Future traders and hopefully millionaires. Welcome to our guide where we are going to break down for you the basics of digital currency and how to buy one .
Before starting with the question on how to buy Cryptocurrencies , lets first explain some must-need facts everybody should know before investing in Bitcoin or anything else.
Table of Contents
Introduction
The first and basic things you should know is What is Cryptocurrency and How does a cryptocurrency work?
After giving the answer on these two questions we are going to head over and explain it to you on how to buy one .
You can’t buy something if you don’t know what it is? Right?
Cryptocurrency is decentralized digital money designed to be used over the internet. With its First launch Of Bitcoin in 2008 as it still remains today the biggest and most significant currency .As the decade passed , Bitcoin with all the other cryptocurrencies rose up to an exponential level where it represents one of the biggest markets that exist now. Today there are over 16 000 cryptocurrencies that exist. One of the most popular ones and the ones you probably heard of even as someone who is new to this are Bitcoin as the founder, Ethereum, Tether , Binance Coin ,USD Coin ,Solana XRP ,Terra LUNA etc…Besides Bitcoin as the most popular and most expensive cryptocurrency there are cryptocurencies available at the market .
The most common categorization of cryptocurrencies that exist are:
1. Alternative Cryptocurrency Coins (Altcoins)
So What are Altcoins and what are crypto tokens? Altcoin is the term used for any alternative digital currency to Bitcoin. The most popular in this ecosystem is Ethereum – one of the fastest-growing cryptocurrencies in the market. There is also a range of other altcoins in the market today such as Binance Coin,Solana.Shiba Inu and Terra.
2. Crypto Tokens
Unlike crypto coins, tokens do not have their own blockchain. They operate on blockchains of crypto coins. For example, many tokens run on Ethereum.A crypto token is a simpler form of an altcoin ,since its more easier to create one than a cryptocurrency coin(altcion).When a token is exchanged, it is physically moved from one place to another.
Before investing your money, you should also know How Cryptocurrencies work?
Cryptocurrencies are a type of currency which uses digital files as money. Usually, the files are created using the same ways as cryptography (the science of hiding information).These files run on a distributed public ledger called blockchain . The technology developed by Satoshi Nakamoto and the original Bitcoin enthusiasts .With the technology of blockchain all the transactions and their records are updated and held by currency holders .Which in other and simple words means every transaction is public and The access is shared between its users and any information shared is transparent and immediate(basically a long public list that can’t ever be changed).All the the recording information is impossible to change ,hack, or cheat the system in any kinds.
It’s important to remember that blockchain is a type of technology, rather than an asset or company .As transactions occur, “miners” verify each and every one to ensure they are accurate. These transactions happen constantly, and as they occur, they’re added to a block. Each block is made up of a definite number of transactions and a link to the previous block. Once a specific number of transactions is added to a block, that block is then added to the blockchain .As a reward, the miners receive their fee in that block’s coin, thus increasing the number of coins of that specific cryptocurrency in the world. Note that some coins, like Bitcoin, have a cap on the number of coins that can be issued.
5 easy steps for buying Crypto
After getting you trough these basics we are going to explain in 5 simple steps on how to buy Bitcoin or any other Altcion or Crypto Token. While it seems like and impossible and very complicated task to buy Bitcoin ,In contrary, its completely the opposite from that.
Step 1: The Requirements
First of all Before making the decision to buy Bitcoin or any other cryptocurrency , there are several things you should need:
And that’s a 1.cryptocurrency exchange account .2 A secure connection to the Internet and 3.A method of payment .It is also recommended that you have your own personal wallet outside of the exchange account. Valid methods of payment using this path include bank accounts, debit cards, and credit cards.
After acquiring all of these things above The first step of buying bitcoin or other altcoins consists of choosing the right crypto trading service or venue .They include cryptocurrency exchanges, payment services, and brokerages. Out of these, cryptocurrency exchanges are the most convenient option because they offer a breadth of features and more cryptocurrencies for trading.
A crypto exchange is a platform on which you can buy and sell cryptocurrency . You can use exchanges to trade one crypto for another — converting Bitcoin to Litecoin, for example — or to buy crypto using regular currency, like the U.S dollar.
One thing you should also know is that your location may prevent you from buying and selling crypto on certain exchanges due to state or national regulations. Some countries, like China, have banned citizens from accessing crypto exchanges at all. Some examples of the most popular Cryptocurrency exchanges are Coinbase , Kraken,Crypto.com,Gemini and also Binance,but it caters to a maybe more advanced trader, offering more serious trading functionality and a better variety of altcoin choices.
Choosing the right exchange will make your time and money worth it, since the accessibility and options of your buys depend from it. Choose wisely.
Step 2: Connecting your exchange to a payment option
After you have chosen an exchange, you will need to gather your personal documents. Depending on the exchange, these may include pictures of a driver’s license or Social Security card, as well as information about your employer and source of funds. The information you may need can depend on the region you live in and the laws within it. The process is largely the same as setting up a typical brokerage account.
After the exchange has verified your identity, you will be asked to connect a payment option. At most exchanges, you can connect your bank account directly or you can connect a debit or credit card. Although you can use a credit card to purchase cryptocurrency, it is not a good idea because cryptocurrency price volatility could inflate the overall cost of purchasing a coin.
One very important thing you should also know too is that all the Exchanges charge transaction fees. Depending from the exchange you are using these fees can be either a flat fee or a low percentage of the trading amount. Some credit cards can also incur a processing fee in addition on the transaction fees.
Step 3: Depositing cash in your Cryptocurrency account
You can start buying cryptocurrencies once you have the necessary founds in your account to make the purchase.
You can deposit money into your account by making a payment with a debit or credit card .As said connecting your account with your exchange can sometimes trigger transaction fees so you have to pay attention to the percentage of it .It all depends from your bank and the exchange you are using .For example, when you make a cash advance using a card you may have to pay the provider as much as 5% of the transaction amount. This is in addition to any fees that your exchange/broker may charge to complete the process. Depending on the funding method you’re using, plus the exchange or broker that you’ve decided to use, you may have to wait a few days before the money that you’ve deposited is available with which to buy cryptocurrency.
Step 4: Place a Cryptocurrency order
Cryptocurrency exchanges offer the same level of features as their stock brokerage counterparts .Crypto exchanges today offer a number of order types and ways to invest. There are thousands of cryptocurrencies to choose from, including the best-known versions such as Bitcoin and Ethereum. Most exchanges and brokers allow customers to buy fractional shares of certain cryptocurrencies(for example these two mentioned above) . Once you’ve decided what cryptocurrency to buy Go to the Buy/Sell option on the exchanges platform you are using(its most commonly in the right corner or somewhere you can’t miss it ).After choosing your payment method, clicking on the buy panel you are getting an option to chose and select the assets you’d like to purchase .Enter the amount of money you would spend on this particular crytpocurrency .And Click Buy-Preview Buy to confirm the purchase .And if all the details are correct ,clicking the Buy option is where you complete you purchase and now you own a crytocurrency.
Step 5: Storing the Cryptocurrency
After making the purchase ,your cryptocurrency will be placed on your account exchange ,but besides the exchange there are more secure options for storing it .Having it in your personal wallet is always the safest option since you gain all the control over the private keys to your funds. It also gives you the ability to store funds away from an exchange and avoid the risk of your exchange getting hacked and losing your funds (It is very unlikely to happen but you never know).
How to chose between keeping the cryptocurrency on your exchange or having it in your online or physical wallet .The most recommendable option , especially for new users to crypto is keeping the assets on your exchange .Since as a beginner you are not going to invest your whole house and lifesavings .Keeping the smaller amount of crypto on your exchange is the best option. At least until you get more experienced in this field(investing an learning at least for a period of 6 months).
For the more experienced users and control freaks that want to have completely control of their private keys and assets is the option of keeping the crypto in your online or physical hardware wallets .They can be divided in two options and those are Hot and Cold wallets.
Hot wallets
Hot wallets run on internet-connected devices such as computers ,phones or tablets .They are online wallets that store your private keys and assets. These wallets are best for small amounts of cryptocurrency or cryptocurrency that you are actively trading on an exchange .That’s because of the fact that their being online can create vulnerability and higher risk of theft since they remain connected to the web.
Cold wallets
In contrast, cold wallets are not connected to the internet, making them a more secure option for holding cryptocurrency. They can be found in forms such as USB or Hard drive devices. They are also referred to as offline wallets since they are not in any way connected to the internet .Making them the safest option for your private keys and assets .But still, nothing is without risk since losing them or losing the key codes to the wallet ,or even if the device should fail in some way ,you may never be able to retrieve you cryptocurrency. It still represents the safest option from thieves and frauds and hacking to.
It is most recommendable for people who store larger amounts of assets .Since you have completely control of everything. But still the question remains is it safe from your mistakes.
Conclusion
Even after knowing how to buy any cryptocurrency, it is not recommendable to do it the exact moment. When it comes to investing in this technology, there are many facets to consider. Cryptocurrency may offer the potential for a high level of returns, but also the possibility of significant price volatility as well as losses. For these reasons, whether cryptocurrency is a good investment may depend on the profile of the particular investor. It is recommendable that you first explore the Market and the prices. Learning how to manage the risk and create a strategy for trading can take up some more time than you are expecting. But having a great strategy with the knowledge will make your chances of making money a lot better. You should be aware of the fact that crypto isn’t something for short-term money making. It is and should be for long term. The most common mistakes are made by novice traders that are panic selling or thinking they can make millions over night. So with all that said, take your time and study this area of investing. Don’t hurry since it’s going to be here for a while and its going to be a normal part of our everyday lives.
Hello guys , I’m a mechanical and software engineering student .Science and technology are my love and passion .