How to Buy Crypto Coins: A Beginner’s Step-by-Step Guide

There aren’t many investments generating more excitement than cryptocurrency. Bitcoin was in the news in December of 2024 after the value of a single coin rose above $100,000 for the first time. Considering that a coin’s initial value was less than a penny and that was only about 15 years ago, there’s no denying it’s been a meteoric rise. But what is cryptocurrency and how do you buy crypto?

Cryptocurrency is a digital asset and there are hundreds of different types to choose from. Bitcoin is the oldest and best known, having been around since 2009. Crypto coins and other digital assets, such as non-fungible tokens (NFTs) and smart contracts, are stored on a blockchain, which is a decentralized ledger where entries are immutable once added.

People buy crypto for a variety of reasons: as an investment, to use in place of fiat currency, as a trading tool, and to diversify their portfolios. All good reasons, but of course it’s essential to know what crypto is (and what it isn’t) and how and where to buy it.

In the financial world, cryptocurrency is sometimes seen as a hedge against inflation. When there’s a significant market correction or an economic downturn, crypto may not be impacted. That said, volatility is a feature of cryptocurrency and you’ll need to keep that in mind.

The question for first-time crypto investors, of course, is how to buy crypto while keeping the risks in mind. In this guide, we’ll lay it all out for you, including why you should invest in crypto, a step-by-step guide to the process, and some important tips to help you avoid common mistakes and minimize your risk.

Why Invest in Cryptocurrency?

Why should you be investing in cryptocurrency? What are the advantages and the risks? It’s important to wrap your head around both, because there are some significant ways that adding crypto to your portfolio can impact your finances.

Advantages of Investing in Crypto

There’s no denying that adding cryptocurrency to your portfolio can help you. Here’s our take on the advantages of crypto investing and whether or not you should buy crypto.

• There’s the potential to earn significant profits. When a single Bitcoin was worth a penny, owning 100 Bitcoin would translate to just $1 in total assets. With the value at approximately $96,000 on December 27, 2024, the same 100 Bitcoin would be worth $9.6 million. 
• Cryptocurrency is new and exciting. There’s a lot of energy around crypto investing and it represents exposure to a new asset class with enormous growth potential.
• Crypto is what investment experts call a non-correlated asset, meaning that its performance isn’t linked to external economic factors. Its prices don’t respond to the market or the economy in the same way that other investments, including stocks and ETFs, do. That means it can serve as a hedge against inflation and offer investors a way to ride out a recession.
• Cryptocurrency also represents a new sector of technology. It’s not just about the currencies themselves, although they’re a big part of it. It’s also about the tech behind it, blockchain technology, which has potential uses that go far beyond decentralized currencies. For example, blockchains may be used to create smart contracts, establish provenance for artwork, and even secure elections.

These advantages are all worth considering as you think about how and when to add cryptocurrencies to your existing portfolio and when you should be buying crypto in general.

Pro Tip:

Sign up today and get $50 of BTC for free after making your first trade on Coinbase!

Risk Factors of Crypto Investing

We’d be remiss if we didn’t also include our take on the risks of crypto investing, which are significant.

• Cryptocurrencies are significantly more volatile than stocks, ETFs, and other traditional asset classes. For example, Bitcoin once dropped 30% in a single day. It rebounded but you should be aware that wild swings in value are part of the package when you buy crypto. (The one exception is stable coins, which are tied to the value of a fiat currency such as the US dollar.)
• A related risk is the potential for extreme or even total losses. The value of a share of stock is tied to tangible things: the financial strength of a company, its assets, and analysis of its past and future performance. Cryptocurrencies only have value insofar as people are willing to pay for them. A so-called crypto bubble is what led to the massive crypto crash that happened in 2021-2022, when crypto’s total market cap fell from $2.9 billion to just $798 million – a bad time to be buying crypto.
• Crypto represents a new opportunity for scammers to target consumers and traders. They use some of the same tricks scammers have used for decades, including phishing scams and Ponzi schemes. 

The good news is that there are plenty of things you can do to protect yourself and your crypto holdings, and we’ll get into those toward the end of this guide.

Step-by-Step Guide: How to Buy Crypto Coins

Now that you’ve got a handle on what crypto is and how investing in it can benefit you, plus an understanding of the risks, here are the steps to buy crypto coins and to buy cryptocurrency in general.

Step 1: Choose a Reliable Crypto Platform

The first step in buying crypto coins is to choose a reliable crypto platform to use. There are plenty of choices, but some are better and safer than others.

Here are a few of our favorite options compared, with some notes about features and security.

Keep in mind that most crypto exchanges are not members of the FDIC and are not insured by the US government. Some have private insurance to protect against hackers, but crime insurance won’t protect you if you give out your password or recovery phrase and lose assets as a result.

Step 2: Create and Verify Your Account

After you choose a crypto exchange, the next step is to create and verify your account. Most centralized exchanges (CEXs) require Know Your Customer (KYC) verification. The purpose is to prevent money laundering and other crimes. You’ll need to provide:

• Your full name
• Your date of birth
• Your current address
• A government-issued ID

The information you provide will be compared against official databases to confirm that you’re not a sanctioned individual or Politically Exposed Person (PEP).

Step 3: Fund Your Account

You’ll also need to fund your account. Depending on the exchange you choose, you may wire funds into your account or use an ACH transfer, PayPal, or link to a credit or debit card. 

You should keep in mind that minimum amounts required to invest vary, as well. For example, you only need $2 to get started on Coinbase, while Binance requires the equivalent of 10 USDT worth of coins and not all exchanges will accept a credit card or google pay for example.

Step 4: Select the Right Cryptocurrency

After you’ve funded your account, it’s time to select the first cryptocurrency you want to buy. You’ll have lots of choices, so it’s important to do some research. Here are some things to do.

• Coin website: Make sure it’s professional and transparent.
• White paper: Every coin website should have a whitepaper explaining the coin and how it will interact with the blockchain ecosystem.
• Token/coin objectives
• Team memberships and partnerships
• Past performance
• Current value
• Investor sentiment
• Bitcoin, altcoin, stable coin?

Bitcoin was the world’s first cryptocurrency and is still one of the most popular. Other coins that have proven themselves include Ethereum, Solana, Cardano, and Dogecoin. You may also want to consider some stable coins, whose value is meant to track the value of fiat currencies such as the US dollar.

Step 5: Make Your First Purchase

With your research complete, it’s time to make your first crypto purchase. The specific process varies from exchange to exchange, so we suggest reading blog posts or watching a video to make sure you know what to expect when you buy cryptocurrency.

The basics will include:

• Selecting the coin to buy from the available options
• Specifying the amount you want to spend
• Reviewing the fees according to payment methods like google pay or bank transfer
• Finalizing the transaction

Make sure to scrutinize the fees, so you know what you’re paying and how much of the selected coin you’ll receive in exchange for your money, especially with a bank transfer. It can be difficult to determine the total fee ahead of time since you’ll be charged transaction fees, regulatory fees, and in most cases, a spread fee. We also recommend avoiding peer to peer marketplaces until you are more familiar with how to trade crypto.

Step 6: Secure Your Investment

The final step is to secure your investment by storing it safely. You should make sure to use a strong password that you don’t share with anybody and enable 2FA.

You’ll also need a crypto wallet for storage. Hot wallets are software wallets that are connected to the web, while cold wallets are hardware wallets that are never connected to the web. We strongly suggest using a cold wallet. You’ll need to create a recovery phrase, and you should never share that with anybody, either. We recommend writing your phrase on paper and storing it in a lockbox or safe deposit box.

Pro Tip:

Sign up today and get $50 of BTC for free after making your first trade on Coinbase!

Common Mistakes to Avoid When Buying Crypto

There’s always the possibility of making a mistake when you’re undertaking any investment. Here’s our overview of some of the most common mistakes and what you can do to avoid them as you learn how to buy crypto currency.

Not Researching Platforms

Sometimes, new crypto investors don’t bother researching crypto exchanges because they assume that the one they choose is safe and affordable. You should always read through the publicly-available information on the website and read reviews before you commit.

Failing to Secure Assets

Another common mistake is using a hot wallet or otherwise being lax with security. You need a strong password with 2FA enabled and a cold wallet for storage. You’ll also need to be careful never to share your information with anybody else: treat it just as carefully as a bank transfer, if not more so.

Overlooking Fees

Fees can add up quickly, so it’s important to check out the exchange’s fee structure before you create an account. You should also review the fees before finalizing a transaction to make sure you understand what you’re paying and how the fees will impact the amount of cryptocurrency you receive at the end of the trade. Some payment methods like bank transfers will have less fees than credit cards for buying cryptocurrency for example.

Succumbing to FOMO (Fear of Missing Out)

It’s common for some crypto investors to jump in on an Initial Coin Offering (ICO) or buy a coin simply because it’s popular. Our suggestion is never to invest out of a desire to get in on something that’s popular. Instead, do your research and make your own decision about whether the ICO is a good addition to your portfolio and a worthwhile investment.

Panicking Due to Volatility

One of the most common mistakes in crypto investing (and stock investing, too) is panicking when the price drops and selling at a loss. Crypto is more volatile than most stocks, but when you look at Bitcoin, it’s easy to see the overall trend is up. Holding, also known as HODLing or Holding On For Dear Life, is the best way to ride out volatility. 

When learning how to buy crypto, you should make sure you’re aware of potential mistakes and know how to avoid them. That’s the best way to avoid losses and scams.

Pro Tip:

Sign up today and get $50 of BTC for free after making your first trade on Coinbase!

Conclusion

Learning how to buy cryptocurrency isn’t difficult. All you need is some basic information and the willingness to learn. We’ve provided everything you need here, but you’ll still need to research crypto exchanges and coins before you get started buying cryptocurrency. 

The key is to be methodical during the research process, and to secure your crypto holdings after you’ve made your first purchase. If you do both of those things, you’ll be in a good position to diversify your portfolio with crypto, and hopefully receive a huge bank transfer in the long term.

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