Buying Your First Cryptocurrency [Beginner Guide]
Cryptocurrencies, like Bitcoin, are still an important topic for many. You can hear about it all around the world, slowly becoming a daily subject among colleagues, friends, and even family members. Many new businesses have been established to capitalize on the trend, providing the market with an abundance of ways to get bitcoins.
A study conducted by Dalia Research has found that, in the most of the researched countries, less than 10% of the internet population owns cryptocurrencies. However, the same study presents there is also a quite amount of people not holding any cryptocurrencies, but planning on buying some in the next months.
The article in front of you will show you just how easy it is to get your first digital coins, no matter if that would be bitcoin or other cryptos. To prove it, I present an easy to understand step-by-step guide on how to purchase bitcoins at one of the more popular markets in the industry, CEX.IO.
Briefly about Cryptocurrencies
Although many heard of them, few know what exactly cryptocurrencies are. Bitcoin and other coins, also known as altcoins, are a form of digital money that exists solely on the internet. Few tries happened in the past to create a physical coin, but all of them turned out to be unsuccessful.
Many of them are completely decentralized and independent in their very nature, due to the fact that no governmental body controls them. Fiats, like USD or EUR, carry Central Bank’s backing, fiscal policies and the entire country. They are printed by a single entity and are very stable compared to cryptos.
Digital money, on the other hand, usually uses “mining” as a source of supply. Bitcoin, for example, is mined through complex mathematical equations. Miners would provide the power of their computers called hash power, by which these equations are solved. Then, once the quota is satisfied, miners would be rewarded with blocks of BTC, which they would sell into the market. This process is known as proof of work (PoW).
Importance of Wallets
Another important aspect of digital currencies is the fact that wallets are the only place where you can send or receive them. Since they are the only storage place for cryptos, it is imperative to use ones that offer the highest security. Many investors experienced a sour situation, in which hackers cleaned their balances due to the lax protection.
Thus, it is important to understand the types of wallets and for what they can be used. At the top sit so-called hardware wallets, which offer the highest safety but come with not so small price tags. Then, you have desktop wallets, which are mostly free to download, have good security but are vulnerable to viruses.
Lastly, you have the most numerous wallets called online wallets, which are free, easy to use but have very low-level protection. First two types are for those investors that plan moderate to large investments. Online, however, are more suitable for traders and beginners, though I would recommend using first two, even for starters.
Short Intro of Popular Platforms
Now that you know roughly what cryptocurrencies are all about and where to store them, it is time to go over places where you can purchase your first coins.
There are many platforms offering the possibility to trade cryptocurrencies. Here are just some of them:
Interestingly enough, CEX.IO started out as a cloud mining service provider back in 2013. Now, it is an exchange that offers services globally, including both simple swaps and margin trading. At CEX.IO, you can purchase and sell bitcoin, Bitcoin Cash, Ethereum, Dash, Ripple, the other cryptos. As for the fiats, you can fund your account with USD, EUR, GBP, and RUB, using credit cards, bank transfers, or cryptocurrencies.
Accounts are allowed to do the trade as long as they are verified. This means that scanned ID or driver’s license is a must, alongside with personal details. Fees, while depositing/withdrawing, range from 0% (bank transfers) up to 5% (credit cards).
The Bitfinex platform is currently the largest one regarding USD trade with bitcoins. Based in Hong Kong, the company offers more complex services, when compared to CEX.IO and Coinbase, mostly due to margin trading. Its fee structure is organized through maker and taker fees, which range from 0% to 0.2%. You should also account for bank transfer costs, which account for an additional 0.1%.
Verification is a must and process can take some time to be completed, with the usual timeframe being a month even. You can fund your account through cryptocurrencies while bank transfers are the only option available for fiats at this point. As for the coins, there are almost 60 of them at the moment, with the number growing as the time passes.
If you are looking for a comfortable and safe option, Coinbase could be one of the reasonable choices. However, whereas CEX and Bitfinex offer their products worldwide, Coinbase concentrated its market into 32 countries only. You are also expected to provide personal documents as soon as you register an account if you wish to buy coins at this exchange.
Through USD, EUR, and GBP deposits, the company offers several payment methods, them being credit card and bank transfers. Fees range between 0 and 3.99%, depending on the chosen deposit/withdrawal method. Accepted cryptos are bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
Step-By-Step Purchase Guide through CEX.IO
In this article, I use CEX.IO as a marketplace where bitcoins are purchasable. I would recommend opening an account at Blockchain.com (registration is super easy and fast) for starters, to get the feel of the process.
So, without further ado, here are the steps on how to purchase your first-ever cryptocurrency.
1) Account Registration and Verification
This is a pretty straightforward step, as you register an account with your email and password. Then, head over to “Verification” page under your account tab on the right side of the website and upload scanned copy of your ID/driver’s license.
The process should take up to a day and once confirmed, the same web page will look something like a picture below.
2) Checking Out Prices and Payment Methods
As you get verified, you should check out payment method and fees that accompany them. FAQs usually hold the answer and should be one of the first things you do, even before registration. EX.IO, for example, accepts credit cards and bank transfers in 4 fiat currencies. Fees range between 0% and 5%, depending on the method used.
3) Fill Out Purchase Form
Click “Buy/Sell” button at the top of the page to get the purchase form set and ready. Choose the number of bitcoins (or another crypto) you wish to get and press “Buy”.
You will be redirected towards our next step, and that would be your desired payment method.
4) Verify Your Payment Method
CEX>IO has this wonderful policy, in which all you have to do is simply list out the required details. You will be charged a small amount t verify your card, of course, but the entire process should take less than 5 minutes.
5) Buy Bitcoins
Firstly, you will need to deposit some funds into your account. From there, you go back to step 3 once more to confirm the transaction and click the “Buy” button again. Only this time, you get coins in your CEX.IO balance instantly.
6) Withdraw to Blockchain.com
Go back to your account tab and click the button “Withdraw” so you can send your coins off to your Blockchain.com account.
Now, all you have to do is to copy your address code from Blockchain.com and paste it here. Clicks “Withdraw” and wait an hour for the transaction to take place, ending the entire process.
As you can see, it is quite possible to get coins within hours if you know how and where to get them. More importantly, there are ways to do so cheaply, if you happen to hold a bank account. However, you should also be aware of the fact that privacy is hard to combine with security.
There are platforms out there that would allow you to anonymously purchase coins, mostly P2P, but that is the story for another guide.
Please be aware there is a lot of risks involved in trading and investing in cryptocurrencies. Are cryptocurrencies a good investment for you? — it is for you to decide, but now you should know how to start.