Looking to gain exposure to the cryptocurrency market but don’t know how to buy crypto? Don’t worry; we are here to help you out!

In this guide, we will take a deep dive into the exciting world of digital assets, answering all the questions you have about buying crypto. This includes essential information about purchasing cryptocurrency, the best places and methods to get started, eligibility, as well as the best practices to stay secure.

Key Takeaways

• Buying crypto offers could come with multiple benefits, including higher return potential, decentralized transactions, financial sovereignty, and open access.
• You can buy cryptocurrency via various services, including centralized and decentralized exchanges, wallet solutions, the stock market, peer-to-peer marketplaces, and digital asset ATMs.
• When purchasing crypto, you should ensure your security by following best practices like doing your own research, avoiding clicking on phishing links, and utilizing advanced safety measures.

6 Things To Know Before You Buy Crypto

There are a few things to keep in mind before you buy your first crypto asset.

First, cryptocurrency is a relatively new asset class and resembles other instruments only in certain aspects. For example, digital assets are traded on the open market just like stocks. But, unlike the stock market, you can trade cryptocurrencies 24 hours a day and seven days a week.

Moreover, the crypto market is rather unregulated in nature, with the actual laws varying by jurisdiction. This means that you should put more focus on doing your own due diligence before you buy crypto. At the same time, you should be aware of each nation’s regulatory landscape to remain compliant with the respective laws. This is especially important in terms of taxation (feel free to check out our guide about the best crypto tax software solutions for 2024).

When buying cryptocurrency, it is also crucial to remember that it is stored in crypto wallets instead of bank accounts or investment accounts at brokerages. You can access the funds in your digital asset wallet with your private key, which you should keep hidden from prying eyes to protect your investment. It is also important to move your coins from a custodial wallet (e.g., exchange accounts) to a non-custodial wallet where you have exclusive access to your private keys.

Crypto is well-known for its high return potential. For example, buying $1,000 of Bitcoin (BTC) on January 1, 2017 at a $963.66 price and selling it at the current price of $65,141 (as of March 4, 2024) would equal a total return on investment (ROI) of 6,600% or an average ROI of 943% per annum.

In contrast, Tesla (NASDAQ: TSLA), one of the best-performing stocks of this decade, only gained 1,322% in the same period.

However, crypto’s high return potential comes with a significant downside. Unlike major fiat currencies, commodities like gold, or even large-cap stocks, cryptocurrencies are highly volatile. This means that you must be aware that their prices can fluctuate heavily, even in very short periods of time.

Finally, cryptocurrencies reside on blockchains, facilitating decentralized, trustless, and peer-to-peer (P2P) transactions between users. As a result, you can buy crypto and store it in a non-custodial wallet with complete control over your funds. But this ability comes with more responsibilities. As crypto transactions are irreversible, you must ensure that you are transferring your assets to the right address.

The Pros And Cons Of Purchasing Cryptocurrency

Pros:

• High return potential, especially when compared to traditional asset classes
• The ability to diversify your portfolio with crypto investments
• Complete control over your coins via non-custodial wallets
• Can be traded 24/7/365
• No need to engage with financial intermediaries to transact cryptocurrencies

Cons:

• Highly volatile
• Unregulated in many countries, with regulatory laws varying by jurisdiction
• Investor due diligence is critical to stay safe in the crypto market

Where Can I Buy Cryptocurrency?

You can buy cryptocurrency on various platforms, including:

Platform	Description
Centralized Exchanges (CEXs)	Centralized exchanges provide a convenient way to buy cryptocurrency. Top services support a large variety of digital assets, fiat currencies, and payment methods (e.g., credit cards, bank transfers). As these are custodial solutions, it is recommended to withdraw your coins to an external wallet after purchasing them to avoid counterparty risks.
Decentralized Exchanges (DEXs)	DEXs present a non-custodial method for trading digital assets. While fiat currencies are not integrated natively into decentralized exchanges, multiple top solutions offer crypto purchases with fiat payment methods via on/off ramp services like Moonpay.
Stock Market	You can also gain exposure to cryptocurrency via traditional assets like crypto exchange-traded funds (ETFs), futures, or options. These instruments are available via stock market brokerages, providing increased safeguards to investors. On the other hand, registration is more complicated, and you don’t have full control over your coins on these platforms.
Peer-To-Peer (P2P) Marketplaces	P2P marketplaces offer an alternative option to buy cryptocurrency without using a CEX or a DEX. This enables you to connect with sellers directly to purchase crypto with fiat currency. However, prices on such platforms are often less advantageous than on CEXs or DEXs.
Crypto ATMs	In most big cities where crypto is legal, there is a great chance that you can find a cryptocurrency ATM. While they have higher fees than CEXs, they offer a convenient, ATM-like experience for purchasing digital assets with cash.
Cryptocurrency Wallets	Some crypto wallets have built-in features that enable you to buy crypto with fiat conveniently. As they utilize the same on/off ramps, the purchasing experience is very similar to on DEXs.

Who Is Eligible To Buy Crypto?

You can buy crypto on most cryptocurrency exchanges if you are at least 18 years old. However, a minority of these platforms also provide a chance for teens to purchase digital assets with their parents’ consent even if they are below this age.

In any case, it makes the most sense to buy crypto if you are a:

• Tech-savvy person: In the past few years, industry projects have put a strong emphasis on creating a beginner-friendly user experience. However, buying crypto still remains a complex procedure for newcomers. Thus, if you are a tech-savvy person, you will be able to navigate the Web3 world more easily.
• Investor concerned with inflation: Fiat currencies are designed to be inflationary to facilitate the economy’s growth. This means that they lose a part of their value over the years. For example, the buying power of $100 has decreased to $53.04 between 2000 and 2024.¹ Gains from crypto investments could potentially offset your losses from inflation, and deflationary cryptocurrencies like Bitcoin (BTC) could serve as a long-term store of value.
• Investor comfortable with taking higher risks: Crypto assets are highly volatile and are often subject to more lax regulations than traditional financial instruments. As they involve higher risks, buying cryptocurrency is more suited for risk-neutral investors who don’t mind facing the possibility of greater losses in the hope of larger returns.
• Regular crypto user: It also makes great sense to buy crypto if you utilize cryptocurrency products and services, such as CEXs, DEXs, decentralized applications (dApps), wallets, decentralized finance (DeFi) protocols, bridges, Play-to-Earn (P2E) Web3 games, non-fungible token (NFT) marketplaces, and more. In that case, you need a certain amount of digital assets to participate in various activities through these solutions.
• Investor seeking financial sovereignty: Through its underlying blockchain technology, cryptocurrencies offer you complete ownership, control, and authority over the coins you hold in your wallet. Unlike in traditional finance, no one can close your wallet, liquidate your assets, or reverse, block, or censor your transactions. With crypto, you remain in charge of your finances, and you don’t have to trust intermediaries to execute your transfers.

How To Buy Crypto: A Step-By-Step Guide

In this section, you will find a detailed guide that will take you through each step you must take to buy crypto.

Let’s get started!

Step 1: Select A Cryptocurrency To Purchase

Before you buy a crypto asset, it is absolutely critical to do your research. This way, you can avoid impulse purchases that could likely cause you significant losses.

According to CoinMarketCap, there are over 2.2 million different cryptocurrencies on the market.² Out of them, Bitcoin (BTC) and Ethereum (ETH) dominate the industry, representing a combined 70.1% of the total market capitalization (52.3% and 17.8%, respectively). The other approximately 2.2 million coins are competing with each other for an only 29.9% market share.

As a rule of thumb, the higher the market capitalization an asset has, the less volatile it is an the fewer risks it presents for investors. High-cap cryptocurrencies are also highly liquid and are listed on most major CEXs and DEXs. However, fewer risks often translate into decreased return potential.

In contrast, low-cap crypto assets pose higher risks for investors. Besides being extremely volatile, they can only be bought and sold on a handful of smaller CEXs or DEXs with limited liquidity. While they have a greater return potential than high-cap coins, their investors are more vulnerable to fraudulent schemes like rug pulls, exit scams, and pump and dumps.

For beginners, high-cap cryptocurrencies present an optimal choice. While they may have less return potential, they are easily accessible and have much fewer risks than low-cap assets.

On the other hand, low-cap crypto assets could be an ideal choice for veteran cryptocurrency investors who are willing to take higher risks and do meticulous research to find the right coins to purchase. But even if you are a pro, we recommend dedicating only a very small portion of your portfolio to low-cap cryptocurrencies to manage your risks efficiently.

In terms of risk management, we can’t stress how important it is to have a diversified portfolio when buying crypto. This way, you can reduce the overall risk of your portfolio.

For example, if you pour all your $100 into an asset that decreases by 50% over the course of the year, you will be left with $50. But if you allocate only $10 into that asset and the other $90 is invested in coins that collectively grow by 50%, your portfolio’s value then increases from $100 to $130 (+30% ROI).

Besides the market capitalization, you should also consider additional factors when evaluating crypto investments:

• Market metrics, such as the coin’s trading volume and supply metrics
• The price history
• Utility and use cases
• Team and partnerships
• Token distribution
• Inflation
• Deflationary mechanisms (if there are any)

In every case, we highly recommend taking an extensive look at the website, whitepaper, official documentation, and social channels of the coin before purchase. This way, you can gain valuable insights into the cryptocurrency, the problems it seeks to solve, its use cases, and the current activity of the project.

Below, you can find an example of a diversified portfolio that includes a part of the top 20 cryptocurrencies by market capitalization:

Crypto	Portfolio Percentage
Bitcoin (BTC)	30%
Ethereum (ETH)	20%
Binance Coin (BNB)	15%
Solana (SOL)	11%
Ripple (XRP)	8%
Cardano (ADA)	5%
Dogecoin (DOGE)	3%
Avalanche (AVAX)	3%
Polkadot (DOT)	3%
Uniswap (UNI)	2%

Step 2: Choose A Crypto Exchange

After selecting your desired cryptocurrencies, it is time to choose an exchange to purchase them, which can be either a CEX or a DEX. As decentralized exchanges are more suitable for veteran digital asset traders and DeFi users, we will show you how to buy crypto on a centralized exchange instead, which presents a convenient option for customers.

Moreover, while multiple major DEXs support fiat purchases through an on/off ramp partner, centralized exchanges offer more options for fiat payment methods. On the other hand, CEXs are custodial services, meaning that it is advised to withdraw your newly bought coins to external wallets to minimize counterparty risks.

Below, you can find a comparison between centralized and decentralized exchanges:

	Centralized Exchanges (CEXs)	Decentralized Exchanges
Convenience	High	Low
Custody	The CEX has access to users’ private keys, maintaining custody over their funds	The user has complete control over their private keys and the funds within their wallet
Supports Multiple Chains	Yes	In most cases (it varies by the DEX)
Customer Service	Yes	No
Fiat On/Off Ramps	Yes	Varies (multiple DEXs have integrated fiat on/off ramp services)
Complexity	Easy to use, even for beginners	Complex, recommended only for veteran crypto and DeFi users
Governance	Centralized	Decentralized (community governance)
Examples	Binance, Coinbase	Uniswap, PancakeSwap

When you select a centralized cryptocurrency exchange to buy crypto, you should be aware of the following factors:

• Supported assets: Before you select an exchange, it is crucial to evaluate whether it supports the crypto you’d like to purchase. Besides that, you should also evaluate the range of cryptocurrency and stablecoin pairs. We also recommend reviewing the fiat currencies the platform supports.
• Proof of Reserves (PoR): After the infamous FTX scandal, CEXs have started sharing Proof of Reserves.³ By allowing the public to verify that they have the necessary funds to cover their debts, exchanges can increase customers’ trust. However, not all exchanges have published their PoR.
• Payment methods: Most CEXs offer a wide range of payment methods for depositing and withdrawing funds from their platforms. Examples include credit cards, debit cards, bank transfers, and crypto transactions for deposits and bank transfers, PayPal, and cryptocurrency for withdrawals. It is always crucial to check whether the exchange’s deposit and withdrawal methods are suitable for your country or region (e.g., SEPA transfers in the EU, ACH transfers in the US, Faster Payments in the UK).
• Fees: Some exchanges charge higher trading fees, while others take only a very small portion of users’ orders as commission. Besides the ones imposed on trades, you should also review CEXs’ fees on deposits, withdrawals, spread, and other services (e.g., borrowing, staking, and charges related to crypto credit cards).
• Availability: Always make sure that the exchange is available in your country and that you are eligible to create an account on the platform.
• Reputation: Before registering, it’s a great idea to check external reviews on social media, forums, educational hubs like CryptoRated, and review sites to see what people are saying about the exchange. This is also an excellent way to evaluate whether the CEX is legit, as well as find out more about its advantages and disadvantages.
• Regulation: Crypto regulation is a complex topic and varies by jurisdiction. Some exchanges are located in nations with a lax regulatory environment, while others are based in countries with strict rules and licensing requirements. If there’s a mandatory licensing regime in place where you live, it is absolutely critical to validate whether your preferred CEX has already obtained one.
• Security features and insurance: CEXs offer multiple security features to protect your funds. Moreover, some providers also offer insurance against a loss of funds due to theft, fraudulent schemes, or other causes that are beyond the user’s responsibility. It’s also a good idea to check whether the exchange has been hacked and how it handled the case (e.g., it compensated users for the stolen funds).

Step 3: Create An Account And Pass KYC

You have selected your preferred cryptocurrencies and a reputable centralized exchange (CEX) such as Binance, Bybit or OKX to buy them. Great job! Now, it’s time to create a CEX account.

This is the easiest part: just head to the official website of the exchange, click “Register” or “Sign Up,” and fill out the form with your details.

Upon verifying your email and phone number, CEXs also require their users to pass know your customer (KYC) and anti-money laundering (AML) checks to comply with regulations. This means that you must answer a few questions, as well as verify your identity and residence by taking a photo of certain documents (e.g., your ID card, bank account statement).

The good news is that many CEXs have automated KYC, with the whole process taking no longer than a minute or two.

Step 4: Fund Your Exchange Account

Upon verifying it, the next step is to fund your exchange account with fiat currency. Head to the “Funding” or “Deposit” tab on the CEX’s platform, choose your preferred payment method, provide the amount to deposit along with the payment details and initiate the transaction.

After the transaction is processed, the exchange will automatically credit the funds to your account.

Regarding crypto deposits, most cryptocurrency exchanges offer multiple payment methods, which could include:

Payment Method	Features
Local Bank Transfers	Based on your location, you could have access to local bank transfers (e.g., SEPA in the EU or ACH in the US), which present the most cost-efficient option to deposit funds to your CEX account. They can take anywhere from a few minutes to multiple days to arrive.
International Bank Transfers	International bank transfers are not only expensive, but they can also take several times to get processed, which is due to the involvement of multiple correspondent banks in the payment process. So, we only recommend this deposit method when you have no other options available at the exchange.
Credit/Debit Card Payments	Most CEXs offer customers the ability to fund their accounts with a credit or a debit card. While this payment method is convenient and instantly credits your assets to your exchange account, most providers charge a percentage-based commission (usually 2-3%), which translates into higher fees with greater purchase amounts.
Crypto	If you already have digital assets in your wallet, you can use them to buy the crypto of your choice. Most CEXs support a diverse range of cryptocurrencies and charge no deposit fees for them. However, you should be aware of network fees, which you must cover each time you transfer coins from one wallet to another via the blockchain.
PayPal	Some CEXs also allow their users to buy crypto with PayPal, presenting a very convenient way to fund your account. However, this additional comfort often comes with increased fees charged by the exchange, PayPal, or both.

Step 5: Execute The Trade

By now, you should have a verified exchange account that has already been credited with funds via one of the payment methods available on the CEX’s platforms. Excellent job!

Your next task is to buy crypto. To achieve that, head to the “Buy Crypto” or “Trade” page on the CEX, select a fiat-crypto asset pair (e.g., BTC/USD, ETH/EUR). On the trading interface, specify the trade’s details, including the purchase amount, the type of the order (e.g., Limit or Market), as well as additional information (e.g., optional Take Profit or Stop Loss orders).

When you are ready, click “Submit,” and the exchange will execute your trade automatically at the best available price (Market orders) or at your preferred price (Limit orders). Congratulations; you have purchased your first cryptocurrency!

Step 6: Withdraw Your Crypto Assets To An External Wallet

Buying a cryptocurrency and letting it sit on your CEX account is a big mistake. Centralized exchanges are custodial solutions, meaning that the service provider has access to your private keys instead of you. This significantly increases counterparty risks.

The latter raises the chance that you lose your funds due to an exchange hack, an exit scam, fraudulent schemes targeting the company operating the service, rug pulls, and other illicit schemes.

To avoid falling victim to the above schemes, we highly recommend withdrawing your cryptocurrencies to a non-custodial external wallet right after the trade is completed. While the withdrawal may involve some costs due to blockchain network fees, it will help you minimize counterparty risks and safeguard your newly bought coins.

To withdraw your coins, you should head to the “Withdrawal” page on the exchange’s platform. When you are there, select the crypto you want to withdraw, the amount of assets, and copy-paste your wallet address where you’d like to transfer your coins to.

If you do everything right, your digital assets will arrive in your external wallet after a few blockchain confirmations.

Staying Safe When Buying Cryptocurrency

To ensure the safety of your funds, we have collected a few tips below, which you could come in handy for staying secure when buying cryptocurrency:

• When withdrawing funds to an external wallet, copy-paste the recipient’s wallet address or scan its QR code via your device to avoid any mistakes.
• Verify the URL of the service you are utilizing to buy crypto.
• Don’t click on links or download files from suspicious emails.
• Always do your own due diligence before using a new service. Remember: if something is too good to be true, then it probably is.
• Never share your wallet’s private keys or seed phrases with anyone. Instead, you should keep it securely at a place you have exclusive access to.
• Consider using a hardware wallet to store crypto securely in the long run (our guide about the best hardware wallets covers everything you need to know).
• Take advantage of safety measures like two-factor authentication (2-FA) and biometric authentication (e.g., Face ID, Touch ID) to bolster your security.

Final Thoughts

Buying cryptocurrency can help you diversify your portfolio and gain exposure to an asset class with high return potential. However, you should also keep in mind the possible risks, such as digital asset volatility and the industry’s lack of regulation.

In this guide, we have shown you when, where, and how to buy crypto, as well as how to stay secure before, after, and during the trade. Hope you enjoyed this article; be sure to check out the other guides on CryptoRated to learn more about the blockchain and digital asset space.

Frequently Asked Questions (FAQ)