Analyses
09
Jan
how to buy cryptocurrency

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How to buy cryptocurrency?

BUYING CRYPTOCURRENCY differs from traditional investing in terms of risks, volatility, and regulation. Buying cryptocurrency is a process, which starts with learning the basics. Cryptocurrencies can be bought from online crypto exchanges. To buy cryptocurrencies, you need a verified user account with euros (or other fiat currencies) in it

In the beginning, you should focus on the largest and best-known coins on the market. After buying cryptos, it is also important to follow the development of the market and regulation. Buying cryptocurrencies is not difficult, but it requires due diligence both before and after the purchase process.

Buying cryptocurrency is different from traditional investing

Buying cryptocurrency differs from traditional investing in terms of risks, volatility, and regulation. The crypto market is still tiny in size with regulation mostly being absent. All this means that crypto prices move drastically in both directions, e.g. because of the news. The market is also relatively easy to manipulate.

Volatility tends to be more extreme in lower-tier cryptocurrencies, but buying Bitcoin or Ethereum isn’t going to be a smooth ride either. The prices of the largest cryptocurrencies can fluctuate by tens of percent in one day. For example, the price rally of 2017 raised the prices of well-known cryptocurrencies by up to thousands of percent in one calendar year. The subsequent downturn (2018) crashed prices by 99%.

what is cryptocurrency

If you are interested in buying cryptocurrency, you need to mentally prepare yourself for a roller coaster ride. Depending on the market situation, crypto prices can rise or fall drastically – sometimes for no apparent reason at all. Preparing for a bull market is of course more straightforward, but you shouldn’t forget it. There should be a plan in place for both bull and bear markets.

Is your goal to double your portfolio and then sell everything? Do you believe in a cryptocurrency revolution in the next 5-10 years? Many beginners make mistakes during crashes as well as during boom times. When prices go higher greed tends to take over. Instead of cashing out profits, many newcomers end up adding to their positions.

Define your own risk profile before investing a single euro. What percentage of your total investment are you willing to risk? For someone, it can be ten percent, for others only one percent. Buy cryptocurrencies only with an amount that you are ready to lose completely.

We recommend beginners familiarize themselves with the Dollar Costa Averaging (DCA) investment method, which means monthly or weekly savings. This is a safe way to get started.

Learn the basics

Buying cryptocurrency is a process, which starts with learning the basics. Of course, basic information should be managed in all investments, but it is emphasized when buying cryptocurrencies. There are so many unregulated operators and completely fraudulent projects that a beginner can easily get lost. In addition, inexperienced investors are lured into scams through social media.

Most beginners buy cryptocurrencies at the peak of a bull market. Few people also know what they are doing when they make their first purchases. This activity is called FOMO – Fear Of Missing Out. Cryptocurrencies are a must during the craze because everyone around you gets rich by investing in them. This is the worst possible starting point for any investment activity.

FOMO investors are the very people who pay the profits of smart investors. They jump on the bandwagon at price peaks and sell their holdings in a panic when prices fall. If you want to win in this game, you have to be a lot smarter than these investors.

Before buying cryptocurrency becomes relevant, get enough basic information about the cryptocurrency market. We recommend checking AboutBitcoin’s crypto guides. Read our beginner’s guide to the cryptocurrency you want to buy. Click CRYPTO from the main menu and go through everything you’ll find there. Reviews will help you choose the right exchange and there are more useful articles under the ANALYSES link.

How to buy cryptocurrency (choosing the exchange)

Cryptocurrencies can be bought from online crypto exchanges. There are already thousands of different services globally. In addition to this, there are usually half a dozen popular services in each country. We will give you now some useful tips so that you can choose the right exchange for you.

First, a word of warning. Many beginners are tempted to deposit their money in scams. People are usually attracted to these services via Facebook and Instagram. If you receive private messages related to cryptos, never sign up for anything. You will most likely get scammed.

We recommend using services that have been in operation for many years. If it’s a local exchange in your own country, make sure it’s a known one and search for online reviews. You can always ask for opinions from seasoned investors on online forums or Facebook groups.

You can easily start buying cryptocurrency from Coinmotion. You can find a beginner’s guide for Coinmotion (as well as other service providers) in the Reviews category of our site. Coinmotion is an operator approved by the Financial Supervisory Authority in Finland. It is one of the oldest exchanges in Scandinavia.

The image below shows the Coinmotion homepage.

coinmotion

Finnish crypto platform Northcrypto is another Scandinavian alternative. You can buy the most popular cryptocurrencies from the above-mentioned services with euros.

Our advice is to start with small amounts first and practice. Make a small purchase and make a small sale. Try how crypto transactions are done into and out of your account. Understand the technology you are using before investing in larger amounts.

Crypto exchanges for beginners to buy cryptocurrency:

Exchange Info Rating Link
Operated since 2011
Easy for newcomers
SEPA bank transfers
Coinbase Pro
Open account
Europe's top exchange
Commodities & stocks too!
SEPA bank transfers
Bitpanda Pro
Open account
Scandinavia's top exchange
Easy for newcomers
SEPA bank transfers
Not the best selection
Open account

Next, you need to decide which storage method is best for your cryptocurrencies. If you’ve purchased cryptos in small amounts, it’s ok to hold the coins where you bought them. The next best thing is to use free wallets such as Exodus and TrustWallet. They support hundreds of different cryptocurrencies. A serious investor should consider purchasing the Ledger Nano X if the amount invested is in thousands of euros.

We have written a more comprehensive guide to cryptocurrency wallets. This article goes through different storage methods and their pros and cons. Check it out if you are not familiar with crypto wallets yet.

How to buy cryptocurrency step-by-step

To buy cryptocurrencies, you need a verified user account with euros (or other fiat currencies) in it. After that, it takes a couple of clicks from your mouse to buy crypto. Next, we’ll go through buying cryptocurrencies step by step. Read the review of each crypto exchange to get more detailed instructions on how buying and selling are done in that particular service.

How to buy cryptocurrency in five steps:

  1. Open a user account
  2. Go through account verification (KYC)
  3. Deposit funds
  4. Buy cryptos
  5. Store your coins safely

Start the process by registering an account to the crypto exchange you have chosen. You’ll need a valid email address and phone number. Next, you need to verify your identity. This is called the KYC process. Every exchange requires you to go through KYC before bank transfers can be done. Your identity is usually confirmed with a passport picture.

After verifying your identity it’s time to make a deposit. You can deposit euros or other fiat currencies to most exchanges fast via SEPA bank transfers or with a credit card. After this, you can buy cryptocurrency with a couple of clicks.

The final stage is to consider your storage options. You can either store your coins at the exchange you used or move them to an external wallet you control.

That’s all! On a general level, buying cryptocurrencies isn’t more difficult than using an online bank or PayPal. If you know how to make an online bank transfer or how to use e-wallets, buying crypto is not a problem.

You don’t need to install any software either in order to buy cryptocurrency. All crypto exchanges can be used via a web browser. Mobile users can install the native app if they wish, but that’s not required.

How to diversify your portfolio with altcoins

In the beginning, you should focus on the largest and best-known coins on the market. Bitcoin is the safest purchase in the crypto world the same way there are so-called blue chip stocks in the stock market. They are stable companies with a good reputation and long history. This is what Bitcoin is compared to other cryptos.

However, do not directly compare cryptocurrencies with the stock market. A more reasonable comparison would be a startup whose potential product will be ready in a couple of years. Bitcoin can only be considered a more reliable choice compared to other cryptocurrencies. This means that Bitcoin doesn’t necessarily make the same gains as smaller coins during a bull market. However, it holds its value better in a bear market.

Many crypto investors want to diversify their portfolios. If you are interested in buying more cryptocurrencies, for example, 5-6 different coins, you can think about diversification like this: Bitcoin 50%, Ethereum 25%, and five coins with a 5 % slice each. Some people might have 100+ coins in their portfolio, so there is no right or wrong answer to diversifying your crypto portfolio.

If you want to invest in other cryptocurrencies, learn about the coin before making any purchases. AboutBitcoin.io is a great place to start! We have written beginner’s guides about dozens of different coins. Youtube is also a valuable resource.

You can buy the most popular coins with euros and dollars. If you are going for rarer coins, you might have to buy them with USD stablecoins or bitcoins. We recommend opening an account with Binance. It is the most popular exchange and lists hundreds of different coins. Read our detailed Binance review if you need any assistance.

how to buy cryptocurrency from binance

The image above is from the front page of Binance. You can find other high-quality crypto exchanges on this page: the best cryptocurrency exchanges.

Remember to follow the market!

After buying cryptos, it is also important to follow the development of the market and regulation. Many stock investors look at their portfolios once or twice a year. In the crypto market, this is not a good strategy, as the market cycles are so much faster. More can happen in one day in the crypto market than usually happens in one month in the stock market.

Even if you are not a day trader, it is highly recommended to stay on top of what is going on in the market. The world of crypto is developing rapidly. This means regulation and taxation changes. Also, the wallet software you use may receive software updates. You should also have a plan for big price increases and decreases and take action quickly if needed.

You should also keep an eye on the social media accounts of those cryptos you have purchased. You can check the official Reddit page once a week or follow the project via Twitter. Following our weekly news reports is also a good idea!

How to buy cryptocurrency – final words

Buying cryptocurrencies is not difficult, but it requires due diligence both before and after the purchase process. The idea behind this article is to provide stepping stones for someone interested in buying cryptocurrency. If you have read this article carefully, you should be off to a good start.

Here is a summary of how buying cryptocurrency is done carefully and successfully.

  • Prepare yourself mentally for volatility.
  • Make a plan for taking profits.
  • Define your own risk limits.
  • Start with small amounts, gain experience, and practice.
  • Get the basic information first before buying anything.
  • Start with the biggest cryptocurrencies first (Bitcoin and Ethereum)
  • If you are more interested in buying cryptocurrency, carefully study one cryptocurrency at a time and familiarize yourself with its events, expectations, and news.
  • Don’t buy crypto just because your friends are doing it.
  • Stay up to date with the news and follow the crypto projects you have invested in.

Buying cryptocurrency is not technically difficult. For many, the biggest challenge is tolerating the volatility, i.e. price swings. This is why it’s important to start with small purchases and gain experience in the market one step at a time.

The biggest mistake a beginner can make is to rush into the market during price rallies when everyone else is making money. Most of these investors end up selling their holdings at huge losses within 6-12 months. Don’t make the same mistake, but take a long-term approach by following the instructions in this article!