Most people who are looking to buy cryptocurrency for the first time are best off purchasing the most well known and universally traded currency: Bitcoin (BTC). You can buy BTC from either exchanges, or directly from other people via marketplaces.
You can pay for them in a variety of ways, ranging from hard cash to credit and debit cards to wire transfers, or even with other cryptocurrencies, depending on who you are buying them from and where you live.
Surprisingly, it’s still not easy to buy BTC with your credit card or PayPal, depending on your jurisdiction.
This is because such transactions can easily be reversed with a phone call to the card company (ie ‘chargebacks’). Since it’s hard to prove any goods changed hands in a transfer of cryptocurrencies, exchanges avoid this payment method and so do most private sellers.
However, there is an easy option for people in the US and other countries: Coinbase.
Coinbase is a popular wallet and exchange service that will also trade US dollars and euros for bitcoins. The company has web and mobile apps. Originally a US-only service, Coinbase has recently opened up to a large number of European countries.
(Note: If you click the above link and sign up to Coinbase using that link, you will receive $10 in free Bitcoin after purchasing $100 of any other currency.)
The most important reason I support Coinbase as the ideal entry point for cryptocurrency traders is its stellar reputation and reliability. It certainly isn’t the ideal platform for trading– we’ll cover how to get from Coinbase to trading exchanges later– but reliability when handling your money is the biggest factor you should consider when making your purchase.
Not only can you buy BTC, but you can also buy the second biggest currency out there, Ether (ETH). Both BTC and ETH will allow you to send your funds to wallets that match that currency on other exchanges or sites.
Not only do you want to purchase on a reliable platform with minimal fees (Other sites like localbitcoins have fees upwards of $50+ or offer pennies on the dollar USD for BTC.) but you will also want to be able to get your money back into fiat form at some point from a reliable site. Even if you send your BTC to a trading platform like Poloniex or Bittrex to take advantage of their diverse selection of currencies, you can always transfer your final BTC totals back to Coinbase for withdrawal even if you haven’t used your account in the interim.
Making Your Purchase
Once you’ve signed up for a Coinbase account, you will need to decide how you’ll fund your account. They now offer limited financing through Credit Cards, although the best method for transferring are bank account transfers. The transfers take longer than Credit Cards, which are free.
Are you looking to take advantage of what you hope is a temporary dip in a currency? You may want to consider paying the extra (but still small) fee associated with funding via credit card.
Looking at a longer-term investment and you’re not in a rush? A bank account transfer is probably the better option for you, so long as you don’t get too worked up about money you may be missing out on by not have transferred sooner.
You will quickly realize there are limits placed on your account that required additional identification to raise. This is to ensure Coinbase operates within full compliance of federal laws regarding the exchange of cryptocurrency. They will not share your information with anybody or use it for nefarious purposes.
Identification processes are becoming a standard for all reputable trading platforms in order to facilitate deposits, withdrawals, and reduce fraudulent activity.
Selecting an Exchange
Now that you’ve signed up on Coinbase and are awaiting your first deposit or have your BTC/ETH in hand, it’s time to move it to a platform you can do some trading on.
Right now there are two exchanges worth checking out, each with their own pros and cons:
- Poloniex: The biggest name in altcoin trading along with a good platform for your standard BTC/ETH/Litecoin trading, this platform offers a solid UI and good tools. It also has the highest volume, which means less drastic fluctuations in price in some coins.
- Bittrex: This is actually my exchange of choice over Poloniex. It has lower volume than Poloniex does but this can be a good thing as Poloniex tends to crash at periods of high volume– usually the worst time for a currency exchange to crash. They have a diverse selection of coins to choose from and still has a large enough volume to experience good churn on most of their offerings.
You will need to decide for yourself which one you would like to use and go through their sign-up process. Once you’re logged into your account, next you’ll need to find your new wallet.
Transferring to an Exchange
Since Bittrex is my preferred platform, I will use their website in my step-by-step transfer example along with Coinbase as the place I am transferring from. I will use Bitcoin as the example of the currency I am transferring for most of this guide.
- Log in to your Bittrex account and click on “Wallets” in the top black bar.
- Find Bitcoin or Ethereum in the wallet listing depending on which currency you purchased on Coinbase– Bitcoin if you bought Bitcoin and Ethereum if you bought Ethereum (Make sure you DO NOT SELECT ETHEREUM CLASSIC!)
- Click on the blue box with “+” in it to the left of the name of Bitcoin and it should produce a pop-up window labeled “Deposit”.
- Your address box should be blank, so click “Generate New Address” and it should fill with a randomized string of number and letters.
- Congratulations! You made a wallet address!
- Copy the entirety of the wallet address.
- Keep this tab open on this page for now and open another tab to Coinbase.
- Click on “Send/Request” on the left hand column on Coinbase. Ensure that “Send” is selected up top after clicking on it.
- In the “Recipient” box, paste the wallet address from Bittrex we just generated.
Now is the time to verify a couple things to ensure your transfer works smoothly. If you fail to transfer properly, you could lose the entirety of your holdings. Following these simple steps not only now, but every time you perform a transfer, could you save you big time.
- Check to ensure the wallet addresses match in their entirety. I do this by looking at the first 3 characters and the last 3 characters of my intended address to make sure I didn’t miss any or the address was not cut off.
- Make sure you are transferring only like currency to like currency– Bitcoin should only go to Bitcoin wallet addresses, Ethereum only to Ethereum, and so on and so forth.
All good? Let’s continue.
10. At the Coinbase send page, enter the amount you would like to send from the correct currency wallet.
11. Ensure that everything is done to your liking and hit “Send Funds”.
You will receive a verification from Coinbase that your transfer was initiated and all you have to do is sit back and wait. If you transferred to Bittrex, you should soon see a “Pending Deposit” amount equal to what you transferred from Coinbase.
Once the transaction is verified on the blockchain and it is process by Bittrex, you will have officially completed your first transfer and will be ready to exchange your currency of choice for countless other alternative cryptocurrencies.
Congratulations on taking your first step towards becoming a cryptocurrency trader and ensuring you have a reliable entry and exit point for your money!