The last few months have been insane in the cryptocurrency market, like no other financial market I’m aware of in history. There have been altcoins making +1000% gains in 24 hours, over the last month. It’s been nearly impossible to not take some profits during this bull market. As a result, I’m often asked how to buy bitcoin, so I’m writing this as a place to point people.
NOTE: This article is not investment advice :D
The first thing you need to do is find a trusted exchange. These change regularly unfortunately, but this year I’ve been really impressed with Shakepay if you’re Canadian, otherwise I recommend Coinsquare. If you’re American, check out Coinbase. There are hundreds of exchanges, but I recommend using an on-ramp exchange in your own country for a bunch of reasons I won’t detail here. I use the term on-ramp exchange, because they are going to on-ramp you into Bitcoin or Ethereum to get started.
Think of on-ramp exchanges like a currency exchange kiosk at an airport, if you’re headed to Belgium, you’ll want to exchange your currency (CAD or USD) for Euros. These on-ramp exchanges do the same thing if you’re headed to digital/internet land, you’ll be trading your currency (CAD or USD) for Bitcoin (BTC) or Ethereum (ETH) to get started.
Once you start to sign up for one of these websites, you’ll notice that once you begin the process there’s something different about these websites than most websites you sign up for, and that’s called the Know Your Customer or KYC process. KYC is needed on all legal on-ramp exchanges as the KYC process is used for anti-money laundering (AML) and counter terrorist financing (CTF) purposes. In order to comply with KYC, they’ll likely ask you to send a picture of your government ID (license/passport) and a recent or live picture or video of yourself. Once you complete this process, it will be sent to them, and they require a human to verify it, so it’s not uncommon to take a few days, although sometimes you’ll be verified in minutes.
I’m going to assume you’ve now been KYC verified on your local on-ramp exchange. If not, go back and start this process now as this is the biggest time delay in getting you started.
Now that you have n verified account, you’ll want to send your local currency from your bank to the exchange. In the case of Shakepay, you can link it to your bank account so you can send or receive money whenever you want. If you’re using Coinsquare, you can send money via Interac e-transfer. Each exchange has its own capabilities in terms of how you can send it money. This is the second biggest delay usually, so go through this process now. With some exchanges, like Coinsquare, they put a 3 day hold when your money arrives. With Shakepay, you can use it right away. I would only send like $100 your first time, until you’re comfortable putting money in, and taking it back out of the system.
OK We’re almost there! Now you have CAD or USD sitting in your on-ramp exchange account. This should be the easy part now, we look for the option to trade. Let’s say I have $100 CAD in Shakepay. I click the big trade arrows, choose how much CAD I want to trade (say $5 just to ensure I can trade both directions) and then choose Bitcoin or Ethereum on the receiving end. It should be as simple as that, you should now own some cryptocurrency!
A few extra notes before you get all smug that you’re a part of the decentralized cryptocurrency revolution – but you can just relax here if you want until you’re ready to dive in even deeper into the weeds…
This is where my security hat comes in, I want to make sure you can do everything in reverse now. So let’s imagine your $5 in ETH is now worth millions and you want to take it out, how would you do so? Click on the trade button again, this time choosing ETH instead of CAD as the source currency, and now choosing CAD as the output currency. Assuming this worked, now you want to take your fat stacks of CAD out of the exchange and send it back to your bank account. Each exchange is different, but right now Shakepay calls it “Send”, most exchanges call it Withdrawal, but try to find the option to withdrawal your CAD back to your bank account. Send $5 back to your bank just so you can verify that this process works, and also note how long it takes so you’re prepared in the future – and note it could take a lot longer in the future. This is why it’s good to have accounts on several on-ramp exchanges, so that if I want money out and Coinsquare is known to be taking a long time (This happened to me, which is why I use Shakepay as default now), but it’s good to have the option for a few ways to take your money off an exchange and back to your bank account.
But wait, there’s one more thing to learn, and that is that if you leave your cryptocurrency sitting on the exchange, and something happens to that exchange (I lost 6 figures when QuadrigaCX went down while trying to complete a withdrawal), you lose everything you owned there, and that will make you sad. So what you want to do now is create a wallet on your computer/phone, but that’s too much for now, so I’ll just link to Bitcoin Wallets and Ethereum Wallets. The one important thing to note about choosing a wallet is a “hot wallet” which is a wallet connected to the internet, convenient for trading, and a “cold wallet” which is a wallet which is offline and can even be written down on a piece of paper. I recommend for any cryptocurrency you don’t plan on actively trading over the next month be moved to a cold wallet or cold storage until you’re ready to do something with it again.
OK OK one more little last thing I’ll note, is you should sign up for 2fa/mfa on your exchange, here’s how to do it on Shakepay. The advantage of 2fa is that even if someone hacks your password, they still can’t access your account. You can use a popular 2fa authenticator like Google’s or Authy, but I use Airsecure as it allows you to own these one time passwords, and it’s decentralized which is cool – no single source central company involved.
If you have any quick questions, you can always reach out on Twitter. If you want to understand this more in depth reach out, as I run practical lunch and learn sessions where I walk everyone through the process and answer any/all questions you have along the way.