The definitive guide to buying cryptocurrency

The definitive guide to buying cryptocurrency

From start to finish, the definitive guide to buying any cryptocurrency is here. I want people to be able to get into cryptocurrency easily without having to do crazy amounts of reading, so I will try to keep this as short as possible.

Step 1. Find a "fiat" exchange

You need to find an exchange that accepts "fiat" money (USD, EUR, etc) and will allow you to exchange it for either Bitcoin (BTC) or Ether (ETH). This will always be step 1, no matter what cryptocurrency you are buying. I will list some common, trusted fiat exchanges below in no particular order for you to look at:

Note: I will only be listing exchanges that sell both Ether and Bitcoin to give you the most freedom.

Exchange Accepted Payment Methods Countries Served Notes
Coinbase Credit Cards, Bank Transfer USA/Europe Low starting limits, even with verification
Bitvavo iDeal, SEPA, BanContact, MyBank Europe predominantly High limits with little verification and advanced trading interface
Bitstamp Credit Cards, Bank Transfer USA/Europe High limits with verification, interesting features like ability to purchase gold
Kraken Bank Transfer USA/Europe Popular in Europe, high limits once verified
CEX Credit Cards, Bank Transfer USA/Europe/UK Highest credit card limits once verified, old trustworthy company based in UK. One of the only companies accepting GBP.

Well, that's basically it for the major ones serving the most people with the most payment options. Yes, it's not very many! I will list some alternatives below which may be applicable to some people, they may have low limits, long entry times, not serving wide arrays of countries etc:

Exchange Accepted Payment Methods Countries Served Notes
Bitonic iDeal, Bancontact, myBank Netherlands, Belgium Not an exchange, can only buy/sell Bitcoin and have it sent directly to wallet. High limits, no account required, very fast. Considered the staple in The Netherlands. Also consider using their exchange BL3P for trading and better prices.
Changelly Credit Card USA/Europe No account required, low starting limits on credit cards which increase with each purchase. Can take several weeks to reach highest credit card allowance as each level requires waiting waiting period until limit is increased.
Blockchain Credit Card USA/Europe Low limits which don't increase very much. On the plus side, good prices and they offer a wallet solution. Also one of the oldest websites in the entire cryptocurrency sphere.

Step 2. Buy Bitcoin or Ether

Yes, you need to buy Bitcoin or Ether even if you are looking to buy another cryptocurrency. I know, sounds counter-intuitive but just keep going through the tutorial.

Put as much Euro/Dollars into Bitcoin/Ether as you wish to put into your other cryptocurrency of choice.

Which one should you buy? It's up to you. Bitcoin is more direct as most websites deal in BTC pairs, which means you can only trade from BTC direct to another currency. Bitcoin however is quite slow when sending from one place to another. Ether is much, much faster when sending from one place to another but on many exchanges may need to be sold for Bitcoin on the exchange first in order to trade for another cryptocurrency. Personally I recommend Ether since it's a lot faster to move between exchanges.

If you are just looking to buy Bitcoin or Ether, congratulations, you're pretty much finished! Move onto Step 4!

Step 3. Choosing an exchange which trades your cryptocurrency of choice for BTC or ETH.

Most fiat exchanges do not allow you to buy anything other than Bitcoin or Ether. Therefore you need to choose another exchange which usually only deals in cryptocurrency, to trade your Bitcoin or Ether for the cryptocurrency you want to buy. Not all exchanges offer all cryptocurrencies, so you'll have to go onto the individual exchanges to ensure that they offer what you want.

Either way, here is a list of commonly used cryptocurrency exchanges with a wide offering of cryptocurrencies:

Exchange Notes
Binance Huge upcoming new exchange with a vast array of cryptocurrencies. Good, modern interface. Verification required for higher daily limits.
KuCoin Verification required but very professional website and beautiful user interface for trading. Also a large coin selection.
Poloniex Oldest and one of the most popular exchanges. Decent interface. Verification required for higher daily limits.
Bitfinex Probably the best interface for trading. Decent selection of the most popular cryptocurrencies. Verification required for higher daily limits.
Bittrex Very extensive selection of cryptocurrencies. User interface is not very good. Higher limits require verification. Well known and reliable, however support can be extremely slow if you make a mistake and need help.

So these are all of the major exchanges which allow you to trade Bitcoin for other cryptocurrencies. Some of these also allow you to trade Ether for other currencies. However, you can always send Ether to all of these exchanges and benefit from the fast transfer times of Ether and then trade the Ether for Bitcoin on the exchange in order to trade for something else.

Finally, there are a couple of other automated cryptocurrency exchange options which essentially do all of the work for you in exchanging one cryptocurrency for another but may not offer as good of a deal. How they work is you pick which cryptocurrency you want to send and which you want to receive in return, it'll generate a transaction for you, once you fulfill the transaction then it'll return the new cryptocurrency to a wallet you specify. These websites will always tell you what you should receive before you make the transaction and it will lock in the price. The following are services that offer this:

  • Changelly, which you may have also seen mentioned earlier in the post as a place to buy cryptocurrency using a credit card really shines more as this service.
  • Shapeshift is also one of these services and was the first of its kind. Highly respected and reliable.

Step 4. Store your new cryptocurrency safely.

The last and most important step of all of this is to get your cryptocurrency off of the exchange and into a wallet that you control personally. This is extremely important. Exchanges are often hacked and all of your funds can be lost without any hope of repatriation.

I have written an extensive guide to all of the options available to storing your cryptocurrencies here:

In short, the best way to store cryptocurrency for most people is to invest in a hardware wallet like the Ledger Nano S. There are other options however if you are unwilling to spend any money, some of which are just as secure, so please delve into that aforementioned blog post for the full breakdown.

In conclusion

It may seem like a lot of effort getting started with buying cryptocurrencies but once you've become familiar with how all of this works, you'll find it pretty much effortless to work with.

Like anything there is a learning curve.

Since you've read this far into my post, here's an investment tip. Cryptocurrencies that do not exist on a fiat exchange yet are more difficult for the average person to buy in large quantities and thus the price is most likely lower as a result of this. If you expect a cryptocurrency will be added to a fiat exchange, you should expect an increase in price as it is more accessible. Keep in mind however that most cryptocurrencies never get added to fiat exchanges and that doesn't look like it'll change any time soon.

With that, I'll close off this blog post. I hope that you were successful in your investment and welcome to the world of cryptocurrencies.