How to Buy Cryptocurrency for the First Time Using Fiat Money from Your Bank Account

When it comes to first time cryptocurrency purchases, centralized exchanges are often preferred for their familiarity as the user experience is most

A step-by-step guide on how to make your first cryptocurrency purchase from a centralized exchange using fiat money in your bank account.

Before we begin, let’s quickly define some key terms:

Cryptocurrency Exchange: A platform that allows users to buy, sell, and trade cryptocurrencies. There are two main types of exchanges: centralized exchanges (CEXs) and decentralized exchanges (DEXs). In this guide, we will be using a CEX.

Fiat Currency: Traditional government-issued currency, such as the US Dollar (USD) or Euro (EUR).

Custodial Wallet: A cryptocurrency wallet where the private keys are held by a third party, such as a cryptocurrency exchange.

Non-Custodial Wallet: A cryptocurrency wallet where the user holds the private keys.

Hardware Wallet: A physical device that stores the user’s private keys offline, providing an extra layer of security against cyber threats.

Now that we have a basic understanding of the key terms involved, let’s dive into the steps on how to make your first cryptocurrency purchase from a CEX.

Step 1: Setting Up a Crypto Exchange Account

1. Choose a reputable cryptocurrency exchange. For the sake of today’s example we will use Coinbase which is a centralized exchange (CEX). Other popular choices include Binance, Kraken, Kucoin, and Crypto.com. These centralized exchanges provide a secure environment with user friendly interfaces for getting started with your first experience going from money from your bank account to crypto in your wallet.

2. Visit the exchange website and click on the “Sign Up” button.

3. Fill in your personal information (name, email, password). Make sure to keep your password safe!

4. Verify your email address and telephone number.

5. Complete the KYC (Know Your Customer) process by uploading identification documents. Note: keep an ID, Passport, or Driver’s license ready. For ID cards, you will be asked to upload a picture of the front and back of your ID.

6. Congratulations! Now you can log in to your Coinbase account and deposit funds!

Step 2: Depositing Funds

1. Once your account is set up and verified, you’ll be able to log in using your credentials and view your dashboard.

2. Next, link your bank account to the exchange to deposit funds using the following steps:

a. Navigate to the “Add a Payment Method”.

b. Select your bank and enter the required details.

c. Initiate the transfer from your bank account to the exchange.

Step 3: Buying Cryptocurrency

1. Congratulations, once your deposit is completed you can navigate back into the Trade tab (left hand side column), input the amount you’d like to spend (300 Euro example) and buy one of the crypto currencies available on your chosen exchange.

2. Go to the “Trade” tab of your chosen exchange.

3. Select the cryptocurrency you want to buy (e.g., Bitcoin, Ethereum, Tether, BNB, Solana)

4. Enter the amount you wish to purchase (in the field which displays 300 Euro as an example) and confirm the transaction.

5. Congratulations, you made your first crypto purchase using money from your bank account!

Your crypto is now stored on the crypto exchange which you purchased it from. In this case, coinbase has custody of your assets. We call this a custodial wallet. For extra security, setting up a non-custodial wallet is recommended. This process requires you to set up your own crypto wallet. While setting up your own non-custodial crypto wallet offers added security, it also comes with extra responsibility.

Step 4: Setting Up a Crypto Wallet

After purchasing crypto, you may choose to move it to a secure (non-custodial) wallet if you want the safest storage for your digital assets. Wallets can be hot (software-based) or cold (hardware-based).

A software wallet such as Metamask runs on your browser which makes your funds easier to access and move. However, this also means your funds are more vulnerable to hacks, scams, and phishing links.

The safest option for storing your crypto is using a cold storage option, also known as a hardware wallet. Popular hardware wallet providers are Ledger and Trezor. These options offer ease of use and portability, but there are many options available on the market for different user needs. For instance, for hardware wallets where security is the primary focus over portability, the Lattice1 by Grid Plus might be worth considering.

Still need help deciding where to store your crypto? Read on!

Hot wallet vs. Cold wallet

Hot Wallets

A hot wallet is a software cryptocurrency wallet that is connected to the internet. This makes it easy to access and use your cryptocurrencies, but it also comes with some security risks. Hot wallets are often used for storing small amounts of cryptocurrencies that you plan to use regularly.

Some

The above is the detailed content of How to Buy Cryptocurrency for the First Time Using Fiat Money from Your Bank Account. For more information, please follow other related articles on the PHP Chinese website!