Buying Your First Crypto: A Guide

Beginner Jan 14, 2021 · 4 min read

Buy your first crypto
Key Takeaways:
— Crypto is not homogenous, but in fact a huge array of different coins and tokens – your first job is figuring out which ones you want to buy and what you’re aiming to get from it

— Be discerning! The cryptosphere is full of new projects and opportunities, but remember; not all of them are genuine – it’s up to you to do the research

— You can buy more or less any amount of currency you want – you’re not limited to whole coins

— Not your keys, not your coins. This is the most important mantra to keep it in mind when deciding how to store your crypto

So you’ve done the reading and you know the basics – now it’s time to get involved! Welcome to the first step on your crypto journey. Let’s chat about buying your first crypto.

If you felt like you were starting to understand crypto, but now you find yourself scratching your head wondering how to actually buy some – don’t worry, this is completely normal! The good news is you’re only one (important) step away from owning some coins or tokens. This next step will be crucial to defining your first interaction with crypto, so it’s worth starting out right.

Which crypto to buy?

First, let’s be clear about one thing: you are the only one to decide what you want or don’t want when it comes to . Crypto gives you back freedom and power, and therefore responsibility aswell. As you know from our previous articles, there are thousands of cryptos to choose from, each with their own rules, values and capabilities. That’s why the most important element of making your first crypto purchase is doing your own research.

Let’s have a look at how to best approach researching crypto projects, so you can make an informed choice yourself.

Bitcoin, Altcoins and Tokens

How to research crypto projects

As previously explained, you have different types of crypto: Bitcoin, Altcoins and tokens. These are the three key categories you might find yourself buying into, and give a rough overview of the system as a whole. But within these categories, there are literally thousands of options, and new projects springing up every day.

Risks to be Aware Of

The decentralized environment offered by crypto is an amazing hotbed for innovation, because more or less anyone can develop and launch a project. For you, that means an incredible array of choice when it comes to buying in. But this freedom to create comes with a caveat – it’s also a perfect place for well planned scams to be staged.

One typical example of this is a rug pull. This is a project (a coin or token) set up with the express intent of making money, where the developers of that project will wait for people (like you and me) to buy in, raising the value of the currency. Once this has happened, the developers sell off all their own holdings at once, draining all of the money out of the project (the money you used to buy in) and leaving you with some tokens that probably aren’t worth a lot.

A rug pull is exactly what it sounds like – a project that pulls the rug out from underneath its community. And this type of scam is not uncommon in crypto, because you don’t need to pass any tests or audits to start a project. This means anyone can claim to be a legitimate platform, even when they’re not.

Resources and Questions to Ask

So how do you assess a project for yourself?

Read the White Paper

Here’s a good starting point: almost every legitimate crypto has a purpose and a vision, so establishing what this is (and if it even exists) for the project that interests you is a key data point. You can do this by reading the reference document called a white paper is therefore a must-do to assess the potential of a crypto. By reading it, you have to pay attention to to assess the project’s viability:

  • Is the project answering an existing problem and is it useful for the crypto ecosystem?
  • Does the project really need a dedicated crypto to work and achieve its ambition?

Join the Project Discord

You can also get a feel for what’s happening on the project by joining its community server on Discord. Here, you can ask the developers questions directly to build a profile of the project, its future and the authenticity of the creators. You can also chat to the existing community to get exclusive information about the project or upcoming developments.

You can find the Discord link for most projects on their main page and also on their Twitter profile, but if you want to take a deep dive into how to use the platform, check out our article right here!

Ultimately, it is impossible to know if a crypto project will achieve the objectives. But if there seems to be a clear plan in place, along with an engaged community and responsive developer team, then there’s a stronger case for the future of the project.

While the most famous cryptocurrencies have already proved their worth, research is very important with smaller cryptocurrencies. Because those are like startups: their value can drastically increase but they are still fragile. In a nutshell, there is no bad choice but one universal rule instead: buy only the crypto you believe in once you have educated yourself.

Do I have to buy a whole coin?

Right! You’ve done some research and established that your project has a clear plan, and seems to be genuine. The next question is how much do you want to buy?

Do you have to buy a whole coin? NO! Although this option is not well-known, you don’t have to buy a whole coin. Most cryptocurrencies actually give you the possibility to buy a half, a quarter or less of a coin. Just like fiat currencies which can be divided into cents, crypto currencies also can be divided, therefore bought, in small amounts. One Bitcoin even has a . While the dollar can be divided into 1/100 of 1 USD, a Bitcoin is divided into “Satoshis” which are just 1/100,000,000 of 1 BTC.

Credit to myyri.com

Where to buy your first coins?

When it comes to buying your first crypto, cryptocurrency exchanges are the most common and convenient (digital) spot to go. They allow you to buy, sell and trade your crypto assets in a pretty convenient fashion. Many of the famous cryptocurrency companies like Coinbase, Binance, Changelly, Bittrex and Kraken are in fact exchange platforms. 

Most crypto exchanges are fiat to crypto exchanges which allow you to buy coins with your traditional fiat currency, via bank transfer, credit card or PayPal for example. But if you want to buy a smaller crypto, you might not find it on these fiat to crypto exchanges. You would have to use an intermediate platform, such as Ethereum (ETH), then go to a crypto to crypto exchange in order to convert your ETH into the desired asset.

We’ll talk more about where to buy coins and tokens in the next article.

Securing your crypto

Aside from buying, selling and trading cryptocurrencies, exchanges are also often used as a place to store your newly purchased crypto assets. However, when it comes to storing crypto, exchanges are not very secure and limit your freedom. By leaving your assets in an exchange…

Your valuable digital currencies are vulnerable 

Anyone who can figure out your login details would be able to access and steal your coins. Besides, exchanges are an ideal target for because of the huge amount of crypto they can steal – and they’ve been successful more often than we’d like.

You don’t own that crypto on your account

There is a big difference between buying and owning your crypto. When leaving your crypto on an exchange, you aren’t the owner – the exchange is holding your crypto assets, much like a bank holding your money.  

You are not in control of your asset

Because the exchange actually owns your crypto, you do not have total control over your own assets, nor the freedom to do whatever you want with it. The exchange does. This is why the exchange can set certain limits to your crypto activities, like setting a minimum or maximum withdrawal limit.

Do not forget that crypto assets are digital money, they are nowhere physically speaking. They require specific security measures to ensure they are truly and safely yours. And it is only on you to do so.

At Ledger, we’re here to help though. We give you full power over your crypto. Our combined with a one-single app offer you the best security, ownership and control over your assets. Through our app Ledger Live you can directly buy, sell, lend or swap your crypto thus combining transacting and storing in one place. Unlike exchanges, the crypto bought is not unsafely left on an online platform. Unlike exchanges, you really own your crypto assets and are in control from the very beginning. Sounds like gibberish to you? Don’t worry, we’ve got your back.

Knowledge is Power.

If you’re getting into crypto and want to make sure you understand the risks – and how to avoid them – check out our School of Block episode.

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