After past blog posts have already gone a lot into the theory surrounding cryptocurrency, this post now goes deeper into practice. This is a step by step guide to buying a cryptocurrency for the first time.
Once you have informed yourself in detail about the individual currencies and then decided on a portfolio, there are now a few steps to follow until you buy the currency. Which Exchanges you can use to buy, we had already presented in the blog post “Your start in cryptocurrency”. If you haven’t read that post yet, you can easily go to the link.
I initially decided to register on bitpanda.com. Bitpanda.com had offered me the highest level of convenience (view, navigation, free registration) and also, in terms of the range of cryptocurrencies available, was very well equipped. Of course, there are other exchanges as well, everyone should choose the one that offers them the most comfort. However, the approach to registration and purchase does not differ too much between the Exchanges, so I will use Bitpanda.com as an example here.
To get started with Bitpanda or other exchanges, you first need to register and create an account. The only prerequisite is that you are over 18 years old and have a budget that you can/want to invest. Once you have entered your email address and password, you will receive an email with the next steps. Please note that it can happen that the email dispatch can take up to 30 minutes and check here regularly also the spam folder.
After receiving the confirmation email, you have successfully created an account with Bitpanda or another exchange and theoretically now have the exchange as a functional wallet for purchasing cryptocurrency. What advantages and disadvantages the wallet directly on the exchange has and what alternatives there are for this, you are welcome to read through our blog post on the topic of “Buying and storing cryptocurrency”.
If you want to use the full limits and payment methods on Bitpanda, you now have to verify your person via a video-ident, as for example when opening an online banking account. The limits and available payment methods vary depending on the level of verification. Bitpanda distinguishes between “Light Verification” and “Verified”, which are reflected in the deposit and withdrawal methods. For example, with a “Light Verification” it is not possible to make deposits via online payment or even credit card.
Another important step besides verification, is the security of your account. Although Bitpanda contributes to the security of your account, you should not neglect your own security. In addition to a strong password, two-factor authentication (2FA) is recommended. If this is activated in your account, a numerical code is requested via the app in addition to your login data when you log in. For example, you can use the Google Authenticator app (or other providers such as Authy for IOS or Authenticator+ for Windows). All you have to do is install the app on your smartphone, activate 2FA in Bitpanda and scan the generated QR code with the app. This way, your account is stored in the app and it is no longer sufficient to crack your password to get into your Bitpanda account without authorization. For each login, a new and time-limited numerical code must also be stored.
If the 2FA is not enough for you as a security measure, you have the possibility on other exchanges, such as Binance.com, to activate an anti-phishing code and to create a payout whitelist. An anti-phishing code is a code that is generated to help identify and prevent phishing attempts from fake email addresses. With the withdrawal whitelist, you have the option to create a list of wallets. This way, the wallets to which you would potentially want to pay out are firmly defined. This way you prevent copy & paste errors and payout to any account is impossible. Unfortunately, these two features are not available on bitpanda.com.
Deposit on Exchange
Once you have created an account on an exchange, verified your identity and achieved a certain level of security, you can start purchasing the desired cryptocurrency. Before you can buy, you must first deposit money on the exchange. You can make the deposit via Sofortüberweisung, credit card, SEPA, giropay or also via the online payment providers Skrill or Neteller. Note that only SEPA is a fee-free option in Bitpanda. The amount you want to deposit is freely selectable, but at least 25 €. If you choose the SEPA option and have your account at a “classic” German bank, make sure that the foreign payment must be activated in your account – the Bitpanda account is located in Austria and the transfer may not work immediately. If the foreign payment is activated, it takes about 1-2 business days until the money is deposited to your Bitpanda account. From that moment, you will be able to buy cryptocurrency for your available budget.
To make the purchase, you need to go to the “Trade” section, where you can select “Buy”. In this section you can enter the amount for how much you want to buy. Please note that for each purchase of digital assets, a fee goes to the Exchange. The fees vary depending on the cryptocurrency and, in my opinion, are not marked in a completely transparent way. However, they will be specified to you when you make a purchase, so you can keep an eye on them. Another thing to keep in mind is that you cannot buy at the most current rate, which you have observed live in the course of the price. The rates for buying and selling, are only adjusted with a delay, so there can often be differences here. To be able to buy at a fairly stable rate with less risk, I recommend creating a “savings plan” in the respective exchange. This way you buy continuously at the average price and do not bear the risk of missing favorable peaks and buying too expensive. The disadvantage, of course, is that you don’t necessarily profit when the price drops.
Once you have bought your desired cryptocurrency, you have several options to proceed with it. If you’re interested, feel free to check out our next blog post!