How to buy cryptocurrencies for the first time with the lowest fees

Key terms

Centralized: managed by a company with human personnel and an administrative team

Cold wallet (cold wallet) — an offline device (offline) in which cryptocurrencies are stored

Cryptocurrency exchanges: platforms where you can buy, sell and trade cryptocurrencies

Decentralized — Managed without a central management team, typically through digital contracts

Hot wallet: an online wallet hosted by a provider where you store your cryptocurrency. Some also allow you to buy cryptocurrencies with fiat money or traditional currency (fiat), and exchange your crypto.

KYC: Know Your Customer, involves providing personal information to confirm your identity before using a service

Off-ramp: exchange cryptocurrencies for fiat or traditional currency and transfer it to your bank account

On-ramp: where you buy cryptocurrencies with fiat money, or traditional currency

Seed phrases/keys: the security code of a cryptocurrency wallet that, if lost, will mean losing access to funds forever

Web3 Wallet — a web browser-connected cryptocurrency wallet, typically used for decentralized finance (DeFi)

So you’ve decided you’d like to buy some cryptocurrency, but have no idea where to start — you’re not alone. Although the adoption of cryptocurrency is becoming more widespread, knowing how and where to buy your first cryptocurrency is not as clear as opening a bank account in traditional finance.

However, it is not at all impossible. In fact, in just a few simple steps you can have a cryptocurrency wallet up and running, allowing you to buy your favorite crypto. From there, you will be able to move it around the cryptocurrency ecosystem to take advantage of all the new and exciting innovations that are happening, especially in decentralized finance.

What do you want to do with your crypto?

The first thing to consider is what you want to buy crypto for. Is it just to keep it in the hope that it will increase in value over time, or do you want to start trading it? Or maybe you’ve decided you want to deposit it into a DeFi wealth management platform to earn a high annual percentage yield (APR). Your answers to these questions will determine where you go to buy your first cryptocurrency development, so make sure you think about this before you start your research.

Purses to buy, save and sell

If you want to buy crypto to hold onto it (or HODL, in crypto lingo), chances are you need a secure wallet. The most secure wallet is called a cold wallet, and it is a physical device that you plug into your computer and follow the instructions to set it up. You can then purchase cryptocurrency through an access service, such as a cryptocurrency exchange, and download it to your device.

cold purses

Trezor

Ledger NanoS

KeepKey

Hot wallets are online wallets managed by a service provider and are a good starting point for beginners. Some of the largest centralized cryptocurrency development company host hot wallets, such as Binance, Coinbase, and Blockchain.com. These companies are both inbound and outbound services, which means that you can buy crypto with fiat money, or traditional currency, and also transfer it to your traditional bank account, all in one place. Many of them also have exchanges where you can trade your cryptocurrency.

hot purses

binance-wallet

coin base wallet

Blockchain.com

Fintechs and foreign exchange service providers

For an alternative approach to buying crypto, there are a handful of apps and platforms where you can exchange your fiat currency for crypto, much like a traditional currency exchange company. These include Wirex, which is a cryptocurrency-focused currency exchange service, as well as some traditional financial providers that are getting involved in the cryptocurrency market: most notably PayPal and Revolut. Some of them will also give you a Visa or Mastercard with which you can spend your crypto directly at retail businesses, most of them online.

Foreign exchange service providers

Wirex

PayPal

Revolut

Web3 wallets to interact with DeFi

If you have decided that you want to buy cryptocurrencies in order to participate in DeFi, you will need to have a particular type of hot wallet called a Web3 wallet. Web3 wallets are an extension to your internet browser that allows you to connect to different platforms and protocols to deposit and exchange cryptocurrencies.

Unlike hot wallets, Web 3 wallets do not require you to provide personal data, known as the “Know Your Customer (KYC)” procedure, to open an account. However, not all of them allow you to buy cryptocurrencies directly from them. Typically, you’ll need to transfer funds from a centralized exchange first, and then move your funds to your decentralized Web 3 wallet (more on that later).

Web3 Wallets

MetaMask

TrustWallet

MyEtherWallet

Keeping your crypto safe

No matter where you decide to buy and store your cryptocurrency, the most important thing is to keep it safe. Unlike with a bank account, where the bank has all the control and responsibility for keeping your money safe, in cryptocurrencies this is entirely up to you (with the growing exception of the largest financial service providers). companies that now offer cryptocurrency services, such as PayPal and Revolut). Typically, when you open a cryptocurrency wallet, you set a password and are given a very important set of words, known as seed phrases, or seed keys .

Seed keys are essential for the security of your account. This is what you will use to recover your crypto if you lose your password, change devices, or in the worst case, the wallet provider or platform you use gets hacked. If you lose these keys, you lose access to your crypto, with no chance of recovery. That’s why it’s essential that you keep your seed keys safe and offline: don’t store them in your cloud notes, for example. Instead, write them down and put them in a very, very safe place. You should also add two-factor authentication (2FA) to your account. You can learn more about it here .

Rates ( fees ) in the purchase of cryptocurrencies

Now we come to the thorny issue of fees. As in most areas of life, convenience comes at a price, and as such the most expensive way to buy cryptocurrency is usually through a hot wallet with a larger provider (although not always). However, these fees are often unclear. Blockchain.com, for example, charges a large markup for buying, trading, and transferring cryptocurrencies within its wallet without this always being apparent to the end user.

Foreign exchange service providers can also be expensive. Paypal, for example, charges a combination of a spread (or margin) between the market price and the quote it receives from its exchange service provider (Paxos), plus the exchange rate between the US dollar and the crypto asset you are trading. buying and add a transaction fee on top of this. This is generally the same for Revolut, as well as cryptocurrency exchange service providers like Wirex.