Newbie Starter Pack: Where do I buy crypto?
5 things you should know before buying crypto on exchanges
In this series of posts, we’ll be looking into pros and cons of buying crypto on exchanges, through ATM and cryptocurrency wallets. If you’ve never purchased crypto and are wondering which steps you’ll go through, we’ve listed them below (if you are not, scroll down to the end of this text — you’ll find some useful tips).
Step 1. Register an account with the exchange
Step 2. Upload documents for KYC verification
KYC normally takes up to 2–3 days, but be ready for waiting and resubmitting additional documents if required. That’s absolutely normal and testifies to the fact the exchange takes the money laundering regulation seriously. Exchanges usually ask users to submit KYC once only.
Some exchanges ask you to verify your identity from the very beginning, when you register an account, others will do it when you try to withdraw — it depends on the exchange.
There are exchanges that don’t ask for KYC if you purchase and withdraw small amounts. This should be checked individually with the exchange. However, you’ll have to share some personal and billing data anyway while opening an account. Don’t be hooked by ‘no KYC’ promise: it’s legal only for a minor amount and will also depend on the country of your residence.
Step 3. Deposit money
No, you don’t pay directly as with online stores. First you make a deposit. At this stage quite a number of exchanges charge a deposit fee. Most exchanges offer several payment methods including bank card, wire transfer, PayPal, Scrill and so on. Some will allow only cryptocurrency deposits.
Step 4. Purchase crypto using your deposit
To do that, you’ll need to place an order. Some exchanges will charge fees for that, too.
Step 5. Withdraw the crypto purchased
Congrats, you’ve purchased the crypto! It now resides on some internal address of yours within the exchange.
To manage your crypto (send it to someone or use for purchases) you’ll need to transfer it from the address with the exchange to an address of yours. An address generated with some cryptocurrency wallet would be ideal for that.
You may be asked to pay some fee to the exchange for this withdrawal.
Buying crypto on exchanges: pros
- Cryptoexchanges offer a secure way to buy crypto
- KYC is required once only
- Fees on large exchanges are quite fair, although there are nuances (see below)
And what about the cons?
- Some exchanges charge complex fees which are not always stated explicitly on the website
- Verification may be complicated and lengthy
- Ease of use varies for different exchanges
Useful tips: things to check in advance before embarking
1. Check the jurisdiction of the exchange before signing up. Each exchange has a set of jurisdictions where it is allowed to operate. For example, a European exchange will not necessarily have licenses to sell crypto in Australia or the USA.
The quickest way is to look it up in Terms of Use (Terms and Conditions) which are normally placed in the footer of the website. If your country or region is listed as a ‘restricted’ there, look for an exchange that deals with it.
2. Check if there are complaints about deposits, withdrawals, security, verification. We’d recommend checking Reddit, Bitcointalk and other related forums. Reviews and bloggers may be biased.
3. Check whether verification is done before you deposit funds or after. That’s especially true if you have no experience with exchanges and passing KYC in particular. It’s also useful to learn beforehand what documents you’ll be asked to provide. You can normally find this info on the website.
4. Learn about all the fees so that the aggregate fee you pay does not come as a surprise to you. As mentioned before, fees may be charged at several stages.
5. If you are dealing with exchanges for the first time, their interfaces may give you the creeps. Take a look at the interface before depositing money: is it intuitive enough for you? Are there guidelines on the website and support at hand?
In fact, if you purchase crypto for the first time, you may opt for a simpler option like ATM or cryptowallet. We’ll talk about these soon. Stay tuned!
