- Cryptocurrencies can work just like money. However, in order to use crypto, you’ll need to buy it first.
- A common way for beginners to buy crypto is to use a crypto exchange, which works much like a stock brokerage account.
- You can buy crypto through centralized exchanges or swap crypto on decentralized exchanges; we’ll discuss both.
|Live Buy Prices For October 2023|
|Buy BTC||Buy ETH|
|Buy SOL||Buy SHIB|
|Buy DOGE||Buy AVAX|
|Buy DOT||Buy LTC|
|Buy ADA||Buy LINK|
|Buy MATIC||Buy TRX|
What Exactly Does It Mean To “Buy” Crypto
You know how buying a stock works, right? You take your cash, find a broker (like Robinhood or Vanguard), deposit funds, and buy the stock. Simple. Buying crypto works in pretty much the same way, except instead of using a broker, you’ll use a crypto exchange, which we’ll cover in just a bit.
Like buying a stock, there are a few steps to the process. Here’s a quick rundown:
- Choose a cryptocurrency. There are more cryptocurrencies than you can shake a stick at these days. Thousands, in fact, but you don’t need to study them all. It’s okay to start with just Bitcoin or Ethereum. These two cryptocurrencies alone make up more than 60% of the market. But your investment goals and your own research might lead you to a different mix of crypto assets.
- Decide where you want to buy crypto. Most people start on a centralized exchange like Coinbase or Uphold. We’ll discuss centralized exchanges (versus decentralized exchanges) in more detail later. But if you’re just getting started, you’ll probably want a centralized exchange because they make it easy to convert cash to crypto (and vice versa).
- Decide how you’ll pay for your crypto purchase. Most exchanges will let you link your bank account or debit card. A few exchanges, including Coinbase and Gemini, will let you link a PayPal account. Exchanges usually don’t offer credit card-funded crypto purchases, however, due to chargeback and fraud concerns.
- Choose where to store your crypto. Once you buy your crypto, you’ll need to store it somewhere. You’ve got two main choices here—the exchange where you made your purchase (similar to an online stock brokerage,) or in a crypto wallet you control. A wallet you control is safer because it protects you against risks related to crypto exchanges, such as bankruptcy. But storing your crypto in your own wallet comes with some responsibilities as well, like safeguarding the recovery phrase for your wallet.
What Are The Pros And Cons Of Buying Crypto?
- Crypto and blockchain tech are already being used in projects such as insurance and payment services and even web browsers and search engines.
- Crypto can be anonymous because transactions are associated with a wallet address rather than a name.
- Buying crypto helps diversify your portfolio by adding a dynamic asset class.
- Dramatic returns are possible (but not guaranteed)
- Current tax laws in the US treat crypto as property, subject to capital gains tax (like stocks).
- If someone gets your wallet keys or gains access to your exchange account, your crypto is now their crypto.
- Crypto values can be volatile, both to the upside and downside, but it’s likely some cryptocurrencies are headed for zero. It’s risky business.
- It’s more difficult to know how to value a cryptocurrency compared to traditional investments.
Who Should Buy Crypto?
Cryptocurrency is often considered a “risk asset,” a term that speaks to crypto’s volatile price movements, which have been wilder than Boris Johnson’s hairdo on a windy day. But crypto can fit into a wide range of investment strategies, including those for:
- People who are concerned about inflation. OK, so crypto prices have been all over the map. But take a long view, and key crypto assets like Bitcoin have performed exceptionally over time compared to traditional (fiat) currencies like the dollar. Between 2018 and 2021, Bitcoin had more than a 1,000% return on investment as measured in dollars.
- Tech-savvy people. Like you! Crypto exchanges and crypto wallets have become more beginner-friendly, but buying and storing crypto isn’t always as easy as swiping a debit card. It also helps to have a “techie” mentality to decipher how each crypto works and decide which ones might be a good fit for your portfolio.
- Freedom-minded investors. Crypto is a disruptive technology that’s already upending long-established industries like banking and money transfers, giving people control over their cash.
- Future-minded investors. Many investors believe crypto will transform countless industries, making crypto a key part of a future-ready portfolio.
Sound good? Let’s dive in.
How To Buy Crypto In 5 Steps
Step 1: Pick A Crypto Exchange.
A crypto exchange, or platform, works much like a stock brokerage, a way to buy crypto with traditional currencies like dollars. We’ll discuss the different types of exchanges in a bit, but most crypto investors start their journey with a centralized exchange, like Coinbase or Uphold.
Check out our tips for choosing which crypto exchange to use.
Step 2: Verify Your Identity.
To open a crypto exchange account, you’ll need to verify your identity. The process is called Know Your Customer (KYC) and is common for financial institutions, like banks, brokerages, and–you guessed it–crypto exchanges. Expect to send a copy of your license or passport.
Typically, KYC only takes a few minutes but can stretch to a few days if the exchange verifies your identity manually.
Step 3: Connect Your Funding Source To The Exchange.
If this is your first crypto purchase, you’ll need cash money to complete your first buy. Most exchanges let you connect to your bank account or debit card. Some, like Coinbase and Gemini, let you connect with a PayPal account. Follow the directions provided by the exchange you chose.
Step 4: Choose A Cryptocurrency And Purchase Amount.
Wait, hold up—don’t just buy something! Do some research first. We cover some options and strategies here. Many people start with Bitcoin as their first crypto buy—it’s the No. 1 token, after all—but many exchanges offer 100 to 200 (or more) choices.
We’re guessing you probably want to know how much it costs to buy different types of crypto. Check out the live prices linked at the top of the article.
Step 5: Transfer Your Crypto To A Self-Custody Wallet.
This step is optional, but it’s generally a good idea to move your crypto to a wallet that you control rather than use the exchange for crypto storage. Why? Although unlikely, crypto exchanges can freeze your funds or occasionally collapse altogether.
Not sure how to choose a wallet? Check out our wallets page for a few tips.
Where To Buy Crypto
In some cases, you can buy crypto through a traditional stock broker, like Robinhood or TradeStation. But most crypto investors quickly outgrow this option. Often, the selection is slim, or the trading fees are hard to understand, or you can’t get your crypto off the platform–or maybe all of the above.
Luckily, we have crypto exchanges. These crypto-specific platforms focus on one thing: You can buy crypto, sell crypto, and trade crypto.
Crypto exchanges come in two types.
- Centralized exchanges (CeFi exchanges)
- Decentralized exchanges (DeFi exchanges)
If you just want to dip your big toe into the Bitcoin or Ethereum market, you’ll only need to use a centralized exchange. Generally, centralized exchanges make it easy to buy crypto with fiat money, such as US dollars. Decentralized exchanges are often better as a way to exchange one cryptocurrency for another.
A centralized crypto exchange (CEX) is run by an institution and people. There’s a company behind the curtain making decisions about the platform and setting the rules. This isn’t a bad thing, and most centralized exchanges have become easy to use, including help sections for newbies. If you’ve used an online stock brokerage or online banking before, you’ll be able to find your way around a centralized exchange.
Here are some of the most popular exchanges for new crypto investors:
Some people feel more comfortable with a centralized exchange, and they have their benefits. If you need to buy crypto with fiat dollars, a centralized exchange is the easiest way to get the job done.
You can also use a decentralized crypto exchange (DEX), but a DEX is often a better fit for people who already have some cryptocurrency they want to swap for a different crypto asset. If you peek under the hood of a DEX, you’ll find high-octane computer code and precision math making the engine purr. Computer algorithms govern the swaps and swap prices. Curious? Check out our deep dive into decentralized exchanges.
Not sure which exchange to choose? We’ll give you the TL;DR on a few popular options below.
But first, a few tips…
Tips For Choosing An Exchange
When choosing an exchange, you might want to keep a few things in mind like:
- Whether the exchange offers proof of reserves. This is a tool to help people see if the exchange has the money they say they have. If things go south, you want to feel confident that they can cover customer liabilities. Some parts of the puzzle are still missing, like whether the exchange owes a boatload of money to someone else. Check out our guide on proof of reserves to learn more (and see which exchanges offer them.)
- Where the exchange is licensed and located. FTX, The now-infamous exchange that collapsed in 2022, was incorporated in Antigua and Barbuda, with bits and pieces of the company operating in other parts of the world. This creates cloudiness over which country has jurisdiction and whether people from other countries have any financial protection at all. If you’re in the US, it’s safer to choose a US-based exchange. Also, be aware that each state has its own financial regulations, so some exchanges may not be available where you live.
- Whether the exchange carries insurance. If you live in the US, you’re probably familiar with Federal Deposit Insurance Corporation (FDIC) protection. FDIC insurance insures bank deposits for up to $250,000 per account. Great. Except that crypto doesn’t have that, at least not for everything. Some exchanges offer pass-through FDIC insurance on cash balances, but the crypto you buy isn’t insured by the government. But that doesn’t mean centralized crypto exchanges aren’t insured. Many crypto exchanges carry insurance against losses due to hacks and breaches. It’s insolvency that creates the largest uninsured risk.
- Whether the exchange has a good reputation for customer support. A benefit of using a centralized exchange is that they have real people in customer support. You got questions, and they’ve got answers. Usually. For example, Coinbase offers support through chat (type “agent” to get a live person), or you can open a support ticket to get a reply by email. It’s worth checking what other people are saying about the exchange’s customer service.
- How much trading fees cost. Trading fees can take a big bite out of returns or amplify already painful losses. Which cryptocurrencies you want to buy might play into the decision as well. Coinbase offers no-fee trades with its Coinbase One membership, and many exchanges offer lower fees if you use the “advanced” or “pro” trading option.
The tips above might not make or break your decision, but they’re definitely worth some consideration. You may want to consider using a crypto research tool to help decide which cryptos to buy, and where. Now for those exchange TL;DRs we promised.
Over 108 million people worldwide use Coinbase, many of them choosing the well-established exchange for their first journey into crypto. Since its beginnings in 2012, Coinbase has become a household name, growing to offer more than 230 cryptocurrencies and providing exchange services worldwide. If you’re just getting started in crypto, Coinbase offers a newbie-friendly platform to learn and grow.
Why Buy On Coinbase?
- Fund your account in multiple ways, including PayPal (rare)
- Extensive learning center, including free crypto rewards for completing quizzes
- Set up automatic purchases daily, weekly, twice-monthly, or monthly
|Proof Of Reserves?||Yes (audited financial statements).|
|Licensed In||USA, available in 100+ countries. Headquartered in San Francisco, CA.|
|Insurance?||Yes. Pass-through FDIC insurance for cash balances (US), crime insurance policy|
|Customer Support||Help pages and message system. Mixed reviews for customer service.|
|KYC||Minutes for basic account access, 2-3 days to complete full KYC.|
Uphold now offers crypto trading in over 150 countries with more than 250 cryptocurrencies available. You’ll find top coins like Bitcoin and Ethereum but also some hard-to-find tokens such as Tron (TRX) and Ripple (XRP). Uphold’s simple trading interface, aptly named “Anything to Anything,” makes it easy to buy or swap cryptocurrencies without the extra steps.
Why Buy Crypto On Uphold?
- Buy or swap crypto in just a few clicks
- Set up automatic purchases for Bitcoin or over 200 other cryptos.
- Support for cryptocurrencies like Ripple (XRP) and Tron (TRX), not available on Coinbase
|Proof Of Reserves?||Yes.|
|Licensed In||USA. Headquartered in New York, NY.|
|Customer Support||Help pages, ticket system, chat. Mixed reviews for customer service.|
|KYC||Minutes to complete.|
Kraken isn’t just a fun-to-say name, it’s one of the most established crypto exchanges, with a history dating back to 2011 (Bitcoin began in 2009). It was also one of the first exchanges to offer proof of reserves, so you know they actually have the crypto you keep on the exchange. Kraken now offers over 185 cryptocurrencies and brings a few features you might not find elsewhere, like the ability to use margin (borrowing) and make purchases using credit cards.
Why Buy Crypto On Kraken?
- Low trading fees on Kraken Pro (0% to 0.26% compared to up to 0.6% on Coinbase Advanced)
- Easy account verification process
- Margin and leveraged trades for advanced traders
|Proof Of Reserves?||Yes. (account login required)|
|Licensed In||USA, available worldwide. Headquartered in San Francisco, CA.|
|Customer Support||Help pages, chat, and phone support. Mixed reviews for customer service.|
|KYC||Minutes to complete for starter through intermediate levels, a few days for Kraken Pro.|
Risks of CeFi Exchanges
- A centralized exchange can halt withdrawals. Yup. They can literally just turn off the tap on your funds. See ya! Sorry. FTX is the most recent exchange to make headlines by filing for Chapter 11 bankruptcy, but any centralized exchange brings insolvency risks or even just a “temporary” pause of withdrawals. The workaround, of course, is to withdraw your crypto from the exchange to a self-custody wallet immediately after you buy or trade. Then, the exchange can pause whatever they’d like without affecting your holdings.
- Centralized exchanges are subject to government regulation. Governments around the world are still struggling to define crypto regulations. As a result, some services may not be available in certain states or countries. Services that are available may suddenly become unavailable. Yikes. If the exchange doesn’t comply, they may see fines reaching tens of millions of dollars. That means the exchange may face some tough financial times, bringing us back to risk #1.
How To Fund Your Crypto Purchase
Most exchanges support purchases funded by your bank account or debit card. A handful of platforms, including Gemini and Coinbase, also support PayPal.
- Bank Account (ACH transfer): Common
- Debit Card: Common
- PayPal: Rare
- Credit Card: Rare
- Wire Transfer: Common
|Bank Account (ACH transfer):||Debit Card||PayPal||Credit Card||Wire Transfer|
|Funds Availability||3-5 business days||Immediately||Immediately||Immediately||Immediate (transfer 1-3 days to complete)|
|Deposit Fees||Usually free||0% to 4%||0% to 2.5%||Up to 4%||$0 to $10, plus bank fees|
|Withdrawal Availability||Usually immediate||Up to 72 hours||Usually immediate||Up to 72 hours||Immediate|
Few exchanges support credit card-funded crypto purchases due to the risk of fraud and chargebacks. For example, Kraken supports credit cards (outside the US), but you may not be able to withdraw right away if you purchase with a credit card.
Many exchanges also support deposits by wire transfer from your bank account. The advantage of wire transfers is that you can send larger amounts than you can with an ACH transfer. The downside is that some exchanges charge a fee for wire transfers–and it’s likely your bank does as well.
What Types of Crypto Can You Buy?
Today’s crypto market offers more than 21,000 types of cryptocurrencies, but most of the action is in the top coins and tokens. Bitcoin alone represents about 40% of the entire crypto market. Ethereum is another 20%.
And then there’s the rest, making up less than 40% of the entire crypto market. So, don’t be overwhelmed by the choices. Most lesser-known cryptos trade on specialty exchanges, and many aren’t the safest first picks.
Often, the top cryptocurrencies make a safer starter portfolio because they’re widely traded, meaning you can sell if needed. These picks aren’t quite like blue chip stocks, but many are household names, like Bitcoin and Ethereum.
Some people split the market into two categories: Bitcoin and altcoins (everything else). But you can also categorize it into cryptocurrencies that function as digital money versus those that enable smart contracts, which are computer programs that run on the blockchain.
- Bitcoin Cash
OK, so teeeeeeeechnically currencies like Bitcoin and Litecoin can support smart contracts through Layer 2 chains (other blockchains that add functionality), but that’s not their original purpose. Bitcoin, Litecoin, and similar projects are digital money.
In contrast, Ethereum and other smart-contract projects bring the ability to do things other than just spending and sending. For example, many new metaverse projects use smart-contract blockchains like Polygon or Ethereum to track ownership of metaverse assets. As another example, Cardano, another smart-contract chain, is providing digital IDs for students and teachers in Africa.
There’s no right answer here other than what’s right for you. Many crypto investors own several types of crypto; others hang their hats on just one.
How To Choose A Cryptocurrency
For beginning investors, choosing crypto projects from the top twenty projects by market cap (total market value) makes a good starting point. Or you can experiment if you want.
Here’s a sample portfolio we put together from another deep dive into crypto investment strategies. This group focuses on the top 20 crypto projects, which most would consider low risk–at least in the crypto world where nearly everything is high risk.
Percent of Portfolio
This list is just an example (not investment advice!), and you might choose a different path altogether. Everyone’s crypto journey is different.
Where To Store Your Crypto
Before you buy crypto, it’s a good idea to think about how you want to store your coins or tokens. Although many people choose to just keep their crypto on the exchange where they bought it, this isn’t the safest choice. You’ll probably be okay, but what if the exchange suspends withdrawals or gets hacked?
Here are a few storage options to consider:
- Exchange: This option is called “custodial storage,” meaning the exchange provides a wallet and keeps custody of your crypto.
- Software Wallet: A software wallet is an app or browser extension that lets you move your crypto off the exchange and spend it or use it as you see fit. Software wallets create and store the private keys to your wallet on an internet-connected device, so they’re often called “hot wallets.”
- Hardware Wallet: A hardware wallet, sometimes called “cold storage,” uses an external hardware device to store your wallet’s private keys. You can easily buy one on Amazon. Thanks, Jeff! Often, you can pair a hot wallet with a cold wallet. This gives you access to more apps through the hot wallet but locks your crypto with the cold wallet. Win/win.
To Sum It Up
Buying crypto doesn’t have to be intimidating. There are options that can make it a lot easier for new or less experienced people to buy coins (the ones used as money) or tokens (the ones that do more) on an exchange. What are your goals? How much crypto experience do you have? Those answers will guide you to the option that works best for you.
Frequently Asked Questions
Buying crypto is a pretty simple process. Here are the basic steps.
Step 1: Pick a crypto exchange.Most crypto investors start their journey with a centralized exchange, like Coinbase or Uphold.
Step 2: Complete KYCKYC is short for Know Your Customer and refers to regulations that require centralized crypto exchanges to verify your identity. The process usually takes a few minutes, but can take a few days in some cases.
Step 3: Connect your funding source to the lending platform.Most exchanges let you connect to your bank account or debit card, or even PayPal. Follow the directions provided by the exchange you chose.
Step 4: Choose a cryptocurrency and purchase amount.Do some research first. Then, select the cryptocurrency you want to buy.
Step 5: Transfer your crypto to a self-custody wallet.This step is optional, but it’s generally a good idea to move your crypto to a wallet that you control rather than use the exchange for crypto storage.
Many crypto exchanges don’t allow credit card purchases, but you can use a credit card to buy crypto on Kraken (credit card funding not available to US traders).
Yes. Coinbase, Gemini, and eToro all let people buy crypto with PayPal.
Coinbase is easy to use for beginners but also offer advanced trading you can use as you gain experience.
Coinbase reduces the minimum to only $2. And both of these exchanges make it easy to set up daily, weekly, or monthly recurring buys. You don’t need thousands of dollars to get started, and you can pay as you go.