How to Buy Crypto: Best Guide for Beginners

Published: 28th May, 2024 | Last Updated: 30th May, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

In this guide, I will walk you through what you need to do to buy crypto for the first time. You will learn how to buy crypto, which platform to use, what to buy, what mistakes to avoid, and how to keep things simple. I will also tell you which cryptocurrencies to buy for a balanced portfolio in this bull run, how not to lose your money, and how to store your crypto. Finally we will talk about altenatives to buying crypto on an exchange. I’ll tell you about decentralized exchanges and why people are using them.

Why listen to me:

I have been in the crypto space and explaining cryptocurrencies on ElementalCrypto.com since 2017.

I have used more than 10 exchanges for buying crypto and have learned from a lot of mistakes I made while investing in crypto.

Previously I used to work at Google where I advised crypto companies on the growth strategy and the user experience of their sites. This informs my opinion on which are good crypto apps to use and which are not.

In this guide, I am going to show you how to get started buying cryptocurrencies. I am not going to explain how crypto works.

To draw an analogy, I am going to teach how to drive a car rather than how the engine works. If its blockchain technology you are interested in then check out my crypto course.

How to buy crypto

Choose a Broker or Crypto Exchange

First, decide if you want to use a broker or a cryptocurrency exchange

What is a crypto broker?

A broker usually offers stocks, ETFs, and other traditional financial products in addition to crypto assets.

The benefit of using them is that you can manage all your financial investments from one place.

The drawback is that they don’t offer as wide a selection as cryptocurrency exchanges. Another drawback is that brokers don’t offer crypto wallets. This is changing as brokers are developing their own wallet solutions. For example, Robinhood already offers a digital wallet to its users.

Popular brokers that offer crypto are Robinhood, eToro, and WeBull.

Personally, I don’t recommend you use a broker. Instead I recommend you use a crypto exchange since they have a wider range of coins and tokens.

In fact, I recommend you open accounts with three crypto exchanges. I will tell you why further on.

What Is a Cryptocurrency Exchange?

A cryptocurrency exchange is a platform that matches buyers with sellers. Imagine it like a large marketplace with people offering to sell crypto at different prices and others offering to buy crypto at different prices. When a match is made the sale goes through. The platform takes a cut on either side.

Which crypto exchange should you use?

To get started I recommend you use Kraken. I am not getting paid to promote them here. It’s just what I recommend my friends use.

Why Use Kraken

Kraken exchange buy crypto interface
Kraken exchange buy crypto interface

Kraken is based in the United States and has a good reputation for security. The primary reason I like it is that it has never been hacked.

Security measures

  • Stores the majority of its funds in cold storage i.e. offline which makes it impossible for hackers to access
  • You can set up three separate two-factor authentication codes. One is for logging in, one for confirming crypto transactions, and one for adjusting your security settings
  • You can set up a 48-hour time delay for withdrawals. This way if anyone gets access to your account and tries to withdraw your funds you get notified in the meantime.

Coin offering

Kraken offers more than 250 coins and tokens which means it covers all the basic ones.

User interface

The user interface is simple to use. Many other exchanges have too many bells and whistles and give you a headache just to look at. Kraken is simpler and easy to use.

You can read more here: Is Kraken Good in Canada?

Kraken alternative

If you don’t want to use Kraken a good alternative is Coinbase.

coinbase app

Coinbase is the largest crypto exchange in the US and one of the largest ones worldwide. It’s a publicly traded company too.

Like Kraken, Coinbase offers a time delay on withdrawals through its Coinbase Vaults. This is a free cold storage solution. You can find out more about Coinbase vaults here.

The reason I do not use Coinbase anymore is that they are not accepting the address verification document I have sent them and I can’t be bothered figuring out why they have rejected it.

Why you will use more than one exchange

Once you start investing in crypto you will soon find out that having one is not enough.

The main reason for this is that you will want to invest in coins with lower market caps that are not on the large exchanges.

These are riskier coins that are way more volatile than blue-chip coins such as Bitcoin and Ethereum.

However, the potential upside is much higher for those coins that do succeed.

In crypto rather than measuring in percentage points people say a coin will grow 3x, 10x, 100x etc. For example, saying that a coin will grow 100x implies that you expect the coin will grow 100 times in its price. So where do you find these 10x or 100x gems?

The two additional exchanges you should open an account with

1. Binance

Binance is the largest centralized exchange worldwide.

binance vs kraken user interface
The Binance app on the left has a busier interface than Kraken’s interface on the right

They offer more than 400 coins many of which are not listed on US-based exchanges such as Kraken and Coinbase. This is the main reason I started using them.

Another reason to use Binance is that they also offer a prepaid card from which you can spend your crypto directly. Binance converts to euros, dollars, etc in the background so that you can use the card in everyday transactions.

I know people who use this card to avoid declaring taxes.

Tip: if you are based in the US you cannot deposit US dollars. Also, note that Binance.us offers a more limited selection compared to Binance.com

2. MEXC

After a while, you will find yourself looking for even riskier bets with more upside. MEXC is a smaller exchange that is often the first to list coins with less than 100Mn in market capitalization.

Market cap = price * circulating supply and is ao good measure to understand how much has been invested in a coin.

MEXC have more than 800 coins on offer and you don’t need to verify your ID to get started.

So here is the strategy

  1. Use Kraken as your base where you invest in blue chips and store and secure your crypto
  2. Use Binance to venture into tier 2 coins which are riskier and have more upside. Order their card if you want to spend crypto directly. Whether that will be under the radar of local tax authorities depends on your jurisdiction.
  3. Finally use MEXC to venture into tier 3 coins that are even riskier but have much higher upside

Steps on how to buy crypto

1. Create and Verify Your Account

To set up an account you will need to share your email address and verify it. Next, you will need to share personal information such as your name, address, and phone number.

You can sign up for an exchange by downloading the mobile app or by visiting their website. You will also need to upload your ID and depending on your country you may need to upload a proof of address such as a utility bill.

Why do I need to verify my identity to purchase crypto?

Crypto exchanges require id verification to comply with Know-Your-Customer and Anti-Money Laundering regulations. Some exchanges don’t ask you to KYC until you deposit or withdraw above a certain threshold.

Pro tip: If you use a VPN make sure you spoof an IP address of your home country. Otherwise, the verification process might take longer or the exchange may reject you. For example, if you try to sign up from a Canadian IP but the exchange does not accept Canadian customers it will create problems for you.

2. Deposit cash

The cheapest way to deposit fiat currency is to make a bank transfer, wire transfer, ACH transfer, or SEPA transfer depending on the country you live in. The only drawback to doing this is that it can take 2-5 business days.

*If you are based in the US ACH bank transfers are instant.

Tip: Credit and debit card deposits are instant but involve hefty fees of 3-5%. Also, most exchanges don’t accept credit card deposits anymore. Some do accept Apple Pay or Google Pay.

3. Install the pro version

Most exchanges have a standard version and a pro version.

The standard versions are aimed at beginners. There is usually just a big buy and sell button and that’s it.

However, this simplicity comes at a large cost with fees on the pro versions being way cheaper. I recommend you install the pro versions of the app or interfaces.

How to access the pro version

  • Kraken has a Kraken Pro app which you download separately. Both the standard Kraken app and the Kraken Pro app will show you the same portfolio and use the same credentials.
kraken vs kraken pro
Kraken on the left vs Kraken Pro on the right
  • Coinbase allows you toggle on the Coinbase Advanced feature with lower fees through its settings in the top left
how to switch to coinbase advanced
how to switch to coinbase advanced
  • Binance too allows you to switch to Binance Pro in the settings of its app
infographic how to enable binance pro

4. Buy cryptocurrency

All of the exchanges have very similar interfaces. To buy cryptocurrency follow these steps

  1. Choose the cryptocurrency you wish to buy from the drop-down or search for it in the search bar. Avoid rookie mistakes such as buying the wrong coin. For example Bitcoin is no the same as Bitcoin Cash.
  2. Click on the buy button and enter the amount you wish to buy. You may not be able to buy all coins with fiat currency. If this is the case you will need to convert your fiat dollars, euros, etc into a stablecoin. Stablecoins are crypto tokens that peg their value to a national currency which is usually the US dollar. The most common stablecoin on exchanges is USDT. Hence, convert your cash into USDT and then use the USDT to buy your crypto.
  3. Choose the order type. Market orders are executed at the prevailing price on the market. Limit orders are for more advanced traders. They execute when the price reaches a specific price that you specify. To start with use a market order as it is simpler.
  4. Review the transaction fees and confirm.
  5. Your crypto will appear in your portfolio tab.

What are the fees for buying crypto?

There is no reason to use an expensive exchange. Both Kraken and Coinbase are large exchanges that offer decent fees in their pro versions.

However, you should be aware that the cheapest option is Crypto.com. This is an exchange that is based in Singapore. They have a decent reputation but I have never used them. Their main product is a prepaid card that gives you 1% in cash back when you spend using the card.

There are four types of fees:

1. Deposit fees

Make sure you choose a cheap or free payment method. There is not reason to pay a high fee here.

2. Withdrawal fees

Some exchanges charge 1.5% for withdrawals. There is no reason to pay that as you can easily move your funds to an exchange that does not charge for withdrawals

3. Trading fees

You should not pay more than 0.7% on a trade. If you do then the exchange is charging you too much.

4. Network fees.

When you buy, sell, or move crypto you need to account for network fees. These are fees that are use to pay the people who validate the transactions on blockchains. They are the same for all exchanges but they differ depending on the coin and blockchain you are moving. For example, Ethereum transactions are much more expensive than Solana transactions.

Fees compared

Top 10 Crypto Exchange Fees Compared

Crypto tokens Deposit Withdrawal
Maker fee Taker fee Bank transfer Bank transfer
Kraken 0.25% 0.40% 0.50% $10
Coinbase 0.40% 0.60% 1% 1%
Crypto.com 0.075% 0.075% 0% $1.99
Binance 0.1% (+25% discount if you used BNB to trade) 0.1% (+25% discount if you used BNB to trade) varies by currency but about $1.5 flat fee on average varies by currency but about $1.5 flat fee on average
MEXC 0% 0.10% undisclosed undisclosed
Robinhood 0% 0% 0% 0% for bank transfers
Uniswap - 0.30% - -
Chainge undisclosed undisclosed - -
Bybit 0.10% 0.10% 0% flat fee of $1 for bank trasnfers
Kucoin 0.1% (20% discount if you use their KCS token) 0.1% (20% discount if you use their KCS token) 0% undisclosed

Which crypto should I buy?

Your strategy will differ depending on whether you are investing for the long run and your kids or if you are looking to make a quick buck.

Which coin to buy for the long term

If you are investing for the long term 20 year time horizon then Bitcoin and Ethereum are the largest coins. Bitcoin holders believe that Bitcoin is a good store of value. To understand the store of value narrative better read the first half of my article explaining bitcoin.

graph of bitcoin price
Bitcoin’s price has been going up over the long term

Ethereum has the biggest network effects owning 60% of the total value locked in crypto protocols. If you did not understand that sentence then you need to read up on what ethereum is.

Ethereum owns 60% of the total value locked in crypto protocols

Most crypto investors I follow recommend somewhere between 5-10% in Bitcoin and Ethereum and the rest in property, stocks, ETFs, bonds, etc. A good book to read on how to manage your personal finance situation is How to Own the World.

Short term portfolio

If this is your first time in crypto you should structure your portfolio in an idiot-proof way. At the time of writing, we are entering a bull market. However, if by the time you read this guide, you see the market is overly exuberant you should be conservative in your approach or maybe not invest at all.

You want to invest when prices are low and sell when they are high and not the other way around.

Here is an example of a conservative way to buy crypto:

How much to invest

Minimum amount of crypto to buy

Don’t be a wimp. Growing $500 by 10x is not going to make a difference in your life

Maximum amount of crypto to buy

On the other hand, don’t be an idiot and invest all your life’s savings. You want something in between and the best way to think of this is to project yourself in the future under two scenarios.

Scenario 1 has you making 10 to 20 times your initial investment. If this happens you are going to say “Man! I wished I had invested more”.

Scenario 2 has you losing 90% of your initial investment.

This happens. It doesn’t happen overnight but is the result of an emotional weakness humans have at cutting losses.

Here is how it usually plays out.

Say prices drop by 20% and you think “Nah I won’t sell, they will bounce back”.

Then your investments drop another 20%. You have now lost 40% of your portfolio.

But you think “I will leave it to fate. It might bounce back”.

When you have lost most of initial investment you decide to sell.

This happens more often than you think with people riding the wave and seeing their portfolio increase only to see it drop back down to zero.

You need to consider this as a plausible scenario and decide how much you would be comfortable losing. Is it $10,000? 20,000? 50,000? What if you lose $100,000?

Portfolio split

Once you decide on the amount split your portfolio with the majority in blue chips and a small proportion in asymmetric bets.

An asymmetric bet is something that might go to zero but can easily 10x or 100x if it works out.

Here is a sample portfolio:

Sample portfolio: 90% in blue chips 10% in risky bets

For example

  • 30% in Bitcoin (risky)
  • 30% in Ethereum (riskier)
  • 30% in Solana (even more risky)
  • 10% in some of the 5 trending themes in crypto (very very risky)

By short term, I mean a few months or a year.

If you are investing for the short term make sure you sell your crypto when it reaches the peak.

To learn how to spot peaks read the Crypto Trader by Glenn Goodman or pay attention to what serious people are saying on Twitter. Some of the more level-headed people to follow on x.com are:

There are 4 major narratives that have gotten traction this bull run. These are

  1. AI protocols such as Bittensor
  2. DePIN (Decentralized Physical Infrastructure). For example, are Akash and Helium
  3. Real-World-Assets such as PropBase, RIO, ONDO, and others.
  4. Gaming projects such as CREO, NAKA, and more.

I am not going to tell you which of these to invest in because I don’t have a magic ball to predict the future. My course teaches you how to research projects and what criteria to look at.

Below are some projects that I have researched in detail

Should I set up a crypto wallet?

This is a common question that newbies ask me. My take is: Start with a secure crypto exchange such as Kraken or Coinbase and worry about storage if you end up with a lot of money. You can find a more comprehensive answer at Where Is the Best Place to Hold Crypto in Canada?

With a wallet, you are in complete control of your funds but you are also responsible for your secret key phrase. If you lose it there is no one to help you.

The reason to use a wallet is to avoid the following risks:

  • The exchange collapses such as FTX, Quadriga, and many others did
  • The government forces the exchange to freeze your assets. If you are not a criminal you probably don’t need to worry. Having said that be aware that in Canada the government did try to freeze protestors’ assets.
  • The exchange gets hacked. However, keep in mind that digital wallets get hacked from time to time too. Many exchanges have some insurance. For example, Binance has set aside a fund called SAFU to insure users.

What kind of wallet should I use?

There are two types of wallets

Hardware wallets aka cold wallets

Ledger Nano S Plus Colors

The safest wallet is a hardware wallet aka cold wallet. This is a USB-type device that is not connected to the internet. The risk with hardware wallets is that you lose the device and private keys. If that happens then you lose your crypto. Ledger offers a service called Ledger Recover. Check out my review of hardware wallets below.

Hot wallets

These are wallets that are easier to use on the go. The primary reason to use them is

  1. You don’t want to buy and own a physical wallet.
  2. It’s easier to use a digital wallet to hook up to decentralized finance apps. For example, you might want to lend your assets for a yield, stake them, or do a multitude of other things that true crypto degens do.
Example of a software wallet browser extension
Example of a software wallet browser extension

My take is that as a beginner you don’t need to worry about a wallet. If you end up making loads of money then you should consider taking those assets into self custody.

Should You Have Multiple Wallets: Yes and Here Is Why

Alternatives Ways to Buy Cryptocurrency

There are two more ways to buy crypto:

Bitcoin ETFs

The first is to invest in an exchange-traded fund. You don’t need to open an account with a crypto exchange to do this.

Instead, you can use your bank or broker to do this. The benefit of doing it this way is that you don’t need to learn something new and you don’t need to worry about security.

The drawback is that you can only invest in Bitcoin this way and you don’t really own the bitcoin.

Decentralized exchanges (DEXs)

DEXs don’t require you to verify your identity and you can buy any cryptocurrency under the sun.

The largest DEX is Uniswap but this only allows you to buy Ethereum-based tokens.

The most trending DEX these days is Raydium which is a Solana-based exchange.

Solana is the biggest Ethereum competitor and is growing fast. For this reason, the market is placing bets on Solana based meme coins. And if that’s what you want to do Raydium is that way to go.

To use a DEX you will need to move your crypto to a compatible wallet and hook the wallet up to the DEX from where you can start swapping coins.

Warning: Investing in meme coins is a sure-fire way to lose your money. It is more akin to playing the lottery or gambling than investing.

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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