Getting yourself some coin. A step-by-step guide for crypto beginners.

There's a lot of ground to be covered by those new to cryptocurrencies. However, having had their interest sparked, newcomers may soon want to test the waters of cryptocurrency trading for themselves.

But how do you take that first step?

With so many coins and exchanges on offer, how do you purchase some cryptocurrency of your very own for trade or investment?

Step 1: Get your wallet(s) ready

Before you start to purchase or trade in cryptocurrencies, you need somewhere to store your coins. You need to set up your wallet(s).

Credit: Anouk Pinchetti education consultant Blockchain Centre and Laura Hawting.

Cryptocurrencies running on open, public blockchains are by nature, decentralised. There is no third party responsible for the safekeeping of your coins. Each user is fully responsible for looking after any cryptocurrency that they hold.

And so, prior to purchasing or trading coins, it is important that users research which wallet(s) best meet their needs. Wallet choice can depend on a number of factors, including:

  • Which coins you're seeking to purchase/trade (different wallets support different coins);
  • Your security preferences;
  • Whether you're considering trading in cryptocurrencies or investing.

Step 2: Choose an exchange

There are many ways to purchase and trade cryptocurrencies. Some services and websites match buyers and sellers to transact privately online. Parties can even arrange to meet face-to-face to transact their coins. However, more commonly, people purchase and trade coins via cryptocurrency exchanges.

Similar to a foreign exchange that enables people to buy and sell a range of different national currencies, a cryptocurrency exchange facilitates buying and selling in cryptocurrencies.

Basically, those wanting to purchase cryptocurrency deposit local fiat currency to an exchange, which then purchases cryptocurrency on their behalf.

Like any service, cryptocurrency exchanges charge a fee or commission for the work they undertake on behalf of a client. However these fees are generally far less than those of a foreign exchange. This is because transferring coins between user wallets incurs far fewer costs for a cryptocurrency exchange than the credit card and bank transfers involved in foreign exchanges.

With so many cryptocurrency exchanges out there, it is important to find an exchange that meets your needs.

Questions to ask when choosing an exchange include:

  • Which cryptocurrencies do they support? (Exchanges typically trade in only a handful of coins)
  • Which local currencies do they trade in?
  • What is their fee structure?
  • What transaction security do they offer?
  • What do other people say about the exchange? What is its reputation?
  • How do they ensure user privacy?

It is worth noting that while most exchanges support the larger, more established cryptocurrencies, smaller coins can be more difficult to come by. It is possible to trade or invest in smaller altcoins, however they are usually obtained via trade for larger cryptocurrencies rather than fiat currency.

Step 3: Trade away!

With your wallet(s) set up and exchange selected, you're ready to purchase cryptocurrencies for trade or for investment.

Remember, responsibility for the safekeeping of cryptocurrencies lies solely with the user. Transactions are irreversible and coins can -- and have -- been lost forever due to poor storage, or spent incorrectly when sent to the wrong wallet address.

The options for trade between cryptocurrencies really are endless. As your confidence and knowledge of the cryptocurrency marketplace builds, so too will your enthusiasm to explore new possibilities for trade and investment.

Why not start today?


Credit: Laura Hawting on behalf of Cointree and reviewed by Anouk Pinchetti education consultant Blockchain Centre.