Introduction to buying Cryptocurrencies
So.. you have decided to invest in Cryptocurrencies but have no idea how to get them or how to trade them? Well, than you’ve come to the right place!
On this website we’ll explain how to set up the needed accounts to start trading in Cryptocurrency. The process consists of 5 steps which are displayed below:
First we need to create an account on a Digital Currency Exchange (Coinbase) so we can buy our first Cryptocurrency (Ethereum or ETH). Then we create an account on a Cryptocurrency exchange (Binance or any of the alternatives found on our dedicated Exchanges page). After transfering our ETH from Coinbase to Binance, we can start trading it for other Cryptocurrencies.
Important: Be sure to read the security hints (first) when executing the steps. They are located at the top of each step.
Are you just interested in one of the major coins and would you like to know more about the technology itself before investing in it? Head over to our dedicated Bitcoin, Ethereum and Litecoin pages to learn more. There we also explain how you can easily buy and store these without heading to the Cryptocurrency exchanges to trade them for one of the many altcoins that are available today.
Create an account on Coinbase
To acquire your first amount of Cryptocurrency you will need to register with a Digital Currency Exchange. These exchanges allow you to buy Cryptocurrencies in exchange for fiat currencies (f.i. EUR, USD, …). I used several of these exchanges and liked Coinbase the most because of its ease-of-use, small fees, and good security. Of course you can do your own research and pick whichever exchange you like most. But in the below text I will explain how to create an account on Coinbase and how to buy Ethereum on it.
-> Go to the Coinbase website (click me!)
When you go to the above webpage you will see an invitation from How2Crypto giving you 10$ for free on your first 100$ purchase/withdrawal (and 10$ for me, thank you!) + the below screen. Fill in your information and continue by clicking SIGN UP. Coinbase will now send you a verification e-mail. Click the link in this e-mail to continue the login procedure.
Coinbase works with a mobile enabled security method. Each time you want to log in to your account, Coinbase will send a message to your linked mobile phone number, requiring you to copy this onto the login screen. After clicking the link in the e-mail you should have received, you will see the following website:
Fill in your mobile phone number and click on Next. You will now receive a mobile message (these messages are FREE!) with a code. Enter this onto the website and you will have COMPLETED the creation of your Coinbase account.
Together with your Coinbase account you get a Coinbase wallet. This wallet is, just like the name suggests, the place where your Cryptocurrencies can be stored. As different Cryptocurrencies use different technologies, they also need different wallets to store them in. Because of this there are a ton of different wallet options out there. You can choose an online solution, a desktop wallet, a mobile wallet, or even a hardware wallet in the form of a USB-stick. As we will be trading our Cryptocurrencies, we have no use in storing them locally. In step 4 we will transfer our Cryptocurrency from the Coinbase wallet to a Binance wallet, where we can use it to start trading. Want to know more about wallets? Head over to the dedicated Bitcoin or Ethereum pages.
Now on to the purchase of your first Cryptocurrency!
Note: I got input from several people that BTCDirect is also a user-friendly, secure exchange with low fees. However BTCDirect is currently not accepting new users. As soon as this changes I’ll try to update this page with info on how to register on BTCDirect.
Buy Ethereum on Coinbase
Coinbase gives you the possibility to buy Bitcoin, Bitcoin Cash, Ethereum and Litecoin. But you will only be able to trade Bitcoin, Ethereum or Litecoin directly on Binance (see Step 4). When purchasing Bitcoin Cash you will have to perform an extra trade, thus you will pay extra trading fees… In my example I will buy Ethereum as it’s transfer time + fees are lower than Bitcoin (Want to know why? Head over to our dedicated Ethereum pages to read more about the advantages).
On to our first real Cryptocurrency purchase!? Nooo… we aren’t quite there yet. First we need to complete our Coinbase account by verifying our identity and adding a form of payment. This might all seem a bit cumbersome, but remember it’s all done to improve security of Coinbase, and thus also our security. Let’s get going!
If you go to your Coinbase dashboard (the first menu item on the Coinbase website) and scroll to the bottom of the page, you will see:
Click on “Verify your identity” in the left screen. You will now have the option to upload images of your international passport, a driver’s license, or your local ID card. Coinbase gives you the option to use your webcam, or to upload a picture with your mobile camera. My advice:
- Webcam is the easiest, but the quality of the build-in webcam on my laptop is sh*t, so I couldn’t use this method.
- When you choose the mobile camera option, Coinbase will send you a message with a link to upload the pictures to. Keep in mind that they only accept pictures with a size <5MB, which might be a problem on newer mobile phones. When you get an error, go to the options of your picture taking app and lower the quality of the image.
Once you upload the images, you will see the below screen. You can now choose to wait for the result (takes 15-30 seconds) or you could click away and wait for the e-mail to arrive.
Once your identity has been verified you can continue to “adding a method of payment”. Here we have 2 options of which I find the second one the easiest. First we fill in our billing information, pretty straight forward so no screenshots here. On the next page we fill out the information on our credit/debit card.
Finally! We can buy us some Cryptocurrencies. Just click on “Buy/Sell” in the Coinbase menu. This will take you to the following webpage:
Choose the Cryptocurrency you want to buy, choose your added Payment Method, and fill in the amount of EUR/USD you want to spend. On the right you will see how much of that amount is used to buy Ethereum (ETH) and how much Ethereum you will get. Just press the big blue button when you’re ready. Coinbase will now ask you to authorize the transaction and it’s possible that you need to go through some security checks of your credit/debit card issuer. Just complete all steps to finish the purchase. Your Ethereum will soon be visible on your dashboard page.
Congratulations, you have now completed your first Cryptocurrency purchase and saved it in your Coinbase wallet, time to go to the moon! Or continue in step 3.
Note: you could stop here and leave your Ethereum on the Coinbase platform (= Coinbase wallet). Or you could haul it over to your own secure private wallet if you don’t plan on selling it anytime soon. More info on this on the dedicated Ethereum pages.
Create an account on Binance
When you want to trade Cryptocurrencies, you need to register with a Cryptocurrency exchange. There are a lot of those out there, but based on reputation (online reviews from existing users), fees, security, available Cryptocurrencies for trade, … I’ve chosen to work with Binance.
I will explain the creation process on Binance in detail. But in general, all exchanges use more or less the same kind of account creation procedures. To continue click on the Binance link above. You will arrive on the Binance website and on the right side you can see the Register button. Click on it to start the account creation process, you should see the following:
When logging in for the first time you will be asked to setup 2FA (Two Factor Authentication). I strongly advise you to do this as it will keep your Cryptocurrency more secure. You can choose between:
- Google Auth: an easy method involving a native google app that you install on your smartphone. When selecting this option you get a 3-step guide. Complete this and your account will be 2FA secured. You will now have to give in a 6 figure numerical code each time you want to login or withdraw money.
- SMS Auth: The same as what is used on Coinbase, but only available to Mainland China Citizens, so I could not test this.
You have now completed your Binance account registration. Let’s get some funds in it so we can start trading.
Note: There are other good Cryptocurrency exchanges like BitFinex, BitTREX, Kraken, Gemini (US), OKEX, Cryptopia (NZ) … but at the time of writing:
- BitFinex and BitTREX aren’t accepting new users because of the extraordinary demand they been having lately
- Kraken has some serious performance issues which makes it impossible for me to use their platform
- Gemini is only available to the US citizens, Puerto Rico, Canada, Hong Kong, Singapore, South Korea and the U.K. So not for me…
- OKEX and Cryptopia: Will add guides to these two on the website soon.
I might add some info later, on general request.
Transfer funds from Coinbase to Binance
Before we can start trading on Binance, we need to transfer our Ethereum (ETH) from our Coinbase wallet to our Ethereum wallet. For this we need to input the deposit address from our Binance account in the withdrawal input of our Coinbase account. Let’s start by logging into our Binance account and going to the Funds menu. Choose “Deposits Withdrawals”. You will get a list of possible Cryptocurrencies and will have to scroll through it to find Ethereum (ETH for short). Click on the Deposit button for ETH so Binance can show you the Deposit Address you need to input on the Coinbase site:
ATTENTION: Make sure you are using the correct deposit address (wallet) for the Cryptocurrency you want to deposit. When depositing Ethereum you need an Ethereum deposit address, when depositing Bitcoin, you need one for Bitcoins, etc. All these deposits are linked to your account but differ in which Cryptocurrency they can hold. Send Ethereum to a bitcoin or any other Cryptocurrency address and you will lose it all!
Now that we know our deposit address, we can go to Coinbase to send over the funds. Log-in to Coinbase and go to the accounts page. Here you should see the balance of the wallet that holds the Cryptocurrency you bought in step 3 (Ethereum or ETH in our example).
You should be able to click the send button on this currency which will trigger the send ETH screen. You can now fill in the Binance deposit address that you copied. Also indicate the amount of Cryptocurrency you want to transfer. The Note is optional. Remember to double check the deposit address! The form should look similar to the one below:
After clicking Continue, you will have to enter another security code that will be sent to your registered mobile number. Fill it in to complete the transaction. After getting back to the “Your accounts” screen you will see that the Cryptocurrency is out of your wallet. Next you will see a new transaction appearing on the right side of the screen with status pending. It will take some time before the transaction is completed. This all depends on the Cryptocurrency you want to send and the performance of the miners who need to confirm your transaction.
After a while you will get a message from Binance, saying that the Crypto has arrived in your Binance wallet:
Now we can start trading for other Cryptocurrencies. Let’s head to Step 5.
Note: Instead of directly sending your Crypto from Coinbase to Binance, you could use GDAX for lower fees. GDAX is a sister company of Coinbase so the transfer of coins from Coinbase to GDAX is free. Transferring from GDAX to another exchange like Binance has a trading fee of around .25% or less, making it really cheap.
Trade Ethereum for other Cryptocurrencies
The final step of this guide/tutorial is to trade our Ethereum for another Cryptocurrency. I will not tell you what are the best Cryptocurrencies right now. There are enough other sites which can give you advice about which altcoin (bitcoin was the “first” cryptocurrency of its kind. All other Cryptocurrencies that are being created now are alternatives to bitcoin. Or in short, Altcoins) is likely going to make it and which is not. You will however find some strategies on trading and on choosing Cryptocurrencies in the sections below this guide.
For our example I will trade all my Ethereum for Ripple (XRP) as I believe this will keep growing steadily over time. On the Binance website, go to Exchange and then pick Basic. Binance gives you the option to trade 4 base Cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Binance coin (BNB) and Tether (USDT). You can exchange these for a lot of other Cryptocurrencies (trade pairs), but you cannot trade these other Cryptocurrencies amongst each other. You always need to go back to one of these four base Cryptocurrencies before exchanging for another one (and each exchange uses other base cryptoCurrencies, although they almost all use Bitcoin and Ethereum).
We bought Ethereum so we need to click on the ETH button in the top right corner of the screen (marked in red on the below screenshot). Than we need to choose our Trading Pair, which will be XRP/ETH (trading Ripple with Ethereum). In the center we can see the evolution of this traiding pair over time.
We want to buy XRP via the Market method (marked in blue on the above screenshot). So in the bottom center screen we choose market, we enter the amount of XRP we want to buy (you can also just press the 100% button). Than you press Buy XRP to finish the transaction. Because of the nature of these figures and the fact that Binance wants to work with whole numbers, you will have a bit of Ethereum left in your account. You can see all your Cryptocurrencies on the Deposits Withdrawals screen under Funds. As you can see I now have 56 XRP minus a small fee and some Ethereum left in my account.
You are now the proud owner of a Cryptocurrency wallet on your favorite exchange, containing your preferred coins. Now it’s up to you to decide how you will continue. Either you start trading on a daily basis, based on the information in the market or some technical analysis. Or you just HODL (Hold On for Dear Life) and hope your coins reach the Moon.
For those interested, here are some quick strategies you can employ when looking for Cryptocurrencies to buy:
Utilize a buy and flip strategy, and look to invest in projects that you expect to grow in the short to medium term. These projects should allow you to realize gains almost immediately.
When dealing with altcoins, take profits as often as possible and transfer funds into other altcoins or ICOs when profits are realized. This helps to maximize your investments and keeps your portfolio active.
Be prepared to experience losses and focus on winning big. With higher risk activities such as investing in ICOs and day trading it’s inevitable that you will lose out at times. However, picking large gainers will offset your losses and use stop-loss orders when trading if necessary.
When investing in ICOs look for projects that can provide good returns. Popular projects with a lot of interest surrounding them should experience solid gains in the short term. ICOs with active teams that seek to get onto exchanges will also grow rapidly in value.
But most of all, always do your own research before investing funds, and never risk amounts you cannot afford to lose. Every investor wants to see his favorite Cryptocurrency shoot for the moon. And this can only happen if a lot of people start investing in it. So, of course, they will propagate it as the best coin to have ever existed with a guaranteed huge ROI. That’s why you always need to do your own research!
In the guide we talked about how to invest in Cryptocurrencies and how to trade them on a Cryptocurrency Exchange. Another option is to just invest in one of the major coins and HODL it for the long run. We have created 3 dedicated pages for the major coins in which we talk more about these and explain the easiest, most secure way to buy and stock these. Just click one of the images below.
About the authors: We started investing in Cryptocurrencies a few months ago. It took us a while to figure out what the difference was between Bitcoin, Ethereum, Ripple, … Or where we could buy cryptocurrencies and if we wanted to store them in a wallet (a What?!) or use them on an exchange. And while investigating all of this “on the go” we lost a lot of our initial investment on high fees, unnecessary transactions, etc.
The reason it took us so long is that there is already an enormous amount of information, but it is scattered around the internet on an innumerable amount of blogs, websites, tutorials and forums. So we decided to take notes of what went good and what went wrong with our investments. Where we lost money and why, and how we should have done it in the first place. People started asking us to share this information with them. Thus we decided to put all this info on one central website to share it with you all, hoping it can serve you and help you to avoid making the same mistakes we made.
On this website you won’t find stories about “How we turned 300€ into 50.000€”. Or “What are The best Cryptocurrencies to invest in right now”. What you will find is an easy to use guide/tutorial on how to buy and trade Cryptocurrencies for the first time!