you want to buy $200 worth of BTC, and the ATM you’re using charges a 15% fee. In this case, you must deposit $230 into the machine’s receptacle. Otherwise, the transaction won’t push through, or you’d only get $170 worth of Bitcoin.

Some crypto ATMs also have banknote restrictions. For example, they often reject coins; the lowest amount they may accept is a $5 bill. So, before visiting an ATM, prep enough paper money to cover the entire transaction amount.

If you have “change,” the ATM converts it into the same cryptocurrency you’re buying. It then adds the excess to the total number of coins you initially entered.

Step 6. Select a Storage Option

Cryptocurrencies live on the blockchain, a digital ledger of all crypto transactions. To access your transactions, you must have a place to store their records. This storage location, in turn, is what you call a crypto wallet.

Crypto Exchange Wallet

If you buy cryptocurrencies from an exchange, your account comes with a wallet. If you like the platform, you can leave your crypto in it. But if you don’t, you can transfer it to a hot or cold wallet.

Hot Wallet

A hot wallet is an online software you can run from a smartphone, tablet, or computer. A perfect example is a mobile crypto wallet, which you can download onto your phone. It lets you generate a Q.R. code containing your cryptocurrency address.

That’s the same Q.R. code you need to scan when you buy crypto from an ATM. Likewise, it’s the code you need to send someone who wants to send you crypto.

Hot wallets are convenient since they let you manage your crypto on the go, as long as your device has internet. They also allow you to buy crypto from ATMs immediately and take advantage of price dips. Plus, many of these apps support numerous cryptocurrencies.

Cold Wallet

A cold wallet is a type of external hardware, such as a USB or hard drive. It doesn’t require an Internet connection, so it’s more secure than online options. However, you need to be careful with them because if they fail or you lose them, you may not be able to get your crypto back.

Some crypto ATMs have a USB port where you can plug cold wallets. In this case, the teller machines scan the device for your crypto address. So when you buy crypto from an ATM, it sends the currency straight into your cold wallet.

What About Crypto Brokers?

Although crypto brokers are great for beginners, they may restrict your storage options. For example, some may not let you move your crypto from the platform to another wallet.

So before deciding to go with a broker, check their terms and conditions first. Then, consider choosing one that lets you transfer your holdings to any wallet. You may have to pay a fee, but that’s better than not having complete control of your assets.

Start Investing in Cryptocurrencies Today

And there you have it, the guide answering the question, “how do you buy cryptocurrency?” Now that you know, it’s time to start researching and reviewing your crypto options.

After that, choose and register with a platform, fund your purchases, and start buying. Finally, don’t forget to pick a safe and convenient wallet so you can store and manage your crypto anytime.

If you liked this guide, you’d surely love our other informative posts. So, browse more of our blog now to get the latest scoop on all things computer, tech, and science!

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