6.3 Setting Up an Account and Buying Crypto with Fiat

In this lesson, we will guide you through the essential steps to begin your cryptocurrency journey, including creating an account, making your first purchase, and securing your digital assets. The information presented reflects current best practices as of September 2025, based on insights from trusted industry sources. Please keep in mind that investing in cryptocurrency carries inherent risks; it is important to conduct thorough research and invest only what you can afford to lose.

1. Step-by-Step Guide: Creating an Account

Starting with a cryptocurrency exchange is the gateway to buying crypto. For beginners, centralized exchanges (CEXs) like Coinbase or Kraken are recommended due to their user-friendly interfaces and support.

Creating an Account

1. Choose a reputable exchange: Sign up on a platform like Coinbase (best for beginners with intuitive apps) or Kraken (strong security features).
2. Visit the exchange's website or download their app.
3. Click "Sign Up" and provide your email, create a strong password (at least 12 characters, mix of letters, numbers, symbols).
4. Verify your email by clicking the confirmation link sent to you.
5. Set up your profile with basic info like name and phone number.

Enabling Two-Factor Authentication (2FA)

2FA adds an extra layer of protection against unauthorized access.

1. After signing up, go to your account settings > Security.
2. Select "Enable 2FA" and choose an authenticator app like Google Authenticator or Authy (avoid SMS for better security).
3. Scan the QR code with the app and enter the generated code to confirm.
4. Back up your 2FA recovery codes in a safe place (not on your phone).

Verifying Your Identity (KYC Process)

Know Your Customer (KYC) is required by law to prevent fraud and money laundering.

1. In account settings, find "Verify Identity" or "KYC."
2. Upload government-issued ID (passport, driver's license) and a selfie for facial verification.
3. Provide proof of address (utility bill or bank statement).
4. Wait for approval—typically 1-3 days, but can be instant on some platforms.

We recommend watching this tutorial to better understand the account setup process:

2. How to Decide Between a CEX and DEX

Centralized Exchanges (CEXs) vs. Decentralized Exchanges (DEXs)

• CEXs (e.g. Coinbase, Kraken): Managed by companies, they hold your funds and offer easy fiat-to-crypto conversions. Pros: Beginner-friendly, customer support, insurance on some platforms. Cons: Less privacy, potential for hacks (though rare with top ones).
• DEXs (e.g. Uniswap, Jupiter): Peer-to-peer platforms on blockchain; you control your keys. Pros: High privacy, no KYC for basic use, full asset control. Cons: Steeper learning curve, higher gas fees, no fiat support directly.

Beginner-Friendly Recommendations for CEXs

Start with Coinbase or Kraken—they top lists for 2025 due to low fees, security, and educational resources. Avoid lesser-known exchanges to minimize risks.

DEX Use Cases for Privacy and Control

Use DEXs once comfortable, for swapping tokens anonymously or in DeFi (decentralized finance). Ideal for privacy-focused users avoiding KYC, but connect via a wallet like MetaMask first.

3. Buying Crypto with Fiat

Fiat-to-Crypto: Onramps Explained

Onramps are like bridges that let you enter the crypto world by converting your everyday money (fiat currencies, such as USD or EUR) into cryptocurrencies. Most centralized exchanges (CEXs), like Coinbase or Kraken, serve as onramps, allowing you to buy crypto directly with a bank account, credit card, or other payment methods.

Methods to Buy Crypto Using Fiat

Common methods include:

• Bank Transfer (ACH/SEPA/Wire): Link your bank account for deposits.
• Credit/Debit Card: Instant buys via Visa/Mastercard.
• PayPal or Other E-Wallets: Supported on platforms like Coinbase for quick transfers.
• P2P (Peer-to-Peer): Buy directly from sellers on exchanges like Binance.

Pros and Cons of Each Method

Choose based on your priorities—speed, cost, or convenience. Bank transfers are ideal for larger purchases (e.g. $500+) because they often have no or low fees (e.g. Coinbase charges 0-1% for ACH) and higher limits, but they take a few days to process. For quick buys, credit/debit cards are faster but come with higher fees, so they're better for smaller amounts (e.g. $50-$200) when you need crypto immediately.

4. How to Buy Bitcoin or Ethereum for the First Time

Use a CEX like Coinbase for simplicity.

Step-by-Step Process Using a Centralized Exchange

1. Log in to your verified account.
2. Go to "Buy/Sell" or "Trade."
3. Select Bitcoin (BTC) or Ethereum (ETH).
4. Choose payment method (e.g. bank transfer for low fees).
5. Enter amount (start small, e.g. $50).
6. Review fees and confirm purchase—instant for cards, delayed for banks.
7. Funds appear in your exchange wallet.

Withdrawal to Your Personal Wallet

Don't leave large amounts on exchanges—transfer out for security. See Module 5: Wallets and Keys — How to Store Your Coins Safely for more details.

5. Fiat-to-Stablecoin Options

Stablecoins such as USDT, USDC, and DAI are cryptocurrencies pegged to the US dollar, offering price stability that makes them ideal for trading without exposure to volatility or as a temporary store of value during market fluctuations. When purchasing stablecoins, many platforms allow you to convert a variety of fiat currencies—whether euros, pounds, yen, or others—into these USD-pegged assets. This flexibility enables users worldwide to access stablecoins regardless of their local currency, facilitating smoother entry and exit points in the cryptocurrency market.

When to Use Stablecoins

• For Trading: Stablecoins are commonly used to hold value between trades, allowing traders to quickly move in and out of volatile assets without converting back to fiat currency. This reduces transaction time and fees.
• As a Store of Value: Compared to highly volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins provide a less risky option to preserve capital during market downturns or periods of uncertainty, acting as a safe harbor within the crypto ecosystem.

Methods of Buying Stablecoins

You can purchase stablecoins directly on centralized exchanges (CEXs) using a process similar to buying Bitcoin or other cryptocurrencies. Typically, you select the stablecoin you want (such as USDT, USDC, or DAI), choose your preferred fiat payment method, and confirm the transaction.

For those seeking greater privacy or decentralization, stablecoins like DAI—issued through decentralized protocols such as MakerDAO—can also be acquired on decentralized exchanges (DEXs) like Uniswap. This option often involves trading other cryptocurrencies rather than using fiat directly.

(Note: See lesson 4.4 for a deep dive into stablecoins).

6. How to Transfer Crypto to Your Wallet

Why It’s Important to Have a Personal Wallet

Cryptocurrency exchanges can be vulnerable to hacks, technical issues, or regulatory restrictions, which may limit your access to funds—as seen in notable cases like the FTX collapse. Using a personal wallet, whether a non-custodial software wallet like MetaMask or a hardware wallet like Ledger, gives you full control over your assets. As the common saying goes, “Not your keys, not your crypto,” meaning that true ownership requires holding your own private keys

How to Transfer from Exchange to Wallet (Step-by-Step)

1. Set up a wallet app (e.g. Coinbase Wallet for beginners).
2. In your exchange, go to "Withdraw" or "Send."
3. Select crypto (e.g. BTC), enter your wallet address (copy-paste carefully).
4. Enter amount, review fees.
5. Confirm with 2FA and send.

(Note: See Module 5: Wallets and Keys — How to Store Your Coins Safely for more details).

Using Exchange Withdrawal Options

Choose network (e.g. Bitcoin for BTC, ERC-20 for ETH). Test with small amounts first.

Verifying Wallet Addresses to Avoid Mistakes

Understanding Gas Fees and Transaction Times

Gas fees are payments made to miners or validators to process transactions on a blockchain—for example, Ethereum gas fees are measured in gwei. As of 2025, average fees typically range from $1 to $5 for Ethereum transactions and around $1.20 for Bitcoin. Transaction confirmation times vary as well: Bitcoin transactions generally take between 10 to 60 minutes, while Ethereum transactions are usually confirmed within 1 to 5 minutes. During periods of network congestion, fees tend to increase, so transacting during off-peak times can help reduce costs.

7. Conclusion

You have now learned the foundational steps to start your cryptocurrency journey: setting up a secure account with two-factor authentication (2FA) and completing KYC verification, selecting a beginner-friendly centralized exchange, purchasing crypto through low-fee methods, and transferring assets to a personal wallet for full control.

Key takeaways include:

• Prioritize security: Use 2FA, create strong passwords, and consider non-custodial wallets to safeguard your assets.
• Understand fees: Choose payment methods like bank transfers to reduce transaction costs.
• Start small: Begin with modest purchases—between $10 and $50—to gain experience safely.
• Stay compliant: Completing KYC procedures helps ensure your trading remains legal and secure.

Continue your education by exploring resources provided by your chosen exchange, monitor cryptocurrency prices through apps such as CoinMarketCap and CoinGecko, and consider diversifying your portfolio with stablecoins. Always conduct thorough research (Do Your Own Research) and seek advice from financial professionals tailored to your personal situation.