A beginner's guide to buying your first cryptocurrency
More than a decade has passed since the first digital coin, Bitcoin, was launched, and cryptocurrencies continue to be a hot buzzword and asset in the digital economy. Their continuous growth in both numbers and value prove to critics that they are not a fad. Instead, they hold various benefits in several ways, such as empowering you to be your own bank by buying goods and services, as well as trading them for profit.
Crypto is undoubtedly an exciting industry filled with many possibilities. Yet at the same time, understanding its blockchain technology and exploring over 6,000 digital coins circulating the market can be confusing. Thankfully, the first step to entering their world is buying digital currencies that can be done in a few following easy steps presented on this page.
- Get a wallet and choose your preferred storage method
Similar to fiat money, you first need to have a wallet to store your crypto. The difference, however, is that it is digital that varies into two major different types: hot and cold crypto wallets. They are also called online and offline storage, respectively. Meaning, the former is connected to the internet, whereas the latter is not and instead uses portable devices like a flash drive. With each having respective pros and cons, Bitcasino lists down their two or more subtypes to help you decide even better.
Hot wallets are hassle-free and convenient, perfect for everyday use and basic transactions. That said, while their connection to the internet allows you to access your account wherever you are and whenever you want, it also means that you are vulnerable to digital dangers like technical errors and mischiefs. As such, you need commendable hot wallets to prevent such problems, but first, take a look further below for their subtypes.
- Mobile wallet — Since many people are with their mobile devices at all times, this software is perhaps the most ideal for daily transactions.
- Web wallet — If, however, you don’t like to download apps, web wallets are another great option because they connect you to the network through a browser interface.
- Desktop wallet — This option is, by far, the safest hot wallet because you need to download it on your personal computer, thus giving you full control and access to your storage. However, it is also highly suggested that you create its backup as a precaution.
As mentioned above, cold wallets are portable devices that only become online when used for transactions. Their secure offline storage feature makes them ideal for business owners, long-term crypto traders, or as what the industry likes to call them, hodlers (users who ‘hold on for dear life’). Here are their two subtypes:
- Hardware wallet — This electronic device (i.e. flash drive) uses a random number generator (RNG) in producing public and private keys.
- Paper wallet — This is a piece of printed paper that includes a crypto address and its keys through QR codes.
- Find a reliable crypto exchange
Once done sifting through the many, many hot and cold wallets available in the market, another platform you need to meticulously find is a crypto exchange. It is a digital marketplace where owners can buy and sell digital currencies, and even convert fiat money into other assets according to the market value.
While crypto exchanges are like traditional stock exchanges — market makers that take bid-ask spreads as their extra charges for every transaction — they vary into three kinds. These are centralised (CEX), decentralised (DEX), and hybrids, each of which holds significant pros and cons depending on your preferred services.
- CEX — Directly controlled by a central organisation, CEX manages your transfer funds and wallets. It normally has higher liquidities and a more stable market than DEX.
- DEX — Thanks to smart contracts, this exchange depends on an automated process in controlling your assets. As a result, its low liquidity creates a more volatile market.
- Hybrids — Unlike crypto wallets where you can only choose between two types, there are a few exchanges that combine CEX’s low latency and fast transaction speeds and DEX’s smart contracts. Hybrids are the ideal solution for preventing yourself from the market’s volatile risks.
To further protect yourself from several digital dangers, you need to rely on platforms that have the six following essential qualities:
- Used technology
- User experience
- Create and verify your account
Licensed crypto wallets and exchanges have successfully met federal regulatory requirements, including KYC (know your customer). Otherwise known as ‘know your client’, it is the process of verifying your identity by either submitting a copy of your passport/driver’s license or uploading a selfie to further prove your appearance matches your documents.
- Deposit cash to your account
Before buying any crypto, you must first ensure that you have funds in your account. As said before, many exchanges allow users to convert fiat money into their preferred coins. Now, how it is done varies from one marketplace to another, possibly ranging from linking a bank account, authorising a wire transfer, or settling payment with a debit/credit card.
- Place your crypto order
Now that the money is available in your account, you are ready to finally place your crypto order. The problem, however, is that there are more than 6,000 digital currencies circulating today in the market.
To get you started, listed as follows are the top 10 digital currencies in October 2021 based on market cap.
- Bitcoin (BTC): Over $821 billion
- Ethereum (ETH): Over $353 billion
- Tether (USDT): Over $68 billion
- Cardano (ADA): Over $67 billion
- Binance Coin (BNB): Over $64 billion
- Ripple (XRP): Over $44 billion
- Solana (SOL): Over $41 billion
- USD Coin (USDC): Over $31 billion
- Polkadot (DOT): Over $28 billion
- Dogecoin (DOGE): Over $26 billion
The last words: Dos and don’ts in the crypto market
Before we let you go and explore more of the crypto market, Bitcasino leaves you 10 important tips to remember:
- Don’t invest more than you can afford to lose.
- Research thoroughly.
- Beware of platforms or features that sound too good to be true.
- Don’t join new trends simply because you have FOMO (fear of missing out).
- Religiously verify whatever offers you find online.
- Beware of ‘unit bias’.
- If they are not your keys, then they are not your coins.
- You can buy a fraction of a bitcoin (not the whole lot).
- Try to explore more other digital currencies.
- Study the changing crypto-related regional laws (i.e. legality and tax consequences).