How Does Buying Cryptocurrency Work?
Last updated on May 1st, 2026 at 11:15 am
ARC401 – How Does Buying Cryptocurrency Work?
Welcome to Part 4 of the CryptoCoinMindSet Educational Arc.
You now understand the “why” and the “what” of cryptocurrency. It’s time for action.
This is where we cross the bridge from theory to practice.
In this section, I’m going to guide you, step-by-step, through the process of buying your first cryptocurrency.
We’ll navigate the exchanges, set up your account, and make your first purchase. By the end, you’ll have taken your first real step into the new economy.
Table of Contents:
How To Buy Cryptocurrency
Before you buy any cryptocurrency it’s a good idea to do your own research to decide what cryptos may be the best investment for you.
While this is a personal decision which takes into account many different factors, there may be a few cryptocurrencies that make a good base for most cryptocurrency portfolios.
I have discussed a beginners crypto portfolio. I explain the what and why of the choices, as well as an overview of where you can purchase these cryptos.
I suggest that you take the time to read through this valuable information.
What is a Centralized Exchange (CEX)?
Before we pick a platform, let’s quickly define the term you’ll see most often: a Centralized Exchange, or CEX.
Think of a CEX like a traditional stockbroker, such as Fidelity or Charles Schwab.
It’s a private company that provides a platform for you to buy, sell, and trade crypto.
To use their services, you must trust them with your funds (while they are on the exchange) and, most importantly, you must hand over your personal information to comply with government regulations (KYC).
They are the most common “on-ramp” for newcomers because they are typically the easiest to use and connect directly to your bank account.
We’ll discuss the alternative, Decentralized Exchanges (DEXs), later in your journey.
Platform Pros & Cons
| Exchange/App/Platform | Beginner Portfolio Availability | KYC | Ease of Use | High Fees | Above Market Pricing |
|---|---|---|---|---|---|
| BinanceUS | X | X | X | ||
| Coinbase | X | X | X | X | |
| Crypto.com | X | X | X | X | |
| Gemini | X | X | |||
| Kraken | X | X | X | ||
| PayPal | X | X | X | ||
| Revolut | X | X | |||
| Robinhood | X | X |
Once you’ve decided what cryptocurrencies you want to invest in, then you need to decide on a cryptocurrency exchange.
Select a Crypto Exchange
The likely place for most U.S. residents looking to buy crypto, especially those cryptos highlighted in the beginner investment portfolio, is a cryptocurrency exchange.
The best cryptocurrency exchanges for U.S. residents are Gemini, Kraken, BinanceUS and Coinbase.
If you plan to invest in the cryptos highlighted in the beginner portfolio, your best exchange options are Kraken, BinanceUS and Coinbase.
Because these options are all centralized, you will be required to complete KYC (Know Your Customer) verification. This means you will be required to show proof of who you are.
Crypto Buying Apps
These days many money related apps provide users the option to purchase cryptocurrency. Of course, these apps are not all created equal.
I do not recommend these options as your primary means of investing in crypto.
Your primary app options include PayPal, Robinhood, Revolut and Crypto.com.
Remember these apps are all centralized entities.
As such, they will always side with regulators and the pressures from Wall Street. This played out with Robinhood and other apps in 2021 when retail traders went against Wall Street favoring GameStop.
Furthermore, as of this writing, some of these apps will not allow you to remove your cryptocurrency from their platform.
Now that we’ve got the negativity out of the way, if you still want to use one of these app options, Crypto.com has the largest selection of cryptocurrency.
This platform does have all of the cryptocurrencies listed in the beginner portfolio.
However, this doesn’t make this app the best option for crypto purchases.
Crypto.com has a withdrawal minimum, this can hinder or even eliminate the possibility of withdrawing smaller amounts of your crypto. Also, Crypto.com has higher fees, so it can become expensive to move your money.
Offline Buying Options
As with most things in life, there will probably always be options outside of the mainstream.
This is also the case for buying cryptocurrency.
Some of these alternative options include Bitcoin ATMs.
While PaxFul for example, has expanded to having some online (KYC) options, for the most part, these options can be done anonymously.
These options require you to meet with someone in your area to make the exchange for your crypto, but they also provide alternative buying options to cash. For example, many people are willing to trade their Bitcoin for things like gift cards.
With increasing global cryptocurrency regulations, these more public options, will likely soon all require some form of KYC.
Currently, the main drawback to using these services is that they charge a premium for selling their Bitcoin and cryptocurrency. So, the buyer ends up paying a higher price for their cryptocurrency.
While this was an option that I promoted previously, as of this writing, it is not the best buying option for most people.
Create an Account
Once you’ve decided what cryptocurrency you want to buy and found a platform to purchase it, then the time has come to set up an account.
Whether you choose the exchange, app or alternative buying option, creating an account is straightforward.
However, for just about all of these options you will be required to complete KYC before you are able to do anything within your account.
The amount of KYC will vary depending on the platform you have chosen.
You should be prepared with the following KYC information:
- Proof of ID – usually a driver’s license or passport
- Proof of Address – usually a utility bill or bank statement
- Proof of Phone – you will be required to verify a valid phone number
- Bank Account – some providers require you to connect a bank account to transfer funds
Fund Your Account
Before you can purchase any crypto, you need to add money to your account.
PRO TIP: The ability to do this may take a few days because of bank account verification, so plan accordingly.
Once your attached bank account is verified you will be able to transfer money to your exchange account.
Some platforms allow you to attach a credit card to fund purchases, however these transactions include higher fees.
Once your account is funded, you can trade those funds for the crypto of your choice.
It should be noted that you can also fund your account with cryptocurrency rather than a fiat currency.
If you fund your account with cryptocurrency, including stablecoins, you will be able to begin trading immediately.
Place Your Order
Once you have completed all of these steps, you can place your order.
Most of these exchanges and apps will make you complete your transaction by paying the spot price for your crypto asset.
In short, the spot price is the current price of that crypto asset on the platform you are using.
Some of these platforms, primarily cryptocurrency exchanges, will allow you to place a buy order at a higher or lower price, this is referred to as a limit order.
This option will allow you to take advantage of market fluctuations whether or not you are aware of them as they happen.
Other Buying Considerations
While for the most part buying a crypto on one of these platforms is relatively straightforward, there are a couple of items you should consider.
Slippage
If you choose to use a limit order buying option, you should be aware of something called slippage.
Basically, slippage means you may not necessarily pay the price you set for the entire limit order you’ve placed.
This is something that happens primarily when the exchange you are using has low liquidity of the crypto asset you are looking to buy.
So basically, the less of the asset that’s available, the less likely you are to get your entire limit order at the expected price.
Dollar Cost Averaging
A method of investing known as Dollar Cost Averaging (DCA) can be utilized with or without the limit buying option.
In a nutshell, DCA is an investment strategy of buying into an asset over a designated period of time with a designated amount of money.
So for example, you can set your account to buy $25 of Bitcoin every Friday.
It doesn’t matter what the spot price of BTC is when the purchase happens. This allows you to get the lowest average buy in price over time.
Most of these crypto buying platforms will allow you to invest in crypto this way.
DCA is the investment strategy I use and suggest for most cryptocurrency investors.
Remove Your Crypto from the Exchange
I need to be crystal clear here… Buying crypto on an exchange is not the end goal… It’s only the beginning.
Leaving your cryptocurrency on a centralized exchange is like leaving your cash in a stranger’s wallet.
You don’t truly own it.
If the exchange gets hacked, goes bankrupt, or freezes your account, your money can be gone forever. This is the exact opposite of the self-sovereignty we are working to achieve.
The fundamental idea behind crypto is being your own bank.
To accomplish this, you must control the private keys for your cryptocurrency.
The only way to do this is to remove your crypto assets from the exchange and move them into a noncustodial wallet.
PRO TIP: When moving crypto to a new wallet, only send a small amount the first time to ensure it is set up properly.
Once you have removed all of your crypto from the platform, you are all set until your next purchase.
Your Next Step in the Journey
Congratulations… if you’ve followed these steps, you have successfully purchased your first cryptocurrency and moved it to your own personal wallet.
You have taken control… you’re no longer just a spectator… you’re a participant.
But your journey into security has just begun.
In the next part of our arc, Part 5: The Citadel, we will dive deep into the single most important concept you must master… self-custody.
We’ll explore the sacred duty of protecting your seed phrase, the chilling reality of what happens when it’s lost, and the exact process for recovering your wallet.
This is where you truly become your own bank.
Your next stop is here: Seed Phrase Magic: Restore Your Crypto Wallet on Any Device
Disclaimer
The information provided here is for INFORMATIONAL & EDUCATIONAL PURPOSES ONLY!
View our complete disclaimer on our Disclaimer Page
