Want to Buy Crypto but Don't Know Where to Start? Here's a Simple Guide
by Lyle Daly | Published on Oct. 1, 2021
Don't be intimidated -- buying crypto is easier than ever.
With how much prices have been going up, crypto is an exciting investment. But when you're just getting started, the buying process can seem confusing, and you may be unsure how to begin.
That's one of the main issues that stops potential crypto investors in their tracks. In a recent crypto survey by Bakkt, nearly a quarter (24%) of respondents said that the greatest challenge of buying crypto was that they didn't know where to start.
Whether you're just looking for places to buy Bitcoin or you want to invest in all kinds of coins, it's not nearly as challenging as it looks at first glance. By following a few steps, you can make your first crypto purchase safely.
1. Learn about your crypto buying options
There are a few different types of platforms where you can buy crypto. The most popular options are crypto exchanges, stock brokers, and payment apps. Once you know more about them, you can pick the one that's right for you.
A crypto exchange is dedicated to buying, selling, and trading cryptocurrencies. These have the most cryptocurrencies available and the most features. If crypto investing is a serious interest of yours, then an exchange will likely be the best option.
Exchanges can have a bit of a learning curve. However, several of the best cryptocurrency exchanges are easy to use and offer lots of educational content. The following two are great if you're new to crypto:
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These don't offer as much as you'd get on an exchange. Crypto selections tend to be smaller, and you might not be allowed to transfer crypto off the brokerage itself. Still, this can be a convenient way to add crypto to your portfolio, especially if you already have an account with a broker that offers crypto.
You can also buy crypto on two popular payment apps, Venmo and PayPal. They have the fewest features and don't let you transfer crypto off the app itself. Despite the drawbacks, some buyers like how quick and easy it is to get crypto through a payment app.
2. Set up an account on a crypto platform
After you've checked out places to buy crypto, the next step is to pick one you like and set up an account. If you picked a stock broker or app where you already have an account, then you just need to enable crypto purchases.
The registration process depends on the platform, but they all ask for similar information. Every licensed crypto platform in the United States needs to obtain certain customer data to comply with know-your-customer (KYC) regulations.
Here's what you can expect to provide before you can buy crypto:
- Full name
- Email address
- Phone number
- Physical address
- Social Security number
- Date of birth
In some cases, you may need to provide proof of identity through a valid ID, proof of address, and possibly even a selfie.
3. Make your first crypto purchase
With your account ready, the final step is making the purchase. Decide which cryptocurrency you want and how much, and then pick a payment method.
This is another time where the process varies depending on the platform you chose. Stock brokers almost always require that you deposit money first through a bank or wire transfer. Crypto exchanges often accept a variety of payment methods, including debit and credit cards.
Before you decide how to pay, review the accepted payment methods and their fees. You can save on crypto trading fees by choosing the most affordable payment method. As a general rule, bank account transfers generally have the lowest fees for crypto purchases.
Credit cards, on the other hand, are almost never a good choice. Between extra trading fees and cash advance fees, it can cost you an extra 7% or more to buy crypto with a credit card.
To sum it up, here's how to buy crypto from start to finish:
- Check out crypto buying options and pick the one that fits your needs. Crypto exchanges are a popular choice, as are stock brokers that offer crypto trading.
- Make an account on the platform you chose. Be prepared to verify your identity.
- Choose the cryptocurrency you want and make your purchase. It's usually best to pay through a bank transfer to get the lowest fees.
About the Author
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Lyle Daly owns Bitcoin.