Since Bitcoin’s inception in 2009, cryptocurrency adoption has been steadily accelerating. Today, we have more than 580 million cryptocurrency owners worldwide, which is a testament to their growing popularity as an alternative and attractive way to invest and pay. If you are about to make your first cryptocurrency purchase, this article will provide you with useful information on how to do so and what is important to keep in mind when making your decision.
Article content: First Cryptocurrency Purchase
What are cryptocurrencies?
Cryptocurrencies are a decentralized form of currency that allows direct transactions between people without the involvement of a central authority such as banks or governments. Their popularity is mainly due to the fact that they give users more control over their funds and allow fast and cheap transactions worldwide. These characteristics have made cryptocurrencies an attractive investment option and alternative to traditional currencies. The lack of central authority allows users to handle their money more freely and reduces dependence on the traditional banking system, which contributes to the growing popularity of cryptocurrencies among investors and ordinary users.
What cryptocurrencies should you buy?
Since Bitcoin’s launch more than a decade ago, several thousand other cryptocurrencies have entered the market (and many of them have disappeared). Choosing the right cryptocurrency to buy thus becomes a challenge. Here is a brief overview of some popular projects and concepts and who they are suitable for:
Bitcoin
Bitcoin is the oldest and probably the most popular cryptocurrency. It is suitable for those looking for a stable and established cryptocurrency as a long-term investment or a way to store value. Bitcoin is also suitable for those who want to make transactions quickly and easily without the intervention of a central authority.
Ethereum
The Ethereum network is suitable for those interested in the possibilities of programming on the blockchain and developing decentralized applications (dApps). Ethereum is also popular among developers and entrepreneurs looking for a flexible and innovative platform for creating smart contracts and custom tokens.
Altcoins
Altcoins are suitable for those looking for investment opportunities outside of Bitcoin and Ethereum. Some altcoins may offer innovative technologies or specific applications that have the potential to grow and develop in the future. However, it is important for beginners to do thorough research and understand the specifics of each project.
Solana
Solana is a modern blockchain network that enables fast and affordable transactions. It’s like a digital account on the internet where you can send money or trade digital assets like cryptocurrencies. Thanks to its innovative technology, Solana can perform these transactions much faster and cheaper than other blockchains, making it an attractive solution for various online financial activities.
Cardano
Cardano is another blockchain platform that emphasizes scalability, sustainability and security. It is suitable for those looking for advanced technology with the potential for a wide range of applications and smart contracts.
Buying cryptocurrencies – options where to buy
Brokerage
Brokerage platforms, such as Coinbase or Binance, are online services that act as marketplaces for buying and selling cryptocurrencies. These platforms are usually easy to use and offer a user-friendly environment. However, some of them may have higher fees or limited cryptocurrency withdrawals compared to exchanges.
Read more about the exchanges here: Crypto Exchanges – A Simple Guide
Centralised exchanges
Centralized exchanges are among the popular platforms for cryptocurrency trading. These exchanges offer a wide selection of digital assets and advanced features such as leveraged trading. They also have the advantage of being able to trade different cryptocurrencies in one place. However, some of these platforms may be vulnerable to hackers or may have limited access in certain countries. Kraken, one of the most well-known centralized exchanges, stands out for its wide range of cryptocurrency pairs and is popular for its security and reliability.
Decentralised exchanges
Decentralised exchanges are an alternative to centralised exchanges and allow users to trade directly with each other without an intermediary. They are considered a safer option because they are not dependent on a single central point of failure. However, they can be more technically challenging to use and offer a more limited selection of cryptocurrencies. One of the most well-known examples of a decentralized exchange is Uniswap, which allows users to trade various cryptocurrencies and tokens directly from their wallets without having to deposit their funds on the exchange.
Buying cryptocurrencies: how to do it?
Creating a trading account on a cryptocurrency exchange or with a broker is usually very easy and takes only a few steps.
Account registration
The first step is to fill in the registration form where you enter your personal details such as name, email and password. It is important to choose a strong password containing a variety of characters.
Confirmation of identity
After you confirm your email address, the identity confirmation process, called KYC (Know Your Customer), begins. KYC is necessary for regulatory compliance and to prevent fraud and money laundering.
The KYC process involves confirming personal details such as name, address, date of birth, and sometimes verification of an official identification document.
Making a purchase
Once you have your account registered and verified, you can start buying cryptocurrencies. You will need some currency to do this, which you can either deposit into your account or use directly to make a purchase.
Depositing money
You can use either fiat currency or another cryptocurrency to deposit money into your trading account. If you want to deposit fiat currency, you will receive information about the bank account where you will make the payment. You will need your wallet address to deposit cryptocurrencies.
Important notice
It is important to note that all cryptocurrency transactions are usually irreversible, so it is important to consider your decision carefully before making a transaction. There is some risk associated with buying cryptocurrencies, so it is important to carefully consider all factors and make a decision based on your needs and capabilities. Be careful and invest only the amount you can afford to lose.
Cryptocurrency storage
Cryptocurrency storage is a key aspect to consider after purchase. There are two main methods of storage: cold and warm wallets.
Cold Wallets:
Cold wallets are physical devices that store private keys used to access cryptocurrency funds. These wallets are offline, which means they do not have a direct connection to the internet. This increases their security against hacking or attacks from the Internet. The use of cold wallets is generally considered one of the safest options for storing cryptocurrencies, especially for long-term storage. An example of a cool wallet is a hardware wallet like the Ledger Nano S or Trezor.
Hot Wallets:
On the other hand, hot wallets are online wallets that have a direct connection to the internet. They can be in the form of software applications or web services. These wallets are generally more convenient for daily use as they allow quick access to funds and easier transactions. However, warm wallets are more vulnerable to online attacks, malware or phishing attacks and therefore less secure than cold wallets. An example of a warm wallet is a mobile app for storing cryptocurrencies or a web service like MetaMask.
Choosing the right wallet depends on the user’s needs and preferences. When it comes to long-term preservation and security, a cool wallet can be an ideal choice. On the other hand, if the user frequently makes transactions or needs quick access to funds, a warm wallet may be a better option. It is important for users to consider all aspects and make an informed decision when choosing a wallet to store their cryptocurrencies.
Account security
Account security is a key element in protecting users’ investments and personal data. There are several recommendations that users can follow to minimize the risk of losing funds or leaking sensitive information:
Two-Factor Authentication (2FA): activating two-factor authentication is an essential step to enhance account security. This method requires not only a username and password, but also an additional authentication code that is generated on the user’s device or sent via text message.
Anti-phishing code: in addition to 2FA, it is important for users to be cautious when accessing websites or links from questionable sources. The anti-phishing code provided to users helps identify legitimate sources and prevent fraudulent practices.
Recommended reading: the most typical crypto scams
Reporting suspicious activity: if users notice suspicious activity or have been the victim of a fraudulent attempt, they should contact the platform’s customer support team immediately. A quick response can help minimize the damage and prevent further fraud.
Buying cryptocurrencies: conclusion
Investing in cryptocurrencies can be a fascinating adventure, but it requires careful thought and planning. With a variety of payment method options, cryptocurrencies are becoming more and more accessible and easily available. Just choose the right platform and embark on a journey of discovery and investment into the future of cryptocurrencies. However, it is essential to be vigilant at all times, whether exploring new projects or conducting financial transactions, and to be prepared for potential risks and challenges. With careful planning and informed decisions, you can achieve success in the dynamic world of cryptocurrencies.
