This tutorial is broken down into two parts; part one is how to get set-up on an exchange called “Coinbase”, and part two, is how to actually do the buying.
Part 1: Register for an Exchange
Since Bitcoin, Ethereum, and all of the other major cryptoassets are not issued by a central authority such as; a bank or a company, their prices are not fixed or constant, but instead, they fluctuate, depending on what people are willing to pay for them. As a result of this, the place to buy Bitcoin or other cryptocurrencies is what is known as a “cryptocurrency exchange.”
On a cryptocurrency exchange, buyers and sellers meet to exchange fiat currency such as: USD, EUR, JPY for cryptocurrency, or vice versa. The price at which these exchanges occur is determined by supply and demand. This means, that on days where more people are buying bitcoin than selling it, the price goes up, when more people are selling than buying, the price goes down.
Every moment of every day, there are hundreds of thousands of people looking to both buy and sell Cryptocurrency. Because such large numbers of people are both looking to buy and sell at every moment, an average price between what people are willing to sell cryptocurrency for, and what people are willing to pay for it is calculated each moment by cryptocurrency exchanges. This average price is known as the “market price”. When you buy cryptocurrency on an exchange, you pay the current market price.
It is also important to note; when buying cryptocurrency, you do not need to buy a whole “coin”. Bitcoins, and most other cryptocurrencies, are divisible down to at least 8 decimal points. This means that you can buy as just a few dollars’ worth of Bitcoin, even if a whole bitcoin is worth $100,000.
With those notes out of the way, now it’s time to learn how to actually buy some crypto!
Step 1: Sign up for Coinbase
Coinbase is the most popular and most user-friendly cryptocurrency exchange, and the one we recommend. This link will take you to a sign-up page:
This link is our referral link. If you use it, you and Blockteq will both receive 10 dollars-worth of free Bitcoin. If you would rather not sign up via referral, you can visit www.coinbase.com and click “sign up” in the upper right-hand corner, as shown in the red circle below:
Step 2: Create an Account
To start, Coinbase will ask for your first and last name, email address, state, and to choose a password. Make sure you choose a strong password, this password will protect your funds. Once you have filled this info in you’ll need to confirm that you are over the age of 18 and that you’re not a robot, then you can click the blue “create an account” button
Step 3: Verify your Email
Once you create your account, Coinbase will send an email to the email address associated with your account. To verify your email, simply check your email for an email from Coinbase and click the link provided in the body of the email as shown below:
Step 4: Verify Your Identity
Since Coinbase is a regulated financial service company operating within the United States, they are required to verify the identities of all of their customers. Don’t worry about giving Coinbase this sensitive information though, they process it, and store it with the same level of security (if not better security) as your bank.
If you want to purchase bitcoin without disclosing your identity, you can buy them using a bitcoin ATM, or by using localbitcoins.com (update 2019: Most localbitcoins vendors are complying with KYC/AML laws and require some sort of identity verification to use their services now too ).
To complete this step, simply fill out all of the required information as best you can, then click “continue.”
Step 5: Complete Your Account
In order to have a fully functioning Coinbase account, you will verify your identity by uploading a photo of your ID and add a payment method. To start this process, scroll to the bottom of your dashboard and click “complete your account” in the bottom left-hand corner.
Step 6:Verify your ID (again)
Once you select the “complete your account” option, it will ask you which type of ID you would like to use (probably your driver’s license). Once you select the type of ID you will be using for verification, you will be given three options on how to upload your ID. You can take pictures using your webcam, phone, or upload pictures of your ID that are already saved on your computer (see this step below).
Step 7: Add a Payment Method
Next, it is time to set up a payment method. If you are looking to quickly buy a small amount, you can add a credit or debit card, but we do not recommend this because the fees are higher, and Coinbase does not allow those who pay with a credit card the option to sell. Because of this (although it’s a bit more of a process), we recommend linking your bank account. To continue select “Bank Account” under “Add Account”.
In order to do this, you will need to find your bank, select it, and enter your online banking credentials. If this works the way it should, your bank account will be instantly linked to your Coinbase account and you will be ready to buy cryptocurrency.
Sometimes (as in our case), this method fails and you have to manually add your bank account by entering your routing and account information. Once you enter this information, Coinbase will direct deposit two small amounts of money into your bank account within 5 business days. Once these small deposits are visible in your bank account, you can log onto Coinbase and enter the amount of each of these deposits to confirm your account.
For us, it only took one business day for the deposits to show up in our account and then we confirmed them by clicking “settings” in the main toolbar up top, and then “linked accounts”. Once you are on the “linked accounts” page, you should see your bank account listed with a big blue “verify” button to the right of it (we already verified our account, so the green button isn’t in this particular shot).
Once you click the “verify” button, you can type in the amounts of the two small deposits Coinbase deposited into your account as pictured below:
After clicking “verify deposit amounts”, you will be ready for part two of this tutorial, the part you’ve been waiting for; how to actually buy cryptocurrency!
Part 2: How to Buy Cryptocurrency
So, you finally got your Coinbase account all set up and you’re ready to buy some crypto, wooo-hooo!
This is where things get scary, crypto assets are incredibly volatile, so there is a large chance the value of your cryptocurrencies will go down or up significantly within moments of buying them, so only buy if you are ready for a ride.
At Blockteq, we never give financial advice, so we really can’t say whether or not you should purchase cryptocurrency, however, if you’ve made it this far, you’ve probably already made up your mind.
If you haven’t yet decided whether or not cryptocurrency is for you, we encourage you to check out our in-depth guide on Bitcoin, Blockchains, and Cryptoassets. This will explain some of the history, philosophy, and the mechanics of these technologies so that you can make an informed decision on whether or not owning a cryptoasset is for you.
One final warning: Because there is no central company or authority that processes cryptocurrency transactions, if you make a mistake and send cryptocurrency to the wrong place, you cannot just call Coinbase and ask them to reverse the transaction. If you make a mistake, it is more than likely that you will never get your crypto back.
Due to this risk, we recommend, that if you do decide that you would like to own some crypto, start small and NEVER invest more than you can afford to lose! Wait until you feel comfortable with all of the wallets and interfaces before you start experimenting with large amounts.
With that important disclaimer out of the way; on to the tutorial.
Step 1: Navigate to Coinbase’s Buy/Sell Page
If you are already logged in, you can select the “buy/sell” option on your navigation bar up top.
If you are not logged in, go to www.coinbase.com and click the “login” option in the upper right-hand corner. Once you are logged in, you will find yourself at your “dashboard” and you can select “buy/sell” on the navigation bar up top.
Step 2: Decide which Cryptoasset You Would Like to Buy
Currently, Coinbase allows the purchase and sale of five cryptoassets: Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Litecoin. By the time you arrive at this page, you should have an idea as to which of these you will be purchasing. If you don’t already know, we recommend that you take some time to do a little bit more research on the differences between the listed cryptoassets.
If you have done your research on the differences between the various cryptoassets, but still are unsure on how much of each to buy, you may want to start by purchasing an equal and small amount of all of the available assets on Coinbase, and learning to store them off of Coinbase as well. This will give you a chance to experience first-hand the way each asset differs in user experience, speed, and cost, as well as how to navigate the system.
If you are interested in buying a cryptoasset that Coinbase doesn’t have listed, we have a guide on how to do that here; however, 99% of the other cryptoassets need to be purchased with Bitcoin or Ethereum, so this is still the right starting point.
Step 3: Buy the Cryptoassets of your Choosing
For this example, we will be buying 10 dollars’ worth of Bitcoin and Ethereum. Once they are purchased and available to be transferred out of Coinbase’s wallet, we will show you how to store them securely.
First, click on the crypto you want to buy (note that Bitcoin Cash is NOT the same thing as Bitcoin and Ethereum Classic is NOT the same thing as Ethereum). We will be buying Bitcoin first.
Next, look for the box that says “USD” and type the amount of US dollars you would like to spend on Bitcoin (here, we will type 10). The box that says “BTC” will automatically fill with the amount of bitcoin that can be purchased with the USD value you just entered. This amount is calculated based on the current market price of the cryptoasset you are purchasing (for this example 10/6,524.36=0.0015 BTC):
Now, we will do the same thing, but instead of buying Bitcoin, we will buy Ethereum. Because one Ethereum is valued significantly less than one Bitcoin ($364.83 at the time of purchase), we will be able to buy a good bit more Ethereum than bitcoin ($10/$364.83perETH=0.0267ETH):
Step 4: Wait and Watch
If you navigate to your dashboard, you can see the current value of your crypto portfolio, it will always be worth a little less than the amount you just spent because of the fees charged by Coinbase. This is where you can track the value as it goes up and down.
After you have owned your coins for 29 days, you can transfer them off of Coinbase and into a more secure wallet. As your account gains some age, this waiting period will go away. Although, you cannot yet move your purchased coins off of Coinbase, you can still sell at any moment after buying, so fear not!
Well, that’s it! You now own cryptocurrency! Congratulations! Make sure to check out our tutorials on how to keep your cryptoassets stored securely and how to trade the cryptoassets available on Coinbase, as well as for other, less known cryptoassets, if you are interested.
Thanks for reading!