Buying Your First Crypto: A Guide
|— Crypto is not homogenous, but in fact a huge array of different coins and tokens – your first job is figuring out which ones you want to buy and what you’re aiming to get from it|
— Be discerning! The cryptosphere is full of new projects and opportunities, but remember; not all of them are genuine – it’s up to you to do the research
— You can buy more or less any amount of currency you want – you’re not limited to whole coins
— Not your keys, not your coins. This is the most important mantra to keep it in mind when deciding how to store your crypto
Welcome to the first step on your crypto journey. Well done for getting this far – it’s an exciting process. So let’s chat about how you can buy your first crypto.
Which crypto to buy?
First, let’s be clear about one thing: you are the only one to decide what you want or don’t want when it comes to crypto. Crypto gives you back freedom and power, therefore responsibility. That’s why it is really important to do your own research and educate yourself beforehand.
Again, no matter your choice, you have to be informed before doing anything. First, because there are well planned scams with funding and marketing that are trying to steal money from unsuspecting investors. Second, because almost every legitimate crypto has a purpose and a vision. Learning about it by reading the reference document called a white paper is therefore a must-do to assess the potential of a crypto. By reading it, you have to pay attention to two main points to assess the project’s viability:
- Is the project answering an existing problem and is it useful for the crypto ecosystem?
- Does the project really need a dedicated crypto to work and achieve its ambition?
Like any market, there are obviously no universal rules. It is impossible to know if a crypto will go up, nor exactly when. But if the answer is yes to both questions, then there are better chances for the project to have some potential. While the most famous cryptocurrencies have already proved their worth, this step is very important with smaller cryptocurrencies. Because those are like startups: their value can drastically increase but they are still fragile. In a nutshell, there is no bad choice but one universal rule instead: buy only the crypto you believe in once you have educated yourself.
Do I have to buy a whole coin?
NO! Although this option is not well-known, you don’t have to buy a whole coin. Most cryptocurrencies actually give you the possibility to buy a half, a quarter or less of a coin. Just like fiat currencies which can be divided into cents, crypto currencies also can be divided, therefore bought, in small amounts. One Bitcoin even has a much larger degree of divisibility than a US dollar. While the dollar can be divided into 1/100 of 1 USD, a Bitcoin is divided into “Satoshis” which are just 1/100,000,000 of 1 BTC.
Where to buy your first coins?
When it comes to buying your first crypto, cryptocurrency exchanges are the most common and convenient (digital) spot to go. They allow you to buy, sell and trade your crypto assets in a pretty convenient fashion. Many of the famous cryptocurrency companies like Coinbase, Binance, Changelly, Bittrex and Kraken are in fact exchange platforms.
Most crypto exchanges are fiat to crypto exchanges which allow you to buy coins with your traditional fiat currency, via bank transfer, credit card or PayPal for example. But if you want to buy a smaller crypto, you might not find it on these fiat to crypto exchanges. You would have to use an intermediate platform, such as Ethereum (ETH), then go to a crypto to crypto exchange in order to convert your ETH into the desired asset.
First thing to know about storing crypto
Aside from buying, selling and trading cryptocurrencies, exchanges are also often used as a place to store your newly purchased crypto assets. However, when it comes to storing crypto, exchanges are not very secure and limit your freedom. By leaving your assets in an exchange…
Your valuable digital currencies are vulnerable
Anyone who can figure out your login details would be able to access and steal your coins. Besides, exchanges are an ideal target for hackers because of the huge amount of crypto they can steal – and they’ve been successful more often than we’d like.
You don’t own that crypto on your account
There is a big difference between buying and owning your crypto. When leaving your crypto on an exchange, you aren’t the owner – the exchange is holding your crypto assets, much like a bank holding your money.
You are not in control of your asset
Because the exchange actually owns your crypto, you do not have total control over your own assets, nor the freedom to do whatever you want with it. The exchange does. This is why the exchange can set certain limits to your crypto activities, like setting a minimum or maximum withdrawal limit.
Do not forget that crypto assets are digital money, they are nowhere physically speaking. They require specific security measures to ensure they are truly and safely yours. And it is only on you to do so.
At Ledger, we’re here to help though. We give you full power over your crypto. Our hardware wallets combined with a one-single app offer you the best security, ownership and control over your assets. Through our app Ledger Live you can directly buy, sell, lend or swap your crypto thus combining transacting and storing in one place. Unlike exchanges, the crypto bought is not unsafely left on an online platform. Unlike exchanges, you really own your crypto assets and are in control from the very beginning. Sounds like gibberish to you? Don’t worry, we’ve got your back.
If you’re getting into crypto and want to make sure you understand the risks – and how to avoid them – check out our School of Block episode that goes Inside the Head of a Scammer; essential advice for any crypto asset.