DISCLAIMER: None of the following is intended to be investment advice. This is only meant to be a description of what has worked well for me so far, and my own opinions. Also, full disclosure, my links to Coinbase and Binance, etc., include referrals. It actually benefits you to use them because we will both get an extra $10 worth of BTC for free if you deposit at least $100 to Coinbase. Thanks in advance if you follow the links when you make your accounts — and even if you don’t, I hope this guide helps you out!
Are you new to the crypto-space entirely and you have only heard of Bitcoin? Did you go online, search around, and figure out there are actually many, many cryptocurrencies out there with many different use cases? Cool. You are at the right place. This guide will teach you how to buy any cryptocurrency from square one. All you have is fiat money, no cryptos. Let’s learn how to buy and hold it!
Buying Cryptocurrency: Basic Strategy
To date I’ve had no problems with the following basic strategy:
- Create and sign into a Coinbase account. I recommend Coinbase because they are the most straightforward exchange.
- Purchase some BTC. At the time of this writing, this currency transfers the fastest and cheapest out of anything Coinbase offers.
- Create and sign in to a Binance account. I recommend Binance because they have been reliable and convenient for me and they offer many different lesser-known cryptocurrencies with trading pairs on both BTC and ETH. An added bonus is that you can withdraw up to 2 BTC/day worth of funds with no verification at all.
- Move your BTC to Binance. Once it has confirmed, you can now easily use the BTC/Cryptocurrency trading pair to buy as much or as little cryptocurrency as you want. Using this guideline I have bought already cryptos like XRP (Ripple), BAT (Basic Attention Token), MANA (Decentraland), ADA (Cardano). More on trading pairs later.
- Send your coins from Binance to a safe Cryptocurrency wallet for long term storage if you intend to hold for a while. This is not strictly necessary but it is considered a safer option than keeping ANY coin on ANY exchange long term. I personally believe Coinomi to be the safest and most convenient wallet for many cryptocurrencies.
Starting Out On Coinbase
This is arguably the most trusted exchange currently on the market. You can think of them as the PayPal of the cryptocurrency world, with all the good and bad connotations that come along with that. There are some countries where this is not the case!
All you have to do here is go to Coinbase’s website and create an account. Security is incredibly important here — remember, in cryptocurrencies you are your own bankand so it is absolutely crucial that you follow good security practices. This means your password should be strong — and it should be a password you aren’t using anywhere else (including other exchanges). Keeping security in mind, it would also behoove you to turn on two-factor authentication once your account is created.
Once you are up and running there are a number of options when it comes to actually paying for coins via Coinbase. It is possible to link your bank account to Coinbase but actually transferring coins out of Coinbase will be impossible for a few days while the funds are clearing. This is obviously not ideal if you want to move quickly, as you would now have to wait several days to move your coins to an exchange where you can trade them for crypto coin.
Instead, I would recommend you link a credit or debit card to Coinbase. This will allow you to purchase some amount of coins immediately, and then immediately send them off wherever you want — your wallet, another exchange, etc. At the time of this writing Coinbase offers three coins: Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).
What to Buy First?
In my opinion if you intend to buy lesser-known coins like XRP, ETH is the best choice to buy here. Why? Well, with regards to LTC, the reason is clear: other exchanges like Binance offer direct trading pairs for BTC and ETH, but not LTC or any other currency. What this means is that you could directly exchange your BTC for cryptocurrency you like, but you’d have to perform another step if you wanted to trade your LTC for other cryptocurrency (and that means more fees!). Obviously we don’t want to waste even one cent if we can avoid it, so LTC is out.
So, to review: create a Coinbase account, link your credit or debit card, and purchase BTC.
I Bought BTC: What Now?
Now is the time for you to make your Binance account. Follow the link and create an account using a strong password (this should be different than the one you used for Coinbase!). There are other places where you may be able to buy cryptocurreny (Changelly, Kraken, EtherDelta, HitBTC, etc.). I cannot directly recommend most of these exchanges as I don’t have much experience with them at this point. This guide focuses on Binance because my experience there has been 100% positive — I have transferred coins in and out of their system many times with no problems.
Once your account is made, you should set up two-factor authentication here via Google Authenticator. It’s safer, and you will need it to transfer coins out of Binance anyway. More on this later.
After your Binance account is made, click “Funds” at the top right, then “Deposits” beneath it. Find Bitcoin in the list and click the “Deposit” button on the far right. You should end up with something that looks like this:
Unlike the picture, there will be an “BTC Deposit Address” listed in the box at the bottom left. This is a very long series of letters and numbers, and is the fundamental basis of most if not all cryptocurrencies. An “address” is simply the destination for funds — think of it like the account and routing numbers at the bottom of your checks. For many cryptocurrencies such as Bitcoin it is possible to have multiple “receiving addresses” which point towards the same wallet.
The address listed here is Binance’s “receiving address” for your Bitcoin. To the right of it is a “copy address” button — use it to put the address into your copy/paste buffer. Then, in your Coinbase account, navigate to the Accounts tab and then to your BTC Wallet. Paste in your address. You should double check that the pasted address is the same one you saw on the deposits page in Binance — you can never be too sure when it comes to security! Once you’re sure you’re sending to the right place, input the amount of BTC you’d like to send (if you just want to buy some crypto coins, you should send all of it) and click “Send.”
I Sent BTC to Binance — Now What?
Once you click Send, you will need to wait a little while. Without getting too technical about it, exchanges want to be as secure as possible. Thus, when you make a deposit, they wait for multiple “confirmations” from the network before allowing you access to your funds. You can view the progress in your Binance account by clicking Funds and then History. Do not be alarmed if nothing shows up at first! There are many reasons there might be a slight delay. In general you should see the transaction show up within a few minutes, with the current number of “confirmations” next to the number of required “confirmations” next to it. Be patient — your BAT is nearly in hand!
Once you have the required number of confirmations, it’s time to trade your BTC to cryptocurrency you would like to buy. This is blessedly simple. In the front page of Binance, click “BTC Markets.” Search for “Your cryptocurrency/BTC” in this list, and click it. Now you are on the trading page. In the bottom left under “Buy your cryptocurrency, let say XRP – Ripple”, click “100%” below the “Amount” field.
This indicates to Binance that you’d like to trade all of your BTC for a commensurate amount of XRP for no more than the price listed above. The price field is automatically listed based on the current market. If you like, you can change it to a different price, but like any market it’s not guaranteed that someone will buy at the price you’d like. Your order will remain open until it’s been fully filled or you cancel it. There are several options here such as Stop-Limit orders, etc., but this is outside the scope of this guide. In this case, you are simply placing a “Limit” order for some XRP.
I Placed My Order! Am I Done?
If you want to be done now, you can be — but there are more steps if you want to be security-conscious. You may want to check under the “Orders” and “Order History” tabs that the order went through — if you placed a Limit order at the default price, it probably did. Once you have your XRP in your Binance account, you can see them under “Funds” → “Deposits Withdrawals.” You can click “Hide 0 Balances” at the top to clean up the screen of coins you don’t own, and you can see an estimate of the overall converted BTC and USD value of your account at the top right.
For maximum security, I wouldn’t leave your coins in the exchange. I like and trust Binance, but ANY site can be hacked or experience downtime — even massively established trusted sites like PayPal. You want to have full control of your coins.
How Do I Move My Coins to a Private Wallet?
In Binance, go into the “Funds” tab, then click “Withdrawal” to the far right of the “XRP” row. By now it should be clear what you’re looking at — fields that let you input the address to send the coins to, and how many coins to send. For your convenience, there is a “Max” button to the right of the Amount field. Note that once you click “Submit,” you will need to use your two-factor authentication via Google Authenticator, an Android app. I recommend you do not use your actual day-to-day phone for this purpose. These days you can get an inexpensive Android phone for around 30 euros — this is an investment worth making for security purposes. You can keep the battery removed from the phone when you’re not using it, and connect it to a network only for cryptocurrency purposes. As a bonus, if you’d like, you can use this phone for the Coinomi wallet.
Be advised that the information here only scratches the surface on the cryptocurrencies in general. I recommend you read as much as possible. Cryptocurrencies are the future, and if you’re reading this guide you are already lightyears ahead of the curve. Best of luck, and happy trading!