This article contains affiliate links – but that doesn’t mean this piece is an ad.
All content is our honest take on the service/product and incorporates our
real thoughts and experience using it.

The cryptocurrency market is making a comeback. Bitcoin is breaking records in many countries, and people are noticing. Traditional investors are even looking at memecoins now while the total value of crypto is getting close to its all-time high.

So are we looking at the start of a new bull market? 

While we don’t know for sure, getting invested in an alternative asset class like Bitcoin will help you diversify your portfolio.

And if you’re new to this, don’t worry. This article will cover buying cryptocurrency, what wallets are, and how to store and manage your digital assets safely. 

Let’s dive in. 

How Does Cryptocurrency Work?

Buying cryptocurrency is the easiest way to start investing in this exciting new asset class. But before we get into how to buy, let’s quickly cover what cryptocurrency is and how it works.

Cryptocurrency is digital money that operates independently of banks or governments. It uses advanced math and computer science to secure and verify transactions on a public ledger called the blockchain. This technology allows for fast, cheap, and secure transactions anywhere in the world.

The most well-known cryptocurrency is Bitcoin, but there are thousands of others, each with unique features and purposes. When you buy cryptocurrency, you’re essentially buying a piece of this technology and becoming part of a growing global community.

To get started, you’ll need to choose a reputable exchange or platform, such as YouHodler, that allows you to buy cryptocurrency with your local currency. 

These platforms make it easy to create an account, verify your identity, and start buying crypto with just a few clicks.

Once you’ve bought your first cryptocurrency, you’ll need a safe place to store it. That’s where wallets come in.

What Are Crypto Wallets?

Now that you’ve bought your first cryptocurrency, you might be wondering where it actually goes. This is where wallets come in. A cryptocurrency wallet is like a digital bank account that allows you to store, send, and receive crypto.

There are two main types of wallets: hot wallets and cold wallets. Hot wallets are connected to the internet, making them easy to access and use for frequent transactions. However, this also makes them more vulnerable to hacking attempts. 

Examples of hot wallets include mobile apps and web-based wallets.

Cold wallets, on the other hand, are offline storage solutions that keep your crypto completely disconnected from the internet. This makes them much more secure but also less convenient for everyday use. 

Examples of cold wallets include hardware devices like Ledger or Trezor. 

When you buy crypto on an exchange like Youhodler, it’s initially stored in a hot wallet provided by the platform. While this is convenient for trading and making quick transactions, it’s generally recommended to transfer your crypto to a personal wallet for long-term storage.

How to Buy Cryptocurrency

The easiest way to buy cryptocurrency is to buy from a user-friendly platform like YouHodler. 

First, you need to create an account.

After creating your account, Inputting Your country of Residence, and Adding Your Identity, you’ll be ready to purchase your crypto.

This is what your dashboard will look like:

Once you’ve set your eye on a specific cryptocurrency, you’ll want to click Deposit which is located in the upper right-hand corner next to Help, and Sign Out. 

Deposit the amount you’d like to invest, then click on the Cryptocurrency you’d like to invest in. 

For our example, we’ll take a look at Bitcoin.

Just click Buy or Sell, depending on the action you’d like to take. 

From there, this screen will pop up, and you can open a position:

Simply type in the Amount you want to invest and click Invest. Your funds will automatically be transferred into your account, which is attached to your wallet that was created by YouHodler when you signed up.

Storing and Using Your Cryptocurrency 

Now that you’ve bought your first cryptocurrency on Youhodler, it’s time to think about storage and how you want to use your digital assets. One option is to send your crypto to a personal wallet for secure long-term storage. 

When transferring crypto from an exchange to your own wallet, always double-check the receiving address to ensure it’s correct. It’s also a good idea to send a small test amount first before transferring larger sums.

Alternatively, you can keep your crypto on Youhodler and take advantage of their various services. Youhodler offers competitive interest rates for staking your crypto, allowing you to earn passive income on your holdings. 

They also provide crypto-backed loans, enabling you to borrow against your crypto without selling it. This can be useful if you need cash but don’t want to miss out on potential price appreciation.

Cryptocurrency FAQs

Here are some common questions and concerns about your first crypto purchase:

What do I do now that I’ve bought cryptocurrency?

Congratulations on making your first crypto purchase! The most important thing is to keep your wallet secure and safeguard your seed phrase. A seed phrase is a series of words that acts as a master key to your wallet, so it’s crucial to store it safely offline and never share it with anyone. 

As for your cryptocurrency, you can choose to hold onto it and wait for potential price appreciation or explore other opportunities in the crypto space, such as staking, lending, or participating in decentralized finance (DeFi) projects. If you’re interested in learning more about DeFi, check out our DeFi module.

What is a seed phrase, and why is it important?

A seed phrase, also known as a recovery phrase or mnemonic phrase, is a sequence of 12-24 words that serves as a backup for your cryptocurrency wallet. It allows you to restore access to your wallet and funds if you lose your device, forget your password or your wallet becomes corrupted. 

When setting up a new wallet, you’ll be given a unique seed phrase that you must write down and store securely offline. Never store your seed phrase digitally or share it with anyone, as whoever has access to it can control your funds. Treat your seed phrase like the keys to a safe containing all your money.

What’s the safest way to store my crypto?

The safest way to store your cryptocurrency is using a hardware wallet, also known as a cold wallet. These are physical devices, similar to USB drives, that store your private keys offline, making them immune to online hacking attempts. Popular hardware wallet options include Ledger and Trezor. When using a hardware wallet, you’ll typically connect it to your computer to make transactions and then disconnect it for secure storage.

What can I do with my crypto?

Cryptocurrency opens up a world of possibilities. Beyond simply holding it as an investment, you can use crypto to make purchases at a growing number of merchants worldwide. You can also explore decentralized finance (DeFi) applications that allow you to lend, borrow, and earn interest on your crypto holdings. Some popular DeFi platforms include Aave, Compound, and Uniswap. Additionally, you can stake certain cryptocurrencies to earn rewards for helping secure their networks or participate in governance decisions for decentralized projects.

Do I need to make a wallet every time I buy more crypto?

No, you don’t need to create a new wallet every time you buy more cryptocurrency. You can continue using the same wallet address to receive additional funds. However, some people choose to use multiple wallets for different purposes, such as having a separate wallet for long-term holding and another for frequent transactions. 

If you’re using a hardware wallet, you can also create multiple accounts within the same device to organize your funds. Ultimately, the number of wallets you use is a personal preference based on your needs and risk tolerance.