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5 steps to efficiently buying your first cryptocurrency

Since the first digital currency, Bitcoin, was introduced more than a decade ago, cryptocurrencies have remained a popular term and asset in the digital economy. They are now, at most times, considered the ideal ‘Internet currency’ due to the convenience and efficiency brought by their blockchain technology. 

As such, digital currencies are far from what critics say they are a fad because 12 years have passed since Bitcoin revolutionised the money payment system, and their market continuously thrives. Just this November 2021, it reached a market cap of $3 trillion, which is quite a long shot from what experts thought it would be by 2030 worth around $4.94 billion. 

Despite the extreme volatility, people across the globe get a hold of digital currencies because of their several advantages. For one, they empower you to be your own bank by purchasing and exchanging products and services for profit. 

Crypto is an interesting sector with a lot of potential. At the same time, deciphering its blockchain technology and navigating the market’s over 6,000 digital currencies may be perplexing. Fortunately, the first step into their realm is to purchase digital currencies, which can be done in a few simple steps outlined here at Luckyslots. 

  1. Choose a wallet

To store your crypto, you will need a wallet, just as with conventional money. The distinction is that it is digital and may be divided into two categories: hot and cold crypto wallets or online and offline storage, respectively. 

A hot wallet is connected to the internet, whereas the cold wallet is not and instead relies on portable devices such as a flash drive. With each having its own set of pros and cons, here we have broken down their two or more subtypes to assist you to make a more informed decision.

Hot wallet

Hot wallets are simple and convenient to use, thus making them ideal for everyday transactions. However, while its internet connection lets you access your account from anywhere and at any time, it also makes you subject to digital threats such as technical failures and mischief. As a result, you will need commendable hot wallets to avoid such issues, but before that, have a look at their subtypes farther down.

  1. Mobile wallet — This software is likely the most suited for daily transactions since many users are always on their mobile devices.
  2. Web wallet — If, however, you don’t want to download applications, online wallets are an excellent alternative since they link you to the network through a browser interface.
  3. Desktop wallet — This is by far the safest hot wallet option because it requires you to download it to your computer, giving you complete control and access to your data. Be that as it may, we strongly advise that you create a backup of it as a precaution.

Cold wallet

Cold wallets, as previously stated, are portable devices that only become online when used for transactions. Their safe offline storage function makes them excellent for company owners, long-term crypto traders, or hodlers (people who ‘hang on for dear life,’ as the industry calls them). Their two subtypes are as follows:

  1. Hardware wallet — A random number generator (RNG) is used to generate public and private keys on this electronic device (i.e. flash drive).
  2. Paper wallet — This piece of printed paper uses QR codes for your crypto address and its keys. 
  1. Search for a reliable crypto exchange

After you have sifted through the many, many hot and cold wallets on the market, you will need to choose a crypto exchange. It is a digital marketplace where you buy and sell digital currencies, as well as convert fiat currency into other coins at market value.

While crypto exchanges are similar to regular stock exchanges in that they are market makers that charge bid-ask spreads for each transaction, they are divided into three types. These are centralised (CEX), decentralised (DEX), and hybrids, each with its own set of pluses and minuses based on your desired services.

  1. Create and validate your account

Licensed crypto wallets and exchanges have passed federal regulatory standards like the KYC (know your customer) practice. It is the process of validating your identity by supplying a copy of your passport/license driver’s and/or even uploading a selfie to further confirm your appearance matches your documentation. 

  1. Deposit money to your crypto account

Now that you have verified your crypto wallet and exchange accounts, it’s time to fund them with at least fiat money. You don’t have to worry about the hassle of conversion because, as stated before, many exchanges allow you to seamlessly convert fiat money into your preferred digital coin. 

The challenge now, however, is that not all crypto exchanges have similar processes and bid-ask spreads. Such options vary either in linking a bank account, authorising a wire transfer, or making a debit/credit card payment.  

  1. Place your crypto order

You are finally ready to place your crypto purchase now that the funds are in your account. The issue, however, is that there are already over 6,000 digital currencies circulating in the market. To get you started, Luckyslots lists down the top 10 digital currencies by coin value, market cap, and total supply in November 2021.

Digital currencyCoin valueMarket capTotal supply
Bitcoin (BTC)$54,510.08$1.03 trillion18.88 million
Ethereum (ETH)$4,068.26$477.67 billion117.48 million
Binance Coin (BNB)$591.56$98.67 billion166.80 billion
Tether (USDT) $1.00$77.27 billion77.16 billion
Solana (SOL)$189.33$57.68 billion510 billion
Cardano (ADA)$1.51$49.51 billion32.83 billion
Ripple (XRP)$0.925133$92.50 billion99.99 billion
USD Coin (USDC)$1.00$34.33 billion34.30 billion
Polkadot (DOT)$33.75$37.76 billion1.12 billion
Dogecoin (DOGE)$0.200773$26.53 billion132.15 billion

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