How to Purchase Cryptocurrency
By Karina Rafaella, edits Denise Schaefer
Digital assets, such as cryptocurrencies, have become increasingly popular in recent years.
During the heights of the global financial crisis in 2008, a technical manifesto known as the Bitcoin white paper was published. The Bitcoin white paper envisioned the future of a decentralized, distributed, and secure form of electronic cash with the use of blockchain technology and cryptography. Thirteen years later, a new digital financial economy has emerged, with different blockchains and cryptocurrencies challenging the traditional financial industry.
Cryptocurrencies are providing people and businesses all over the world the opportunity to participate in a global financial system that was once limited to a selective few.
While the internet enables people to transmit information, cryptocurrencies enable people to transmit value almost instantly, in a decentralized, peer-to-peer way. The digital native nature of cryptocurrencies means that anyone with an internet connected device can participate in this new economy. The opportunity to participate in this paradigm shift is right at your fingertips. Through a cryptocurrency exchange, you can convert your money to crypto and begin exploring this new ecosystem.
So, what is a cryptocurrency exchange?
A cryptocurrency exchange is a platform that enables people to buy, sell, convert and manage crypto assets. An exchange can either be centralized or decentralized. Both centralized and decentralized exchanges facilitate billions of dollars of trading volume everyday, but the differences lie in the way they operate and who actually has custody of the crypto assets.
Centralized Exchange
A centralized exchange (CEX) is the bridge between traditional finance and the crypto economy, it is where you convert fiat currency ($, €, ¥, £) to cryptocurrency. Before you can begin transacting on a centralized exchange, you will need to verify your identity by providing the necessary information, such as a valid government issued ID. Centralized exchanges are regulated financial service companies that must comply with financial and consumer protection laws in the countries they operate in. Some examples of popular centralized cryptocurrency exchanges are: Coinbase, Gemini, Kraken, and Binance.
CEXs involve trusted intermediary organizations for clearing transactions, which is why it often takes a few days for certain transactions to be completed. It’s important to note that the assets you hold in a CEX are in the custody of the exchange. They hold the private keys and are responsible for keeping your assets safe. This is not a bad way to start if you simply want to hold cryptocurrencies. But, if you would like to do more, such as access the decentralized web, use Decentralized Finance(DeFi), and Decentralized Apps (Dapps), you can always send your assets to a digital wallet (such as Metamask) that can interact with different blockchains.
Decentralized Exchange
A decentralized exchange (DEX) allows you to buy and swap cryptocurrencies without the need for intermediaries by using self-executing smart contracts. DEX transactions are almost instantaneous. You don’t need to verify your identity to use a DEX, but they do not facilitate transactions with fiat currency. The on-ramp from fiat currency to cryptocurrency is through a centralized exchange.
DEXs open up the world of Decentralized Finance (DeFi), where you can perform a number of economic activities centralized exchanges do not support, such as yield farming, the ability to contribute to a liquidity pool, and more. To use a decentralized exchange, you will need a digital wallet to hold your assets, which you can learn to set up here.
Getting Started on Coinbase
One of the most popular and trusted centralized cryptocurrency exchanges is Coinbase. Coinbase has been around since 2012, and started as a simple platform for buying and selling cryptocurrencies. It has since grown beyond trading. Today, Coinbase supports over 90 different cryptocurrencies and has over 43 million verified customers worldwide. Customers can participate in different activities such as borrowing, staking, earning interest on crypto, and much more.
Please note that before investing in cryptocurrencies, it is essential to do your own research. Cryptocurrencies are volatile assets and are not immune to loss.
What You’ll Need to Buy Crypto on Coinbase
Computer or smartphone
Government issued photo ID (must be at least 18 years old)
Phone number
Payment method (Bank account, Paypal, or credit/debit card)
Creating A Coinbase Account
The application process:
Visit https://www.coinbase.com/ or download the Coinbase app on your mobile device.
Provide the required details, such as your legal full name, email address, password, etc.
Read and accept the user agreement and privacy policy.
Verify your email address and phone number.
Provide more details as required. A valid government ID is part of the verification process.
Verification will take a few minutes once you've completed the application process.
After verification, you will be able to add a payment method to begin using Coinbase.
Buying Crypto on Coinbase
Converting your cash to crypto
From the Coinbase homepage, go to the “Trade” section which can be found on the left side of your screen. On the right side of your screen, you can begin a transaction to buy, sell, or convert crypto.
2. Select the asset that you would like to purchase by typing the symbol or scrolling through the list.
3. Select your payment method.
4. Enter the amount (in your local currency) that you would like to purchase. Click “Preview Buy” to proceed with your order.
5. Review your order to buy and select “Buy now” to confirm your transaction.
Selling Crypto on Coinbase
Converting your crypto to cash
From the trade page, select the “Sell” section on the right side of your screen.
2. Select the asset you would like to sell.
3. Enter the amount you would like to sell and select “Preview Sell”.
4. Review your order and select “Sell now” to confirm your order to sell.
Swapping Crypto on Coinbase
Converting one crypto for another
From the trade page, select the “Convert” section on the right side of your screen.
2. Select the assets you would like to convert. As an example, we are converting BTC to USDC.
4. Review your order to convert one crypto asset for another, and select “Convert now” to confirm your order.
Sending Crypto to a Digital Wallet
You can send your crypto on Coinbase to a digital wallet, another exchange, or other people’s wallets. When sending crypto, make sure to verify the address of the recipient since transactions are not reversible.
From the Coinbase home page, select the “Send/Receive” button on the upper right corner of your screen.
2. To send crypto to another wallet (such as your Metamask wallet), go to the “send” section and enter or paste the address of the destination wallet. On Coinbase, you can also send crypto to a mobile number or email address.
3. Select the asset you want to send.
4. Enter the amount you want to send and select “Continue” to proceed with your transaction.
5. Review your transaction to send crypto to another digital address and confirm your transaction by selecting “Send now”.
Receiving Crypto on Coinbase
You can receive crypto from a digital wallet, exchange, and from other people you know. Always verify that you’re giving the right address before proceeding with your transaction.
From your Coinbase home page, select the “Send/Receive” button on the upper right corner of your screen.
2. On your screen, you should see a QR code, the asset you want to receive, and the address of the asset.
3. Select the asset you want to receive. Each asset has a different address. If you want to receive ETH, select the asset ETH and provide your ETH address to the sender.
4. Selecting the “Asset address” section copies the address to your clipboard. Send this address to the sender or paste it in the address section of your Metamask wallet.
5. If you are transacting in person, the sender can scan the QR Code to easily send you crypto
It can take a few minutes to receive crypto on your Coinbase account. If you’re on mobile, you will receive a notification once it is there.
Now What?
You’ve set up a Coinbase account, converted your fiat currency into crypto, and are now an official participant in the new digital financial economy. Yayy 🎉
You can buy more cryptocurrencies, hold, trade, sell, and earn interest. What you do next is entirely up to you. The decentralization of the financial economy is giving people greater freedom, independence, and choice. Remember to always do your own research and stay safe.
Keep in mind that this article, as well as any and all Surge articles, are purely educational and not to be taken as financial advice.
