- Create an account with local online exchange
- Transfer fiat money into the account
- Exchange fiat for available cryptocurrencies on the crypto exchange
- Once you have your first crypto you can use it to buy other cryptocurrencies on other exchanges
If the local exchange doesn’t offer the particular cryptocurrency you are after, then you can open up a secondary account with any exchange around the world that does offer it. Once you convert fiat to any cryptocurrency, then it is easy to exchange with any other crypto asset (altcoin).
The most challenging part is indeed the first purchase using fiat currency. Not all exchanges will offer purchase of crypto in your country’s domination. Also some exchanges will only accept users from the country they are based in.
Exchanges offer convenience and transparency of price– they are also fairly low fee– especially compared to buying typical shares for example. But if you do not have a local online exchange then there are other methods of purchasing bitcoin and other cryptocurrencies. Other methods could include (depending on where you live):
- Bitcoin ATMs
- Retail outlet that may offer bitcoin purchase (e.g. news agency)
- Facebook or other online forums
- Wire transfer foreign currency to an exchange that deals with that foreign currency (if the exchange allows this)
Facebook and online forums can be a very risky as you are placing blind trust in the seller to fulfill the sale after you transfer them the money. You also need to have some knowledge on wallets and have one setup in order to receive your cryptocurrency. They are also not as common.
You reduce such risks through an online exchange. Most exchanges now:
- provide real-time pricing
- ability to purchase more than just bitcoin
- provide liquidity (enough volume so that you can buy sufficiently and quickly)
- graphing and analytical tools
- online multi wallets to store multiple cryptocurrencies
Remember, you don’t need any of this if you just want to simply buy some cryptocurrency. In which case you essentially need one that converts fiat to crypto.
Buying and trading cryptocurrency 101
Once you have your first Bitcoin – or any other coin for that matter- it gets easier to purchase or trade with other cryptocurrencies. For example nearly all exchanges offer BTC pairs- allowing you to buy other crypto with bitcoin. Some exchanges offer more pairs, e.g. ETH, LTC, etc. So that you can buy other coins with Ethereum, LiteCoin etc.
The following example is from BTCMarkets.net which allows you to trade between the Australian Dollar, BTC or a limited range of other popular coins.
Say you find a reliable online exchange but it only allows you to purchase bitcoin. In that case, you can open up a second account with any other preferred exchange around the world, send your bitcoin to that exchange, and buy other crypto with bitcoin. You no longer need fiat currency to buy or trade.
In the same example, if you wanted to sell your crypto, you’d have to sell for bitcoin on the second exchange, transfer the bitcoin back to the local exchange, and sell that bitcoin for fiat.
The good news is that most exchanges now offer more than just Bitcoin. So you can buy or sell fiat for a range of cryptocurrencies without being limited to buying or selling bitcoin first. But every exchange is different, and every exchange is limited on which crypto pairs it offers, as well as the altcoins it offers for buying or selling.
The following example is from Bittrex.com which allow you trading in three different markets (or pair options): BTC, Ethereum, or USDT. Meaning you can exchange other cryptocurrencies directly for Bitcoin, Ethereum or the USDT.
How to Buy and Trade Cryptocurrency (step by step)
Let’s show you exactly how you can buy, sell, or trade cryptocurrency as part of your own trading strategy.
We’ll go through how to buy cryptocurrency using fiat all the way to placing your first crypto to crypto trade:
Step 1: Purchase crypto using fiat
Purchase cryptocurrency using fiat
The first step is to purchase your cryptocurrency with fiat money. Depending on which exchange you choose for this you may be able to buy Bitcoin, Ethereum, Litecoin, Ripple, or a whole list of other coins. Usually fiat to crypto exchanges are limited in the number of coins.
In this example, let’s go with Coinbase– as it’s one of the biggest and offered around the globe in over 20 countries.
Step 1: Create account on exchange
Go to Coinbase.com and create your account.
You will receive an email to confirm you email ID. Once you follow the instructions you will be guided back into Coinbase.
Step 2: Verify your account and add payment method
If you have provided you mobile number during the setup then fantastic! That’s a good way to increase security for your account. You will receive a text message on your phone providing a one-time password.
Other exchanges will allow you to setup 2FA- you can use a 2FA app such as Google Authenticator. In that case, instead of receiving a text message, the app will provide a one-time use password.
Step 3: Add a payment method
The good thing with Coinbase is you can buy using a debit or credit card. Most exchange will not allow you to do this.
So go ahead and ad a payment method by clicking on ‘Buy/Sell’ in the menu first.
Step 4: Buy your first Crypto
Once you add funds into the account, you are ready to buy your cryptocurrency. You have a choice between Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
Simply click on Buy/Sell, and select the cryptocurrency you want to buy, and place your buy order. You should see that you will have BTC in your account in a short while.
If you only want to buy and hold the coins offered in Coinbase, then that’s it. In this case you may wish to consider better and more safer storage methods.
Otherwise, if you want to buy other cryptocurrencies, follow next steps.
We recommend Binance as it is also one of the largest cryptocurrency exchanges while offering a large number of altcoins to choose from. You can also trade in the Bitcoin, Ethereum, Binance, and USDT markets.
So let’s proceed to step 2.
Setup a secondary exchange
Step 5: Create a Binance account
Use the following referral link from Blockogy: https://www.binance.com/
or scan the following bar code to signup:
Step 6: Enhance your account with Google 2FA
Once again, make sure you add more security to your account by setting up 2FA.
Once your Binance account is setup, it’s recommended to transfer some Bitcoin or Ethereum into here. So let’s do that next!
Transferring exchange to exchange (Crypto to crypto)
We want to transfer Bitcoin or Ethereum to Binance. Because Binance let’s you trade in four markets: Bitcoin, Ethereum, USDT, and BNB (Binance’s very own coin).
Step 7: Get the public address of you Ethereum wallet in Binance
Click on Funds then Deposits and search for Ethereum in the window that shows up.
Once the results come up, you’ll see an option to Deposit on the right hand side. Click on this to go to the wallet.
Make sure that you click on the deposit button for Ethereum and no other. This is extremely important!
In the next window, once again, make sure that you are in the Ethereum (ETH) wallet.
You’ll see your public address here. This is the address you need to deposit INTO this wallet.
Step 8: Send Ethereum from Coinbase or other exchange
In Coinbase, go to your account, select Send under Ethereum and paste your address that you copied from Binance.
It’s extremely important once again to select the right wallet in Coinbase. Make sure you select ‘send’ under Ethereum.
Double check the Binance address- make sure no digits are missing. Triple check this if necessary- once you send funds you cannot get them back if you make a mistake.
Complete your transfer.
Wait a few minutes and check that you have received the funds in Binance (may take up to half hour or longer).
Making your first cryptocurrency to cryptocurrency trade
Excellent! so you made it this far. Hopefully you’ve completed the steps as required, and made sure you’ve sent to and from the right addresses. It’s time to make your first trade.
Step 9: Access the exchange
Going back into Binance, you need to access the exchange interface. Select either Basic or Advanced. In our example, we’ll go into advanced. Don’t worry, it’s not any harder than basic. In fact I think it’s a better user interface.
Step 10: Marvel at what lies before your eyes
You will see that Binance offers charts, charting options, as well as chart analytical tools. On the top you will see the coin that is selected. In the screenshot you can see the Litecoin (LTC) is selected. The chart, the price history, and all price stats are for LTC. You can select any other available coin from the drop down as shown.
To place your order we are interested in the bottom right hand of the screen as pointed out in the image above.
Step 11: Place your first crypto to crypto order
We’re going to buy some Litecoin. You can see that Binance offers three options: Limit, Market, and Stop-Limit.
Limit: This is the standard option to buy or sell LTC at the rate that you specify
Market: This is the option to buy or sell LTC at the market (current) rate
Stop-Limit: This is the option to place conditional buy/sell orders to buy or sell at a certain price once it hits a price you can specify
In this example, we’ll just place a Limit Order. The only difference between Limit and Market is that within a Limit Order you can specify the exact price you want to buy or sell at. So if this is above/below market price then your order may be delayed. Your order will be placed in a queue (price book) until the market price reaches your specified price. If you place a Market Order, you can expect your trade to finalise instantly.
The above screen shot shows a Limit order being placed for LTC at a price of 0.016260 BTC. All you need to do is either change this price to one you feel is more suitable or leave it at that price. Then type in the amount of LTC you wish to buy (this is number of units of LTC you wish to purchase).
Keep in mind that if you transferred ETH into Binance, then make sure you select the ETH market when you select the coin you want to buy. In that case, the pricing will be in ETH instead of BTC.
Click on Buy when you are ready.
If the market price hits your specified price then the order will go through. Otherwise it will remain in the book until the price hits the specified amount.
Once the order goes through, you will also see it in the Funds screen for Litecoin.
That’s it. Simple. Well done! You’ve successfully made your first trade. Now remember to follow our top tips to building your ideal portfolio of cryptocurrencies.
When to buy and sell Cryptocurrency
In a standard trade you want to buy low and sell high. Right? Sounds simple? Well it’s not that simple when you’re caught up in emotions, hype, and FOMO (fear of missing out).
Your standard investment principles and logic apply to crypto. Buy low sell high. You can actually make money anytime in crypto. Infact you can do it in a bear market too. Check this guide out which explains how people make money from cryptocurrency in a bear market.
Storing your bitcoin and cryptocurrency
Once you buy bitcoin or any other cryptocurrency, you need a mechanism to store it. The exchange on which you purchase your bitcoin or crypto should allow you to store it there as well. As each cryptocurrency requires it’s own private key (address) you will need a wallet to store each cryptocurrency.
The benefit of an online exchange is this also- they provide multiple wallets within the one account. This means you can access all your currencies through the exchange. However, there are numerous pitfalls and risks associated with storing all your crypto in an exchange. Although they do provide a convenient storage method, they are not the safest. Here are five recent examples of why it can be a bad idea to store your cryptocurrency on an exchange.
Methods for storing crypto is discussed in detail in a separate article.
Online exchanges will let you enhance some security measures though. It is strongly suggested that you:
- Create a strong, unique password greater than 8 alpha-numeric and special characters
- Set up two factor authentication (and also backup your two factor authentication code)
- Follow any enhanced verification protocols on the exchange (ID verification)
- Turn on any email notifications if available
- Optionally, also allow specific IP transfers only (requests will only be processed from specific IP addresses)
In summary, it is getting easier and easier to purchase cryptocurrencies. As the industry expands we can expect different online and offline service providers to increase- giving us more options.
Selling cryptocurrency for Cash
You can sell your crypto for cash (fiat) easily once you have followed the above steps. Any exchange that allows fiat pairs (NOT USDT- which is USD Tether coin) will let you trade your crypto to cash. Most exchanges convert Bitcoin, Litecoin, Ethereum and some other popular ones to fiat.
Not all exchange let you trade crypto for cash as they only do crypto-to-crypto.
Exchanges like Coinbase are a good example of an exchange you can use to trade cryptocurrency to cash. For altcoins not listed on this exchange you need to trade your altcoin into one of the ones that are allowed on the exchange.
For example, say you hold some XRP. Most fiat-crypto exchanges don’t let you sell XRP directly for cash. So in that case, you will have to trade it for one of the ones listed on the fiat-crypto exchange. You may have to use two different exchanges to be able to do this depending on your fiat-crypto exchange.
In that case you’d have to follow the steps as shown in the image:
Most exchange require you to have AML/KYC requirements complete before you can sell crypto for cash. In that case you will need to meet the relevant criteria and provide proof of identification.