Starting in Crypto - selecting an exchange, choosing what to buy, and making your first purchase.

Starting in Crypto - selecting an exchange, choosing what to buy, and making your first purchase.

By CryptoPlankton | Beginner's Bible | 31 Aug 2021


This is my third post in a new blog aiming to build piece-by-piece a basic guide to getting started in crypto. My first post introduced a few golden rules, my second post will cover some of the bewildering terms a crypto investor may encounter. Today's post will focus on selecting an exchange, choosing what to buy and making your first purchase.

This guide should not be treated as financial advise, the choices you make are yours and should be based on careful research and a plan.



Choosing what to buy

It is really important to have a plan, don't think you are going to get rich simply by buying a coin on CoinBase and going about your day. The first question to ask is what is it about your choice that is going to generate a yield?

  • Simple HODLing—you believe your choice is likely to increase in value over time, such as Bitcoin, you are going to buy some, transfer it to your wallet, and wait.
  • Native staking—you are going to stake your coin on its native platform, such as ADA, you are going to transfer it to your wallet and stake it.
  • Auto-staking—your choice earns income just by holding, such as Algorand, you are going to transfer it to a wallet and HODL.
  • Onward investment—your token may just be a gateway to DeFi staking, liquidity mining, yield farming or lending, such as Binance Coin, you are going to transfer it to a wallet, then head into the cryptoverse for some high-risk adventures.
  • Speculation—you're jumping on a project, early doors, hoping to net some big gains as the ecosystem of your chosen token grows.

Some of these choices are risky, as in you could lose everything risky, so require further research, and are probably not for you, just yet, if you are starting out. Whatever your choice you need a plan, you need to decide what you are planning to do with yields and when you are going to take profits. Don't just ape into crypto and expect everything to go well.



Selecting an exchange

If you're making your first crypto purchase, you probably want to turn your hard earned fiat currency into Crypto. To do this you will need to select an exchange to buy from.

This should be simple, but in reality it is not. Some exchanges are thoroughly disreputable, and even popular ones have enough rumours and accusations surrounding them to make you think twice. It might be tempting to turn to Trustpilot to see if you can work out if your candidate is safe or not. However, the sad truth is, a lot of positive reviews on Trustpilot are fake, and a lot of negative ones are generated by people who have had bad experiences—that are not always the fault of the exchange—these include errors made by the user resulting in loss, and frozen accounts as the result of anti-money laundering activities. Type the name of literally any exchange and the word scam into Presearch (or a lesser search engine) and you will find claims the exchange is a scam. Don't be overly alarmed, you can do exactly the same for any financial institution with similar results.

So where to start?

Firstly, we have to consider what you want to do with your crypto, your plan will itself potentially narrow your choice of exchanges—if you are planning to invest in BNB, for instance, then Coinbase might be a bad choice— they don't sell it.

If you live in a country with regulation, you could look into regulated exchanges - for example in the UK there is a small exchange called Coin Pass which is licenced by the Financial Conduct Authority. However, small exchanges may not offer the options you want in terms of token choices. 

I'm going to be straight up, generally speaking—if you dig long enough—you will find rumours about all the exchanges that might put you off, in some ways crypto is very much the Wild West, my aim with exchanges is to get my money on and my crypto off as quickly as possible. Not least because exchanges can and do get hacked.

A good start would be to examine the list of exchanges on CoinMarketCap, start at the top and work your way down to the first exchange that meets your needs. Personally, I use several exchanges, Binance, Coinbase Pro, Coin Pass, Coin Tiger, KuCoin, and BitMart, but I have a diverse portfolio so have used some by need.


Making your first purchase

Our aim is simple, to get as much of our chosen coin for the smallest outlay of our fiat possible.

Look carefully at fees, before you make your final choice. Examine withdrawal limits too, some exchanges have exorbitant fees or excessive minimum withdrawal thresholds that may exceed your initial investment. As a rule of thumb large purchase fees cost less—in percentage terms—than smaller ones. Several exchanges offer 'simpler' ways to buy crypto, Coinbase for instance offers an entry-level app, or Binance has a 'lite' setting in its app, that lets you purchase coins with a debit card, these ways of buying tend to come at a premium. generally fees are lower and rates better on the proper trading platform.

If you really don't have the confidence to buy through the trading tools, then you can, of course, use the entry level tool, but I recommend learning how to use the trading tools properly: even small fees add up over time, and as assets climb in value the loss is also increased in real terms.

Generally speaking, it is cheaper to send your money to the exchange through a direct bank transfer; debit card transfers and purchases come next; credit card purchases often result in additional 'cash transaction' fees levied by your credit card company. Some exchanges, offer third party bank transfer or payment services, such as Moonpay or Simplex, these are generally very expensive ways to buy crypto and best avoided.

If you are buying a popular token with high liquidity, such as BTC, then it is safe to simply use the 'market buy' option on the trading platform, with this function you just buy the coin at the best market rate available at that moment. If the coin you are buying is lower liquidity or very volatile use a limit buy option or you may get caught by a sudden change in price.


After your purchase

Once you've made your purchase you need to get your token off the exchange and into your chosen wallet - do not rush this step, ensure you have chosen a wallet that meets your needs and can receive your chosen coin in the form the exchange allows you to withdraw. There is a complex world here of token types and protocols and a mistake sending your coins could result in total loss.

I will write a guide on wallets next, but if you're not waiting for that then be sure you understand what you are doing.


Previous installments in the series are-

I will write the following guides shortly-

  • Selecting a wallet and setting it up
  • Making transactions

Don't feel like you need to wait for me, but if you do chose to start buying crypto, please research each step carefully before you dive in. One simple mistake, for example when sending your coins to a wallet, could see all your money lost irrevocably.



I write many articles, here and elsewhere, and I often include referral links in my articles. At times I also write unpaid articles about projects I have found that I like the look of. On this particular blog I have made the decision not to include referral links, because my aim is simply to help beginners without them having to wonder about motives.

In my other blog, CryptoPlankton - Adventures in Crypto, also on Publish0x, I publish articles aimed at non-beginners, some of which are more technical or cover ways to earn free crypto - in the interest of transparency these do include referral links.

If you like my articles and you want to thank me for it then please register on Publish0x, then you can tip me, at no cost to you - in fact you can earn crypto yourself just for reading articles.

Remember, while learning involves listening to others I am not a financial advisor so do your own research.

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CryptoPlankton
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