Beginner’s Guide: Learn How To Buy Bitcoin & Other Cryptocurrencies With Video Tutorials
- Price 3,951.86
- Market Cap 69,596,199,633.00
The above graph shows the live price of Bitcoin.
In this beginner’s guide, we will show you how to buy Bitcoin and how to properly store your Bitcoin safely.
This guide will be split into three main steps:
1 – How to determine what Cryptocurrency Exchange you can buy your chosen cryptocurrency from.
2 – How to send and receive cryptocurrency payments.
3 – How to store and protect your cryptocurrency.
Now let’s dive in!
Step 1 – Determining What Cryptocurrency Exchange You Can Buy Bitcoin?
The first key concept that you need to understand when wanting to buy Cryptocurrency is that there are two main methods of purchasing cryptocurrency.
Purchase Option 1 – The Direct Purchase Method
The direct purchase option which means you can use your bank account money to directly buy your desired cryptocurrency similar to any other purchase.
This is usually either with your debit card or through bank transferred money into a cryptocurrency exchange trading account like Coinbase.
Once your purchase is made you can then store your funds in an exchange wallet.
Purchase Option 2 – The Indirect Purchase Method
The second method of purchasing cryptocurrency is the indirect method.
This is where you have to directly buy a cryptocurrency (usually Bitcoin or Ethereum) and then exchange your Bitcoin/Ethereum for your desired cryptocurrency.
The methods available are entirely dependant on what method each cryptocurrency exchange allows.
So this begs the question: How do we figure out which exchanges will allow us to buy our chosen currency with your domestic currency?
The easiest way to do this is to go to Coinmarketcap.com and then search for the cryptocurrency you want to purchase.
To find out what markets are available for any other currency simply search for the cryptocurrency and then click on markets tab circled in the picture below.
This will then bring up a list of available exchanges under the source column that operate a trading marketplace between buyers and sellers of your chosen cryptocurrency.
Under the trading pairs column in the picture below you can see the exchange or currency swap markets that exist for Bitcoin.
Cryptocurrency Trading Pairs Explained
Now if you’re wondering what are cryptocurrency trading pairs you’re not alone.
A trading pair i.e. BTC/USD is simply a way of expressing what the exchange rate is between two currencies.
Note: This exchange can also be between two cryptocurrencies or a cryptocurrency and a domestic currency.
The first currency code (i.e. before the “/” ) tells you what currency you would be buying.
The second currency code tells you the amount and what currency you would need to swap or exchange to get your desired currency.
For example, BTC/USD= 6,363.30 tells you that you need USD 6,363.30 to buy 1 Bitcoin.
Why is this important?
Trading pairs allow you to determine whether you can buy your chosen currency with your domestic currency or if you can only make purchases with another cryptocurrency.
In the case of the picture above, we can see that Bitcoin can be bought directly with USD on the Bitfinex, Coinsuper, Bitstamp and Coinbasepro exchanges.
If there are no currency pairings this will mean you will need to acquire another cryptocurrency usually Bitcoin or Ethereum and exchange this for your desired cryptocurrency.
In the video below I walk you through a live demonstration on how to use coinmarketcap.com to identify where and how to buy Bitcoin.
What Happens If There Are No Direct Cryptocurrency Purchase Options?
From the Tokenpay markets screen above, you can see that at the time of publishing this article that there is currently no way to directly purchase Tokenpay with domestic currencies.
As a rule of thumb, as more exchanges open up, regulation becomes clearer, or a currency becomes more popular, this leads to more currency-exchange markets opening up (as the exchanges make a profit on each trade).
From the above, you can see that if you want to purchase TPAY, you will need to purchase TPAY with Ethereum (ETH), Bitcoin (BTC) and a few other smaller lesser known cryptocurrencies and then exchange those currencies for TPAY.
Choosing An Exchange To Purchase Your Cryptocurrency
The next step in the process is selecting which cryptocurrency exchange you want to open up a trading account with to buy and sell your Cryptocurrency.
(A trading account is just like a bank account).
When deciding what cryptocurrency exchange you should use we think that at a minimum you should consider a few important main criteria:
1 – Check whether you can purchase cryptocurrency directly with fiat/domestic currency i.e. by bank transfer or with via your debit card;
The easiest way to do this is by looking on coinmarketcap.com to see what trading pairs are available.
2 – Determine if the exchange is safe with good customer service;
Security is often a very underrated factor that new investors should not underestimate.
Because if anything goes wrong such as your exchange being hacked this could result in you losing all your money.
Similarly, if you send your money to an incorrect wallet address (a wallet address is just like a bank account number) then you will need to get assistance from the exchange to recover your funds.
This can be very difficult with some of the smaller exchanges that offer little to no customer support.
The bigger exchanges also tend to have bigger teams, established customer service and identification processes which can make opening up accounts super quick instead of making you wait weeks or months.
3 – Has the exchange listed many cryptocurrencies?
Smaller exchanges tend only list a few currencies which means that it can be harder to buy and sell all the different cryptocurrencies.
This can result in you having to open up multiple accounts across different exchanges which can be an administrative nightmare.
Lastly, because exchanges are literally a marketplace to exchange your cryptocurrency it is wise to pick an exchange that has a large userbase and high trading volumes.
Because this means that there will always be someone to buy your cryptocurrency if you want to sell, or someone looking to sell to you if you are wanting to buy cryptocurrency.
For this reason, we recommend the following two exchanges to assist with purchasing your cryptocurrency:
Coinbase to purchase Bitcoin and Ethereum with your debit card (this is super easy and user-friendly).
Binance to purchase a majority of the other alternate cryptocurrencies out there i.e. currencies that are not Bitcoin and Ethereum.
If you open up trading accounts across these two platforms you should have access to the vast majority of cryptocurrencies out there.
How To Transact With Cryptocurrency
In case you’re wondering how you can actually send and receive Cryptocurrency well it’s really simple!
We will show you how using an example of sending Bitcoin below.
Note: This process is the same for any other cryptocurrency you just need to make sure you are making transactions to the same currency type wallet addresses.
For example, Cardano (ADA) can only be sent and received to a Cardano (ADA) address and Bitcoin to a Bitcoin address etc.
So let’s dive in.
There are two main methods for sending Bitcoin/cryptocurrency in general:
Either obtain the transaction counterparty’s wallet address (this is like a bank account number) who you wish to send a payment to;
A wallet address looks like this: 1DVsE9EKCn3mV62WcAb9H3CVzQrX4b
Or give your wallet address to someone who owes you a debt to send you Bitcoin (much like a normal bank account transfer) – or simply give them your QR Code (see image 3 below).
Now I know some of you are probably thinking “How on earth can I remember a wallet address like that?!”
Well, we’ve got you covered.
Using the Coinbase platform (which is probably the easiest and most user-friendly app) as an example I will show you how to make a payment:
1 – Input the payment amount in Bitcoin or in currency to be made. For example £20
2 – Now the way you can make payment without inputting the long wallet address number is by scanning the recipients QR code (see image 3 below for a picture of a QR code) – this needs to be requested from the recipient;
3 – Scan the QR code with your mobile phone camera (Hit: Try it by scanning image 3 below) if you want to send me a payment.
4 – This will automatically bring up my wallet address (See Image 4). Next simply hit next to confirm and send your payment.
Below we have included two short video tutorials which walk you through how to buy Bitcoin on Coinbase and then the second video which shows you how to send your cryptocurrency to Binance exchange and purchase alternate cryptocurrencies.
Video Demonstration: How To Buy Bitcoin On Coinbase
Video Demonstration: How To Buy Cryptocurrency On Binance
Cryptocurrency Wallets Explained
A cryptocurrency wallet is very different from your physical wallet.
Cryptocurrency wallets don’t store cash or your cryptocurrency – Instead, cryptocurrency wallets store your public and private keys.
Without these keys, you can’t perform transactions such as sending or receiving your currency.
So what is a private key?
Think of a private key as being like the PIN number for your bank account.
You use it to allow you to connect to the blockchain in order to update transaction data such as sending and receiving coins.
Only you should have access to your private key.
You should never divulge your private key to anyone.
If anyone else gets access to your private keys, they will also have access to your coins and can make unauthorized transactions.
Now If you store your cryptocurrency on an exchange such as Coinbase or Binance then these exchanges will hold your private keys for you.
So don’t panic if you didn’t receive your private keys!
You will never get given your private keys by an exchange unless you decide to withdraw your coins from the exchange into a private wallet.
The benefits of this are that it allows you to make trades in real time.
But if a hacker manages to hack the exchange then this means they can potentially steal yours and millions of other exchange users private keys.
Your public key or wallet address can be freely distributed to anyone with no harm.
Types of Cryptocurrency Wallets
Now there are two main types of cryptocurrency wallets.
These are hot wallets and cold wallets.
If your wallet is connected to the internet, it’s termed “a hot wallet” and can be vulnerable to hackers.
A hot wallet literally means that your private keys are stored on the internet.
If your wallet isn’t connected to the internet, “it’s termed a cold wallet” and generally WAY MORE secure.
We’d surely all go for cold wallets then, right?
Hot wallets are much more convenient and easier to use as they process transactions faster.
Cold wallets are generally cumbersome and need to be connected to your computer like a USB stick before they can be used.
If you’re not looking to trade your cryptocurrency, but instead hold as an investment for the long term then we recommend a cold storage wallet solution.
Cold storage wallets are the safest method of protecting your cryptocurrency and keeping your private keys offline away from hackers.
Ledger Nano is the first most popular cold storage hardware wallet we recommend.
This wallet is aimed at Bitcoin and alternate coin investors who want maximum security.
Thanks to a second security layer, Ledger Nano is able to thwart attack vectors.
You can purchase the Ledger Nano wallet by clicking this link.
Trezor is the other most popular alternative cold storage wallet and is ideal for anyone who needs a place to store a lot of cryptocurrencies.
Trezor is a popular bullet-proof wallet that protects your private keys from malware, phishing and hackers.
This allows you to keep your coins save.
Trezor is also easy to use, open source and ideal for beginners.
Before purchasing either wallet we recommend that you check your chosen wallet supports the cryptocurrency you want to buy.
To learn how to buy Bitcoin and keep your cryptocurrency safe you need to complete the following steps:
Step 1 – Determine what Cryptocurrency Exchange you can buy your chosen cryptocurrency from.
Step 2 – Check whether you can purchase your chosen cryptocurrency directly with fiat/ your domestic currency.
Step 3 – If you can’t buy your chosen currency with your domestic currency you will need to use a provider like Coinbase to exchange domestic currency into Bitcoin or Ethereum.
Next, you will need to send that Bitcoin or Ethereum to an exchange (we recommend Binance) that sells your desired cryptocurrency and exchange your Bitcoin for your desired cryptocurrency.
You can see a video demonstrations of how to do this below.