I've had a few people in real life ask me about how to get started in crypto recently, so I thought I'd write up a quick guide.
The general advice for someone brand new to crypto is to buy some Bitcoin and Ethereum and go from there. After that you can go as far down the rabbit hole as you like, but getting exposure to the space's two biggest assets is a great place to start.
To do this you first need to transfer the value of your fiat USD into the crypto ecosystem. This is accomplished by first depositing it onto an exchange and then trading it for your crypto of choice. In crypto, you'll often hear of centralized exchanges as on/off-ramps. This is because they are the portals between the old monetary system and the new. In other words, they're the way you get money into the system.
If you're a resident of the US you only have so many options for where you can deposit and trade your USD. I'm going to give a brief overview of the main ones and recommend which you should go with.
At the risk of over-complicating things, I'm going to recommend different exchanges for different types of users. This is because which exchange will be best for you depends on what you plan to do there. For instance, do you just plan on buying and holding your assets, or would you like to trade them actively? Maybe you'd like to buy ETH and stake it to earn interest? I have extensive experience with all of the platforms below, so I know firsthand which platforms are good for which use cases, and which are not.
Note: If your aim is strictly to buy and hold Bitcoin in as quick and painless a manner as possible, skip to Cash App section at the bottom of the page.
Coinbase and Coinbase Pro
If you pay attention to the US financial news, you've probably heard of Coinbase. The largest crypto exchange in the US by trading volume recently went public. Not only do they have some of the highest traffic, liquidity, and trading volume in the US, but by these metrics rank somewhere in the top three of exchanges globally.
As for on-boarding new users to crypto, Coinbase does a decent job. They have a well-designed user interface and mobile app which most will find simple and easy to use.
Coinbase has ingeniously split their two main products to target two different customer profiles: casual investors and more sophisticated traders. The regular Coinbase platform and app is geared more toward casual retail investors. The more sophisticated trader will likely prefer the more advanced Coinbase Pro, which offers more detailed price charts, order books, and the ability to place more advanced order types. Most new users will likely begin on Coinbase then migrate to CB Pro as their trading needs outgrow the capabilities of the former.
Security at Coinbase is also decent, but their customer service reputation is notoriously bad. Ask around and you'll hear many stories of waiting many days and even weeks before getting a response to a support ticket.
Coinbase also tends to implode during periods of high volatility in the market. If you're a trader trying enter or exit a position while the market is tanking, there's a good chance you won't be able to log into your account.
Sadly, Coinbase is not the only exchange with this problem. For the average investor this isn't an issue but if you're an active trader looking to take advantage of periods of high volatility I'd keep reading for a better option.
CB also gets poor marks on fees, which are relatively high. While both the downtime and high fees of Coinbase leave much to be desired, if you compare them to their competitors like the next pick on the list and you won't do much better. This, among other reasons, is why DEXes will be taking over (but that's the topic of a different article).
Overall, Coinbase provides a good catchall platform that services the needs of the majority of retail traders and investors. It isn't the greatest exchange by any single metric, but it does manage to do the majority of what its customers need it to relatively well.
Who It's For
Casual crypto investors who may eventually become slightly more sophisticated traders.
• Intuitive user interface
• High volume and deep liquidity
• High fees
• Poor customer service
• Frequent downtime during high volatility
The second longest standing US crypto exchange was founded a year before Coinbase, in 2011. Despite having a slightly longer track record, Kraken has not experienced quite the same level of growth as Coinbase. This is likely at least partly due to its less intuitive UI.
Kraken used to be distinguished as the only US-based crypto exchange to offer margin trading to its users. That changed this summer in response to guidance from US financial regulators. Kraken still offers margin trading to some of its customers, but in order to qualify you must self-certify as an "Eligible Contract Participant" which is defined as, among other things, having at least US$10 million invested on a discretionary basis. After self-certifying, Kraken may or may not request that you submit supporting documentation to prove your status as an ECP. Needless to say, the new ECP requirement will significantly reduce the amount of users able to trade margin on the platform. It also begs the question why open an account with them at all?
One reason could be their excellent security rating. Kraken has the most secure platform of any US-based exchange, with air-gapped cold storage, API key permission control, and mandatory two-factor authentication for sign in.
Besides their top tier security, Kraken also offers the ability to stake and earn interest on certain digital assets, like ETH. This is enticing for investors who would like to earn a yield on their ETH, but don't have the minimum required amount of 32 to do so themselves. There are a growing number of decentralized protocols that also offer staking as a service, but some users may feel more comfortable depositing their ETH with a centralized service like Kraken.
Like Coinbase, Kraken tends to go down during periods of high market volatility. They have a slightly different fee structure than Coinbase, but as a user you really don't notice much of a difference--both are too high.
Who It's For
Casual investors who prioritize security over UI, as well as users who would like to stake their digital assets with a centralized entity.
• High level of security
• Staking options
• Poor user interface
• Frequent downtime during high volatility
The third exchange on this list is the young up and comer. FTX US is the American division of a global brand powerhouse headed by luminary CEO and crypto iconoclast Sam Bankman-Fried.
FTX's notorious tagline "built by traders, for traders" rings true. It offers advanced order types like take profit and take profit limit not offered by the other exchanges mentioned. It was also the only exchange that remained in operation during the recent flash crash on September 7, 2021.
FTX's main drawback is its relatively small user base, which results in lower volume and liquidity. This may not last much longer as the company continues to form celebrity sports sponsorships with the likes of Steph Curry and Tom Brady in order to attract new users.
Their recent acquisition of popular portfolio management app Blockfolio is yet another strategy to expand their retail trader user base. FTX US may be the smallest exchange on the list, but it looks poised for continued growth and increased market share.
Who It's For
Tech-savvy users who are interested in active trading.
• Advanced trading order types
• Best up-time of any US exchange
• Low liquidity
• High slippage
Quick And Dirty Mobile Option
If all you're interested in is buying and holding Bitcoin, Cash App is the simplest and most straightforward way to do so. You can even get a physical Cash App credit card (complete with custom emojis) that rewards you for purchases with a small amount of BTC.
• Extremely simple and easy to use
• Limited to only BTC
Who It's For
Those who want the simplest and easiest way to buy Bitcoin.
Hopefully this has shed some light on how and where to get started buying your first crypto. None of them are perfect, but getting started somewhere is necessary to get exposure to crypto. Just make a choice based on the info I've outlined above and you'll be fine. There's nothing that says you can't open accounts with multiple companies/exchanges in the future. In fact, for the sake of diversification, I recommend you do so.
One other thing: all of the exchanges mentioned are going to require you to undergo a verification process to trade with them. This process can take anywhere from a one to several days (and sometimes even weeks), so it's best to get started now if you want to buy crypto soon.