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How to buy cryptocurrency – a beginner’s guide

You can make your first crypto purchase in a few easy steps. But you’ll need to consider these 4 things first.

If you’re new to cryptocurrency, figuring out which digital currencies to purchase and how to purchase them is the relatively easy part. Doing so is similar to the process of buying traditional assets like stocks on through a brokerage.

However, once you buy digital assets, you have to decide where to store their private keys.

How to buy crypto — 4 things to consider

  1. What broker or exchange to use
  2. The crypto asset to buy
  3. How you want to pay
  4. Where to store the crypto you buy

1. Choose a crypto exchange and sign up

Most beginners use either a centralized crypto exchange, a traditional brokerage that supports crypto assets or a payments app to make their first crypto purchase.

If you already own some crypto and want to trade it for other crypto without going through the Know Your Customer (KYC) process, you might consider using a decentralized exchange (DEX), though using one requires some technical know-how.

Centralized exchange. These exchanges are where crypto investors can buy and sell their crypto assets through an interface provided by a third-party broker. Most centralized exchanges offer an easy method for making instant crypto purchases and include educational materials for beginners. Popular centralized crypto exchanges include Coinbase, Kraken and Gemini.

Traditional brokerage. Some brokerages through which you can purchase traditional assets like stocks and exchange-traded funds (ETFs) now support crypto coins and tokens, as well. For example, you can buy Bitcoin alongside shares of Apple stock on Uphold, eToro or SoFi. Keep in mind, though, that some traditional brokerages custody your crypto for you and don’t offer you the option of moving it to a wallet for which you hold the private keys.

Payment apps. You no longer have to open an account with a crypto exchange or traditional brokerage to gain some exposure to the crypto asset class. You can use payment apps like CashApp, PayPal or Venmo to purchase Bitcoin and other crypto assets. However, only CashApp lets you transfer your Bitcoin or crypto out of its custody.

Decentralized exchange. If you already own crypto and want to trade it for other crypto assets without going through the KYC process, you might consider using a DEX like Uniswap or THORSwap. To do this, you’ll need to know how to use a browser extension crypto wallet like MetaMask or XDEFI Wallet, which can be a little tricky for newer users.

Checklist for choosing an exchange

  • Make sure the exchange is registered as a Money Service Business (MSB) with the Financial Crimes Enforcement Network (FinCEN) or as a trust company.
  • Avoid centralized crypto exchanges that are based offshore and don’t require a Know Your Customer (KYC) check.
  • See if the exchange supports the coin or token you’re looking to purchase.
  • Find out whether or not the exchange permits you to move the digital assets you purchase from its custody to a crypto wallet for which you hold the private keys.
  • Research whether the exchange publishes a proof of reserves, which is a third-party audit of the amount of crypto the exchange holds.
  • See if the exchange offers two-factor authentication (2FA) for your account.

2. Choose a crypto asset to buy

If you’re just dipping your toes into the crypto waters, Fidelity recommends starting with Bitcoin (BTC) before purchasing other crypto assets.(1)

However, you may already know you want to purchase a crypto asset other than BTC. In that case, simply check beforehand to make sure that the exchange you’d like to use supports the asset you want to buy.

The following are some of the most popular types of crypto.

Bitcoin (BTC) The original cryptocurrency, Bitcoin (BTC) is the first digital asset to exist on a blockchain. BTC is often called a store of value because it’s perfectly scarce — there will only ever be 21 million Bitcoins. BTC is often referred to as digital gold. In Fidelity’s “Bitcoin First” report, the authors explain that bitcoin “is fundamentally different from any other digital asset” because it’s the only digital asset that has monetary properties.

Ethereum (ETH) The second-most popular crypto in terms of market capitalization, Ether (ETH) is the native asset of the Ethereum blockchain, which serves as a platform for decentralized applications (dapps) built via smart contracts. ETH fuels transactions on Ethereum. The network is best known for its decentralized finance (DeFi) applications and for the non-fungible tokens (NFTs) it supports.

Alternative Layer 1 coins There are many alternative base layer, or “Layer 1”, smart contract blockchains like Ethereum. And each of these other Layer 1s has its own cryptocurrency. Alternative Layer 1s and their native coins include Cardano (ADA), Solana (SOL) and Avalanche (AVAX).

Layer 2 Coins Layer 2 blockchain networks are built on top of other blockchain networks to help the base layer blockchain to scale. Layer 2 blockchain networks and their native tokens include Polygon (MATIC) and Arbitrum (ARB).

Meme Coins Meme coins are the gambling chips of the crypto space. Coins and tokens like Dogecoin (DOGE) and Shiba Inu (SHIB) have no intrinsic value, and their prices tend to be driven by the memes issued by supporters on social media.

3. Choose a payment method and place your order

Pay with cash. Most platforms let you deposit money from your bank account or via a wire transfer. You can also buy crypto with a debit or credit card or a payments app like PayPal or Apple Pay. With some crypto brokerages and exchanges, you can deposit cash instantly, whereas with others, you may have to wait a few days until the money transfer clears. Also, keep in mind that fees for using credit and debit cards tend to be high.

Pay with crypto. You may already own some crypto and want to sell it for some other crypto. In this case, you can transfer it to that broker or exchange on which you want to trade it so long as the platform accepts crypto deposits. Certain platforms like SoFi, eToro and Webull don’t accept crypto deposits (or allow withdrawals).

Once you find a platform that accepts deposits, make sure it supports both the crypto you already own and the one you want to buy. On some exchanges, these two cryptos may be a trading pair, which means you can directly swap one for the other. On other exchanges, you may need to sell the crypto you already own for cash or another crypto first and then buy the new crypto you want.

4. Select a storage method

Once you’ve purchased your crypto, you’ll then have to decide where to store its private keys.

Some exchanges and payment apps like eToro, SoFi and PayPal hold the private keys to your crypto for you and don’t give you the option to transfer it out of their custody and into your own.

Other platforms like Kraken, Robinhood and CashApp do permit you to transfer your crypto out of the platform’s custody.

You can leave your crypto in the custody of a brokerage or exchange, but it’s important to know that you don’t technically own it when you do this. Instead, you own an IOU for your assets and can’t use them in a peer-to-peer transaction or put them to work in a dapp.

If you opt to take custody of your crypto, two of the most popular options for non-custodial wallets — wallets that enable you to hold the private keys to your crypto — are software and hardware wallets.

Software wallets. These are a type of hot wallet, which is a wallet that’s connected to the internet at all times. Software wallets are a good place to store or manage assets that you plan to use or trade in the near future. These wallets include MetaMask, Atomic Wallet and Exodus.

Hardware wallets. These wallets are sometimes referred to as cold storage wallets. They include actual physical devices that either never have to be connected to the internet or only have to be connected when in use. These wallets include the Ledger Nano S Plus and the Trezor Model One.

Exchange sign-up checklist

  • Identification (passport or driver’s license)
  • Facial recognition scan (in some cases)
  • Include your address, phone number and any other information the platform requests
  • Set up two-factor authentication (2FA)

Is investing in crypto worth it?

Deciding on whether or not to invest in crypto is a personal decision and is often based on your investment thesis, time preference and risk tolerance.

For example, if you believe that Bitcoin (BTC) is digital gold, and you’re willing to wait years to make a return on your investment, then you might find crypto worth investing in. Though the price of BTC has been volatile over the past decade and a half, it’s still climbed from less than $0.01 to almost $70,000 at its peak.

If you’re just in the market to speculate in an attempt to get rich quickly, you may want to think twice about investing in crypto, especially if you have a low-risk tolerance. Buying a highly volatile crypto coin or token because you’ve heard from friends or family that you can make some quick, easy money isn’t a solid investment plan, as the drops in the prices of these cryptos can be gut-wrenching.

Historically, if you’ve held an asset like BTC or ETH for more than four years, you’ve found yourself in profit. Keep in mind, though, that past performance does not indicate future results.

Other ways to invest in crypto

You don’t have to invest in digital assets directly to gain exposure to the crypto asset class. You can also invest in either crypto stocks or crypto ETFs to indirectly invest in crypto.

Crypto stocks. You can invest in Bitcoin, crypto and crypto-adjacent companies via crypto stocks like Block Inc (SQ), Coinbase Global (COIN) and Riot Platforms Inc (RIOT). Such stocks are available via traditional brokerages. The price movements of some of these stocks tend to correlate with the price movements of major crypto assets like Bitcoin (BTC) and Ethereum (ETH).

Crypto ETFs. While many are awaiting an institution like Fidelity or BlackRock to bring a spot Bitcoin ETF to market, there are also currently a number of other crypto ETFs available to invest in. These include the ARK Next Generation Internet ETF (ARKW), the Amplify Transformational Data Sharing ETF (BLOK) and the ProShares Bitcoin Strategy ETF (BITO).

Compare crypto exchanges

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Name Product Deposit methods Fiat currencies Cryptocurrencies Offer Disclaimer Link
Finder Award
Kraken Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, Apple Pay, Google Pay, SWIFT, ACH online banking

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Paybis Cryptocurrency Exchange
Bank transfer, Credit card, Debit card, Neteller

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Finder Exclusive: Get 25% discount on all commission for 1 transaction when using promocode Finder25. There is no time limit on the validity of the promo code.
US residents: Restricted in the following states - NY, CT, NM, WA, HI, AL, VT, FL, AK, NV.
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Uphold - Digital Asset Platform
Bank transfer, Credit card, Debit card, Bank transfer (SEPA), Apple Pay, Google Pay

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Refer a friend to earn US$20 — $10 for you and $10 for the person you refer. T&Cs apply.
Terms apply. Cryptoassets are highly volatile. Your capital is at risk.
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Robinhood Crypto
Bank transfer, Cash, Debit card

1

36

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Gemini Cryptocurrency Exchange
Bank transfer (ACH), Cryptocurrency, Debit card, PayPal, Apple Pay, Google Pay, SWIFT

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Public Cryptocurrency Exchange
Public Cryptocurrency Exchange
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7

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Whether products shown are available to you is subject to individual provider sole approval and discretion in accordance with the eligibility criteria and T&Cs on the provider website.

Name Product Deposit methods Fiat currencies Cryptocurrencies Offer Disclaimer Link
eToro Cryptocurrency Trading
eToro Cryptocurrency Trading
Bank transfer, Credit card, Debit card, Neteller, Skrill

18

78

Disclaimer: Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply.
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Binance Cryptocurrency Exchange (Not available to US users)
Bank transfer, Cryptocurrency

1

369

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KuCoin Cryptocurrency Exchange
KuCoin Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, PayPal, P2P

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Bybit Cryptocurrency Exchange
Bybit Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, P2P

73

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Disclaimer: Highly volatile investment product. Your capital is at risk.
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Gate.io Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card

8

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Kraken Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, Apple Pay, Google Pay, SWIFT

8

222

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OKX Cryptocurrency Exchange
Bank transfer, Cryptocurrency, iDEAL, PayPal, POLi, SEPA, Faster Payments (FPS)

35

338

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Uphold
Uphold
Bank transfer (ACH), Credit card, Debit card, Apple Pay, Google Pay

27

237

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EXCLUSIVE
Paybis Cryptocurrency Exchange
Bank transfer, Credit card, Debit card, Neteller

42

357

Finder Exclusive: Get 25% discount on all commission for 1 transaction when using promocode Finder25. There is no time limit on the validity of the promo code.
US residents: Restricted in the following states - NY, CT, NM, WA, HI, AL, VT, FL, AK, NV.
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Finder Award
Bitstamp Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, SEPA, Faster Payments (FPS)

3

90

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Coinmama Cryptocurrency Marketplace
Credit card, Fedwire, SEPA, Google Pay, SWIFT, Bank card

6

15

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OFFER
Gemini Cryptocurrency Exchange
Bank transfer (ACH), Cryptocurrency, Debit card, PayPal, Apple Pay, Google Pay, SWIFT

7

152

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Finder Award
Crypto.com App
Bank transfer, Credit card, Cryptocurrency, Debit card, PayPal, Wire transfer, Apple Pay, Google Pay, SWIFT

31

384

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Bybit Cryptocurrency Exchange

Bybit Cryptocurrency Exchange logo
  • Offers leverage and derivative trading
  • Supports EUR, GBP and CHF
  • Licensed to operate in all European countries
Go to site
Disclaimer: Highly volatile investment product. Your capital is at risk.

Kraken Cryptocurrency Exchange

Kraken Cryptocurrency Exchange logo
  • Large selection of cryptocurrencies
  • Low fees for active traders
  • Pleasant UI for new traders
Go to site

KuCoin Cryptocurrency Exchange

KuCoin Cryptocurrency Exchange logo
  • Buy, sell and trade over 700 crypto assets
  • Supports 10 Asian fiat currencies
  • Offers crypto futures trading
Go to site

Kraken Cryptocurrency Exchange

Kraken Cryptocurrency Exchange logo
  • Buy, sell and trade over 200 crypto assets
  • Licensed to operate in 17 jurisdictions in Oceania
  • Supports AUD
Go to site

Binance Cryptocurrency Exchange (Not available to US users)

Binance Cryptocurrency Exchange (Not available to US users) logo
  • Supports over 300 crypto assets
  • Binance Pay enables users spend their crypto
  • Binance P2P supports multiple African fiat currencies
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Binance Cryptocurrency Exchange (Not available to US users)

Binance Cryptocurrency Exchange (Not available to US users) logo
  • Supports over 300 crypto assets
  • Binance Pay works with Credencial Payments to support crypto payments
  • Binance P2P supports five Latin American fiat currencies
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Bybit Cryptocurrency Exchange

Bybit Cryptocurrency Exchange logo
  • Supports leverage and derivative trading
  • Supports 300 spot trading pairs
  • Low-to-non-existent trading fees
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Disclaimer: Highly volatile investment product. Your capital is at risk.