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Crypto Quick-Start: How to Create a Coinbase Account and Make Your First Purchase

The profit potential of crypto is huge.

In 2020 we saw triple-digit gains across the biggest and most established cryptocurrencies. And the action has been even more explosive amongst the smaller altcoins.

We expect more of the same in 2021. So if you’ve been sitting on the sidelines, it’s critical that you get started now.

This short guide will quickly walk you through those key introductory steps.

By the time we’re done, I think you’ll see that buying crypto is as easy as buying stocks... if not easier.

Let’s get into it.

Sounds Familiar

It all starts with creating an account at a crypto exchange. There are many options you can choose from, but for simplicity’s sake we’ll focus on Coinbase. It’s the E-Trade of the crypto world: easy to use with plenty of educational tools and support built in. In other words, it’s great for beginners.

This much is made clear when you arrive at the Coinbase homepage:

Creating an account is free. Simply click “Get started” in the upper-right corner or enter your email in the box under the “Get $5 in free Bitcoin” banner.

(You can also use this referral link to sign up. It will help you - and one of our favorite charities, the Roberto Clemente Health Clinic in Nicaragua - earn $10 worth of free Bitcoin.)

You’ll be asked to verify your email address and add a mobile number for two-step verification – i.e., the same security requirements you can expect these days when creating a new email account.

Next you’ll enter personal info like your name, date of birth, address, etc. You’ll also be asked questions about your income and employment status, just as you would when signing up for any brokerage account.

And lastly, you’ll just need to fund your account by connecting to your preferred financial institution.

Again... it’s virtually identical to the process you’d go through to sign up for any brokerage.

Picking Up a Highflier

Now that we’ve got our account set up, it’s time to make our first purchase.

How about we pick up $100 worth of Ethereum (ETH)? It’s been one of the highest-flying cryptocurrencies recently.

We could search for Ethereum in Coinbase by typing ETH into the search bar. Or we could take a look at all of the cryptos available to me by clicking “Prices” on the main menu.

That would take us to this screen:

As you can see, Ethereum is listed right behind Bitcoin in terms of market cap. To initiate our purchase, we simply click the “Trade” button, and the following window pops up:

From here we enter our desired purchase amount and click the “Preview Buy” button.

The next screen tells us exactly how much Ethereum our $100 will buy, minus a small exchange fee. It looks like this:

If everything looks good on our end, we hit the “Buy now” button, and, within minutes, we’re the proud owner of 0.16199128 Ethereum.

It’s just that easy.

But we’re not quite done...

You may be asking: “What should I do with my crypto after I buy it?”

Let’s talk crypto wallets.

A Billfold for Bitcoin

Coinbase allows you to store crypto right in your account – or “on the exchange.” You can do this with other exchanges as well, but most crypto traders don’t for fear of getting hacked.

(It probably goes without saying that, unlike the dollars in your bank account, Bitcoin and other digital currencies are just like gold or artwork and are not FDIC insured. So if a hacker rips you off... well, that’s between you and the police.)

You can always lower your risk by doing things like changing your password once a month... using two-factor authentication... downloading a password manager... etc.

But most crypto investors would rather take their coins off the exchange entirely and transfer them to a wallet.

A crypto wallet is exactly what it sounds like: A safe place for you to store your crypto until you’re ready to use it. It’s an added layer of complexity, sure. But it creates an added layer of protection for your investment.

There are a few types of wallets you can choose from...

• Paper wallet:There are numerous sites that will generate a random QR code or a lengthy private key specific to your crypto. You can print this and store it with your other important documents. Here’s an example of what that might look like:

• Mobile wallet:A smartphone app that secures your crypto and enables you to access it on the go. Coinbase offers its own secure wallet app – helpfully labeled “Wallet.” Jaxx Liberty is another free option.
• “Cold” wallet:Taking your crypto completely offline and putting it on a mini hard drive or USB stick.

Each comes with its own pluses and minuses.

A mobile wallet, for example, is probably the most convenient option for crypto traders. It grants you the ability to buy and sell quickly. Some mobile wallets will even allow you to use your crypto as a currency to pay for goods and services on the go. However... it is less secure than cold storage in the same way that the cash in your billfold is less secure than the cash in your home safe.

A paper wallet comes with caveats as well. The most glaring concern is that you’re required to upload your crypto details to a third-party website. It’s recommended that you take your computer offline while your random key is being generated, among other security measures. There’s a solid rundown of the procedure here from bitcoinpaperwallet.

The bottom line is that crypto wallets are not one-size-fits-all. Before you create one, you should consider all of the details above.