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A beginners guide to buying cryptocurrency

9 min read

A beginners guide to cryptocurrency

Written By

Gaby Pilson
Gaby Pilson

Rounding it up

  • Crypto is a new, fairly unregulated, and highly volatile investment that’s only appropriate for people with a high risk tolerance.

  • You can buy crypto on an online exchange with just the push of a button.

  • Before making your first crypto purchase, be sure to fully research the coins you want to buy and the exchange you want to use.

  • After purchasing crypto, be sure to store your assets in a secure wallet to prevent successful theft and hacking attempts.

Interested in buying crypto? You’re not alone. Cryptocurrencies are all the rage these days and they’re quickly becoming a popular investment in Canada.

But unlike what you’d find with more traditional investment products like stocks, bonds, ETFs, and mutual funds, the process of purchasing crypto can get pretty darn complicated.

The good news is that we’re here to help.

In this article, we’ll give you step-by-step instructions on how to buy crypto. We’ll walk you through everything you need to know about making your first crypto purchase, and we’ll give you insight into the various risks you need to consider before you become a veritable crypto tycoon.

Should I Buy Crypto?

Before we discuss how to buy crypto, we first need to talk about whether you should buy crypto.

If you’ve already done your research and you’ve decided you’re willing to accept the risks of investing in crypto, feel free to skip this section. But if you’re new to the world of digital assets, it’s vital that you understand what you’re getting yourself into before you begin.

Cryptocurrencies are a type of highly speculative and volatile investment. There are thousands of different kinds of cryptocurrencies available, though there are relatively few regulations that govern the crypto market. This makes crypto different from things like stocks, ETFs, or even gold, all of which are highly regulated securities with long-established track records.

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At the end of the day, the question of whether you should buy crypto is a personal decision you have to make based on your unique financial situation. Much of that decision should be based on your personal risk tolerance.

Although crypto has the potential to earn some major investment returns, it’s not without its risks. Some of the many risks of crypto include:

  • High market volatility – Crypto prices have been known to increase or decrease by hundreds of dollars in a matter of minutes. This can cause your portfolio to drastically rise and fall in value.

  • Increased risk of theft – Without stringent security precautions, the digital, decentralized nature of crypto puts it at an increased risk of theft from hackers.

  • Market manipulation – The increased popularity of crypto on Reddit, the rise of so-called memecoins, and crypto’s lack of regulation make certain coins more susceptible to market manipulation and quick price fluctuations.

  • Lack of regulation – Although there are some restrictions and limits on crypto trading, digital assets are currently mostly unregulated in Canada and around the world. Some investors see this as a benefit while others fear what might happen if governments impose regulations or completely ban crypto in the future.

  • Tax implications – Since crypto is so new, many governments haven’t yet decided how they want to tax any gains on your investment. Canada currently treats crypto like a commodity for tax purposes. If crypto is later treated as a type of currency, this can have major long-term tax implications for investors.

As we’ve mentioned, you’re the only one who can decide if investing in crypto is right for you. Risk is an inherent part of any investment, but these risks are heightened in a new and mostly unregulated asset class like crypto.

If you’ve decided you’re unwilling to take on the risks that come with crypto, it might be better to stick to more traditional investment products, like ETFs and mutual funds. Otherwise, if you’re ready to buy your first crypto, read on for our step-by-step introduction to the process.

How to Buy Crypto for Beginners: Step-by-Step Guide

Now that you understand the potential risks and rewards of crypto investments, let’s get to the fun stuff: how to buy crypto.

In this section, we’ll take a closer look at all of the steps involved in buying your first digital coins and tokens.

Step 1: Research Your Crypto Investment Options

If you want to buy crypto, your very first task is to determine what you’re going to buy. There are thousands of coins on the market and that number is only expected to grow in the coming years. Therefore, figuring out which crypto you want to buy is an essential part of any digital asset investment strategy.

Of course, with so many options to choose from, narrowing your choices down can be a challenge. When deciding what kind of crypto to invest in, consider the following:

  • Long-term performance – As is the case with all investment products, past performance is not necessarily an indicator of future success. However, with crypto, coins with a long history of good performance are less likely to be flat-out scams or pump-and-dump schemes.

  • Market cap & trading volume – A coin’s market cap and trading volume give you an idea of whether it’s a popular investment among other traders. Coins with high market caps and trading volumes, like Bitcoin, Etherium, Cardano, Solana, and Polkadot, are often (but not always) considered to be higher-value investments than less popular coins.

  • Project goals and white papers – Most cryptocurrencies are developed as part of a larger project. This project could be to facilitate faster and cheaper remittances or to develop decentralized apps (DApps). A coin’s value is often tied to its potential use applications, so understanding the goals of a given cryptocurrency can be helpful. Reading a coin’s white paper (an informational document about the coin) can help you decide if it’s a worthy investment.

Step 2: Find a Crypto Exchange

Once you decide what crypto you want to buy, you need to find a place where you can buy it. The primary place to buy cryptocurrencies is on a crypto exchange. These are digital platforms that connect buyers and sellers of various cryptocurrencies.

Nowadays, there are hundreds of different crypto exchanges, each of which offers different features and benefits to users. Which exchange you use is a matter of personal preference, but there are a few things you should consider before you select one for your needs:

  • Supported countries – Not all exchanges operate in all countries. Be sure that whatever exchange you use operates in Canada or wherever you currently call home.

  • Supported coins – Each exchange supports a select number of cryptocurrencies. Most will let you trade all the major players (think Bitcoin and Etherium). But if you want to buy something else, make sure a given exchange supports that coin before signing up for an account.

  • Prices & fees – Exchanges are in the business of making money, so they all charge fees. Some charge higher fees for added convenience, which might be worthwhile if you’re new to crypto investing. Always read an exchange’s fee schedule thoroughly before you start trading.

  • Security & reliability – Crypto exchanges are major hacking targets. Do your research to learn more about what security features an exchange has in place. Also investigate whether an exchange has had a history of successful hacking attempts in the past and, if so, what that exchange did to prevent attacks in the future.

  • Extra features – Some exchanges now offer extra features, like crypto-backed credit cards, crypto rewards programs, and NFT trading that can enhance your investing experience.

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Step 3: Create & Fund an Account on a Crypto Exchange

After you find the right crypto exchange for your needs, it’s time to create an account. Each exchange has its own application process for new accounts. Note that some require photo ID verification and other steps before you can start placing trades.

Once your account is up and running, you’ll need to fund it with fiat currency (that’s the fancy term for national currencies like the Canadian dollar) so that you can buy crypto. But keep in mind that some exchanges have deposit fees and limitations for certain kinds of payment methods.

For example, certain exchanges might let you use Interac e-transfers, wire transfers, PayPal, or even a debit card to buy crypto. But some charge fees as high as 5% for certain payment methods. Therefore, always verify what fees you’ll be charged before you transfer your hard-earned money to an exchange.

Step 4: Buy Crypto

As soon as your account is funded, you can buy crypto. Every exchange is slightly different, but the process of buying crypto is more or less the same. Here’s how it works:

  1. Go to your exchange’s website or mobile app and log into your account.

  2. Navigate to the trading terminal where you can buy and sell crypto.

  3. Select the crypto that you want to buy (e.g., Bitcoin or Etherium).

  4. Confirm your payment method (e.g., debit card or bank transfer).

  5. Enter your total purchase amount.

  6. Review your order and any applicable fees.

  7. Press the buy button to finalize your transaction.

Once you confirm your transaction, the crypto that you purchased should be available in your account within a few minutes. Most purchases are instantly confirmed and processed unless you’re using an advanced trading terminal with more complex order types.

Step 5: Securely Store Your Crypto

At this point, congrats! You’re the proud owner of your very first crypto. However, this is just the beginning of your crypto journey. Now that you own digital assets, you need to find a way to store them securely.

Most exchanges offer what we call a “hosted hot wallet” for free with your account. This means that your coins are held by the exchange in an online storage system. With a hosted wallet, the company behind the exchange maintains full control over your private keys.

The whole concept of private keys and crypto wallets is fairly complex, so we won’t get too far into the details here. But the take-home message is that keeping your private keys safe is the best way to stop hackers from stealing your coins.

In fact, there’s an old adage in the crypto world that says “not your keys, not your coins.” That’s because giving your private keys to someone else gives them full control over your money.

If you’re working with a reputable exchange with good insurance and security practices, you might be comfortable keeping the coins with the exchange.

Otherwise, you might want to consider getting a personal hot wallet, which provides you with full control over your private keys. For added security, a so-called cold wallet, which is a wallet that’s not connected to the internet, is often a good idea.

Regardless of what storage method you choose, though, it’s important to take security seriously when dealing with crypto.

Buy Crypto With Ease

Despite its surge in popularity in recent years, crypto is still a highly speculative investment. If you’re okay with the risks that come with digital assets, then you’ll need to create an account with an exchange to be able to buy your own crypto.

Always remember that there are risks involved with every step of the crypto buying process. Be sure to fully research any coins you want to buy and any exchange that you’re thinking about using. That way, you can make wise decisions about your money.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Gaby Pilson

Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.



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