How To Buy Crypto Currencies – First Timers Guide
Buying crypto currencies for the first time can be daunting. Just setting up an account at one of the exchanges can be an invasive experience, with different levels of “proof of person” often needed depending on how you intend to fund an account or move money for purchases.
Each exchange has their own variations on the process, but their processes are only one side of the equation.
YOU need to have YOUR own process for accomplishing your tasks.
Let’s say, as an example, you want to buy into Ripple (XRP). You believe in the platform after researching them and feel they are going to grow over time. Whether you hold short-term or long-term is entirely your call, and that is a different process (getting to that decision).
Right now the goal is: Buy XRP.
For me, the process looks like this…
Step One: Buy some Bitcoin
- Get into my Coinbase account. Login, then select the Buy/Sell tab near the top of the page. (here’s the official support page for Coinbase – it’s useful and explains a lot)
- In the Buy area, make sure “Bitcoin” is highlighted.
- Under payment method, I select the account I want to buy from. For me the options are my USD Wallet at Coinbase, which requires a deposit to fund (and the transfer into it take a week to process), a bank account (again, the transaction takes a week to process) or my credit card (which makes instant purchases within the specified weekly limits). here I usually select my Credit Card.
- Next I choose an amount, either in USD or in BTC – the conversion for both is shown as you enter either amount.
- Click the giant “Buy Bitcoin Instantly” button.
- Click on the next screen to approve the transaction – there is always a double check here, and it requires you enter the 2FA (2 factor authentication) code generated on the Google Authenticator app – you wouldn’t be here if you didn’t already have this set up and active. 😉 )
Now I own X of Bitcoin. Step one complete.
Step Two: Transfer the Bitcoin
Next I log into my other exchange account. This is where I want to buy my Ripple (XRP) coins. Could be at Poloniex, Kraken, Bittrex or a number of other places. The point here is you need to go to where XRP lives to buy it (it lives in multiple locations, there is no “one” here). And right now, it doesn’t live on Coinbase, nor do most of these exchange stake direct deposits to fund transactions beyond actual Bitcoins – see the catch 22 there? Thus the multi-step process. (Some exchanges will take direct wire transfers, but at very high amounts, like $100k and up.)
Inside your account at the exchange of your choice, you’ll look for the Deposit option. Once you have this open, your looking for the 16 alphanumeric code that is the address for your discrete BTC account. And I cannot stress this enough – pay attention here – ONLY deposit Bitcoins in Bitcoin accounts. If you cross things up here, whatever you send is lost. period. Gone. So you’re looking for the deposit address for your BTC account, because you’re going to transfer your BTC from Coinbase to this address.
Next step happens back in Coinbase, so head back there and click on the Accounts tab. Under the BTC Wallet area is an option to Send. Click this.
In the popup window that appears will be a space labeled Recipient and the form should have Enter a BTC address ghosted in the background of the form. This is the location where you enter that 16 digit code you got as the deposit address in your account at the other exchange (where you will buy Ripple (XRP)).
Below this you can enter an amount you intend to send. I typically send the exact amount of BTC that I had just previously added to my BTC account. Note a couple of things: this amount is often 8 digits long – you don’t need to move it all, the choice is yours. I do, as my intention wasn’t more BTC, but more Ripple; there may be multiple vertical scroll bars on the right of your screen at this point, so watch carefully as you attempt to scroll or you could inadvertently click the wrong one – no harm, just makes the send transaction window seem to disappear. 😉
Fees will be tallied and shown, then you click the continue button. The next step is the double check and will require the 2FA code from Google Authenticator again. One final click completes the transfer order, and then you wait.
Wait times for the transaction to process can vary. I’ve had some as fast as a few minutes, but it seems as Coinbase’s popularity has grown and market action has increased, it all very much slower. My recent transactions (end of 2017 as I write this) are taking several hours. Some as long as 6 – 8 hours (today’s transaction took just under 3 hours). Go grab a coffee, gets some work done, whatever. Now I typically do these transfers in the morning so I can monitor them throughout the day, ensuring I’m ready to buy my XRP the instant my transfer completes. I’m not a fan of waiting overnight – totally your call however. Makes no difference to the system.
When the transfer goes through, you’ll get an email from Coinbase letting you know. Check the other account and you’ll see the Bitcoin balance is higher. Close to what was sent minus any fees incurred. Remember, we’re dealing with 8 digits to the right of the decimal here, so very small fees at this point.
Step Three: Buy Ripple (XRP)
Now you can use the BTC to buy XRP in the exchange that trades XRP. This process will depend on the exchange uniquely though the general process is similar: select to buy XRP; select BTC as the payment option; input the numbers as you like and the buy happens nearly instantly. Do not be surprised if multiple purchase transactions happen. That’s just the system buying based on immediate market conditions for each purchase request and your one request may be split across several “market calls”. This is normal.
At this point, you own Ripple. Also at this point, most people would now start researching Ripple to understand what they just bought. That’s because most people are buying on FOMO (fear of missing out), buying in reaction to a price dip or surge or because they heard a random person mention XRP and figured they should buy it, too.
But please – always research a coin first. Especially if it’s new or part of an ICO (initial coin offering – like an IPO). Take the time to read the whitepaper for the coin/project, and if it sounds like a pile of catch phrases or technobabble, skip it. If it never really explains the point of the coin in real terms, skip it. If it doesn’t clearly explain a real problem and offer a real solution that could have mass appeal, skip it. And “mass appeal” doesn’t mean millions of users. it means billions of users. Think big here. If there are a bunch of assumptions or the need for society to change at a base level, to formulate new behavior skip it…oh, hang on…that last one…yeah, Bitcoin… Never mind! 😉 Just due your diligence for real!
I also cannot stress enough the need to tune in and pay attention. Get woke with this stuff. Read every word on the page at every step during a transaction. Treat every click as irreversible and take the time to pay attention to what you’re doing. We all want things to be simpler and claim life is crazy, too busy and complex. Well, investing in cryptocurrencies is still very complex. It’s a multi-step process with parts that look similar but are not. It’s got potholes that swallow money – real money – so paying attention is the easiest way to avoid obvious mistakes.
But is it worth it? So far, yes. As I write this, my portfolio is up 915% from my initial purchases. That’s after all fees, etc. have been accounted for and is after reaching a high of 960% and retreating a bit! THAT is healthy (crazy) growth, and in no way will I claim to be an expert here. I will claim to being someone who takes their time and pays attention when researching and buying. And even then, I’ve made mistakes (lookin’ at you, Potcoin…which ate up about $200 of my money and offered zero growth over 4 months…sigh). Keep in mind that your results will vary.
Buying cryptos your first few times is not easy. We’ve been trained all our lives on the ease of cash and credit. This is different and new, it requires you learn new things. Be patient, watch the steps carefully and in no time you’ll feel more comfortable with it all.