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How to Buy Crypto?

June 27, 2023

With the crypto industry growing at an incredible pace, more and more people are becoming interested in buying crypto assets. It is evident by the increasing popularity of ‘how to buy crypto’ searches. 

Financial experts recommend purchasing cryptocurrencies during significant price drops, such as during a bear market, as it increases the potential for earning substantial profits more quickly. However, as crypto also enables you to access DeFi services and expand your investment portfolio, it is advisable to buy gradually over time to compensate for possible price fluctuations. 

It all begins with selecting the right platform to purchase your crypto assets.

Choosing an Exchange or a Broker

Choosing a reputable crypto exchange or broker with a wide range of cryptocurrencies is crucial. What is the difference, though, and what is preferable? 

Crypto exchanges are similar to stock exchanges and can be centralized or decentralized. Centralized exchanges (CEXes) are controlled by some companies, which have access to your data and funds but can often offer more intuitive interfaces and straightforward exchange flows. Decentralized exchanges (DEXes) operate using smart contracts and can not access your data or funds, offering better autonomy and anonymity. Yet, their interfaces are often more complex and, hence, challenging to navigate. Since CEXes are more popular, they can dictate their terms and increase prices, which makes them an inefficient long-term solution for acquiring crypto assets. 

Brokers offer an easier way to buy your first coins and tokens but have multiple downsides. Firstly, brokers are even more expensive than CEXes as they tend to add their fees to exchange fees. Secondly, they have more opportunities to take advantage of you, including selling information to third parties or executing orders at disadvantageous prices to increase their own profits. Thirdly, brokers might place limitations on transferring your newly acquired crypto assets off their platforms, which means you will have to store your funds there for some time or even pay a fee to withdraw. Consider these aspects when choosing between a broker and an exchange. 

Lastly, remember to check if the exchange you have chosen accepts fiat currencies (U.S. dollars, euros, pounds, etc.) since some platforms only allow buying crypto using another crypto. 

Creating an Account

After choosing a cryptocurrency broker or exchange, the next step is registering and creating an account. Depending on the platform and the amount you want to invest, you might be required to provide personal information and undergo some KYC (Know Your Customer) or AML (Anti-Money Laundering) procedures. These measures are essential to prevent fraud and comply with anti-money laundering laws. Until you complete the verification process, you may not be able to buy or sell cryptocurrency. You may be asked to submit a copy of your passport or driver's license, and you may even have to upload a selfie to verify your identity.

If you value privacy and prefer not to disclose personal information, you can look for DEXes. Most DEXes respect users' anonymity and do not require any personal information. However, even decentralized platforms usually require some form of identity verification when using fiat money.

Funding Your Account

Some platforms allow you to purchase cryptocurrency without funding an account beforehand, while others require you to do so. To fund your account, you must deposit money in any fiat currency, such as U.S. dollars, euros, pounds, etc., using your bank account, debit card, credit card, or any other payment method the platform offers.

Although depositing money from a credit card may seem convenient, it can be risky and more expensive than depositing money through a debit card. Credit card companies treat cryptocurrency purchases as cash advances, which means higher interest rates and additional fees. These fees can add up, making buying crypto inefficient and wasteful.

The time it takes for the deposited funds to become available for buying crypto may vary from hours to several days, depending on the exchange or broker and the funding method used. Therefore, checking this information with the platform you want to use and considering the time when planning to buy your assets is essential.

Buying Crypto

Once you have added money to your account, you can place your first order for a cryptocurrency of your choice. Before investing, research the available coins and tokens and decide which one(s) you want to invest in. You have plenty of options, including well-known coins like Bitcoin and Ethereum, popular assets like Litecoin, BNB, Uniswap, and Cosmos, or lesser-known options. You can learn more in this post dedicated to creating your crypto portfolio. Once you have decided on your first cryptocurrency purchase, proceed with an order.

Most platforms offer a step-by-step guide to buying or selling crypto assets. Typically, the process involves selecting the asset you want to purchase and its quantity. Note that you can buy a fraction of a coin or token, which is helpful when purchasing such costly assets as Bitcoin. Then, choose your preferred payment method. Some platforms require you to fund your account beforehand, as mentioned in a previous step, while others offer a variety of payment methods at the time of purchase.

Ensuring Security of Assets

Unfortunately, cryptocurrency exchanges and brokers alike are vulnerable to hacker attacks, and there is always a risk of losing your assets if you forget, destroy, or lose the codes needed to access your account. Therefore, it is crucial to have a secure storage method for your assets and a safe way to store your account or wallet codes and keys.

After purchasing, your assets will be stored in a digital wallet, which the exchange or its partnering company can provide. However, if you are unhappy with the provided solutions or want a more secure storage option, you can transfer your assets to another wallet later. Remember that this may require a small fee, so check with your chosen platform or broker beforehand.

You have two options for storing your cryptocurrency: hot and cold wallets. Hot crypto wallets are more user-friendly and quick because they are always connected to the internet, which also makes them more susceptible to hacker attacks. Cold wallets are safer because they come in the form of external drives you log out of your devices, thus storing assets offline. However, those wallets require more care and commitment, as losing or damaging them may result in losing your coins and tokens forever. Before making your choice, learn more about hot and cold wallets in this post.

Final Thoughts

If you are new to the crypto industry, it is natural to feel overwhelmed by the buying process. However, if you have weighed the risks and decided to invest in crypto or try DeFi services, you have taken a significant first step. The rest is following the instructions on your chosen platform and gradually learning about crypto technologies. Once you purchase your first crypto asset, you can exchange it for other tokens, send it to friends, and experiment with various storage methods to gain more experience and feel more confident managing your crypto assets in the future.

Kinetex is an excellent option for managing your coins and tokens, whether you are new to cryptocurrency or need to rebalance your existing portfolio. With Kinetex, you can quickly swap any crypto asset across any network through the Kinetex dApp, which supports over 5,000 assets. You can also exchange your assets for stablecoins and withdraw them to fiat using DeFi services like MoonPay, Simplex, and more.

Kinetex Network: Website | Kinetex dApp