It’s totally fine if you choose not because the current system isn’t particularly fair

Exchanges

Alright, so if you’ve gotten this far, I’m guessing you’ve decided to take the plunge or humor me. I salute you.

One of the first things to know about acquiring crypto is how to get it. The most likely place where you will do this is at exchanges. Similar to a stock exchange, an exchange for cryptocurrency is where sinful people can buy and sell their bitcoin for normal money or other cryptocurrencies.

So you’re saying I’ll need to take part in commodity exchange to buy bitcoin?

Yes, just like when you have to when you go to the grocery store to buy food to stay alive. It’s called “living in a society.” It’s a small price to pay, but don’t worry, Karl will still let you in to Marxist Valhalla in the afterlife.

Only a few years ago, cryptocurrency exchanges were the wild west and essentially not regulated at all. Nowadays regulatory authorities have cracked down on cryptocurrency exchanges to follow laws meant to protect investors. Basically, this means that the manipulation of prices have become less overt but exchanges want the recognition of regulatory authorities because it legitimizes them and gives trust to investors. There are two main types of exchanges.

Centralized exchanges are owned by a single entity, usually a company that provides the service of a market in which people with accounts can submit requests to buy or sell. Think the New York Stock Exchange or Nasdaq. To sign up for an account and buy with money from your bank account you will likely have to go through KYC or Know-Your-Customer procedures in which you give them information about yourself, like your full name, address, a picture of your passport, etc. They’re similar requirements to opening a bank account in a lot of countries. It will then take some amount of time to approve your account so you can load it with money from your bank account and begin buying. You can choose either to buy a cryptocurrency at market-value (the price currently on the market) or do more complicated things like only buying if a certain price is reached. When you make the purchase, you will likely be charged a small fee for the trade that goes to the exchange. Some of the well-known exchanges include Coinbase, Binance, Bitfinex, and Kraken. Which exchange is best for you will largely depend on the country you live in, currency you hold, and how you want to purchase.

Decentralized exchanges run completely on smart contracts. This means that the code used to make this exchange work is publically available for anyone to see and technically no single person should be able to own the exchange. This also means that you likely can’t purchase crypto from these exchanges without already having some amount of cryptocurrencies yourself. It also means that they don’t need to follow KYC regulations and if you mess up or are personally hacked, you can’t call customer service to help. These exchanges are more difficult to use for beginners so I don’t recommend them if you’re just starting out.