Buying and selling has been a concept for over 150,000 years now. It dates back to the Stone Age. Today, it is the core of every profitable business—one of those non-negotiables. To make profits, you must sell, and people need to buy. It is no different in the cryptocurrency world. However, with modern tech, there is usually a lack of technical know-how. For example, when you buy a Tesla for the first time you need a guide to understand the operations of the car. You need a manual for every new device you aren’t quite familiar with.
There are tons of cryptocurrency materials out there and while most of them jump into serious concepts like the Web 3 and all that stuff, only a few attempt to address the newbies in the space. Most newbies have questions and at the top of the list is “How can we buy cryptocurrency?” Well, cryptocurrency has reached the point where there are so many answers to that question. You can buy cryptocurrency through spot trading, P2P, Debit/Credit card, and bank transfers on Centralised, Decentralised and P2P Exchanges. However, we will focus solely on P2P in this article.
Before we delve into the step-by-step process, there are 3 key concepts you need to learn about namely:
- Cryptocurrency Exchanges
- P2P Exchange
- Cryptocurrency Wallet
Let’s take a quick look at each of these concepts:
Cryptocurrency Exchange
To buy cryptocurrency, an exchange is your best bet— your only bet really. A cryptocurrency exchange provides you with a platform to trade crypto [e.g. Cardano (ADA)] for other assets, especially fiat money [e.g. United States Dollar (USD)]. Most exchanges allow payment with credit cards, wire transfers, etc. Some major cryptocurrency exchanges are Binance, Coinbase, Kucoin and Bybit.
Cryptocurrency Wallet
As the name implies, a cryptocurrency wallet is a wallet for your cryptocurrency. It provides a medium for storing your cryptocurrency. Under the hood, a cryptocurrency wallet operates much deeper but for the sake of simplicity, this is all you get.
P2P Exchange
The beauty of P2P is it lets you interact with another user directly. The prior sentence perfectly sums up the meaning of a P2P exchange. It makes it possible to trade your crypto with another user directly. However, there are a few risks involved. Newbies are often exposed to cyber crimes on P2P exchanges like fraud and scams. Cryptocurrency exchanges like Binance use an escrow service to prevent scams on the platform. It is a system that ensures both parties leave the deal with happy faces. We will explore the Binance P2P escrow service in the next section.
How to buy cryptocurrency
We will work with the Binance exchange as our P2P exchange and Cardano (ADA) as the cryptocurrency we seek.
Go to Google Play Store/Apple Store and type “Binance” on the search bar. Look out for the logo below. Download and Install!
Next, you open the application, fill out the necessary information as prompted, complete the verification process and you are good to go.
Click on the trade icon at the bottom of your screen.
Click on the P2P option at the top right corner of your screen.
You will be instantly greeted with a list of advertisements each showing a crypto seller, their rate, and balance for a particular cryptocurrency.
For beginners, this is a lot but Binance provides you with a better P2P option called Express.
To access this option, click P2P at the top of your screen.
You will be shown a list of options from which you are to choose Express.
On the express page, you have the fiat money option on the top right where you can select what currency you want to trade with.
For this example, we will select USD.
On the left is the crypto option where you can select the cryptocurrency you want to buy.
In our case, we will scroll through and select the ADA option which is the ticker symbol for Cardano.
Finally, enter the amount of USD you want to trade for ADA in the input box.
Click on select payment method and follow through until Binance provides you with a seller.
You will get the seller’s rate and also their bank details through which you are to pay for the cryptocurrency you intend to buy.
Afterwards, Binance locks the amount of crypto you intend to buy from the seller in escrow until you transfer the equivalent USD to the Seller’s bank account.
When the seller confirms your transfer, Binance releases the cryptocurrency from escrow to your Binance wallet.
Congratulations, you’ve bought your first cryptocurrency.
P2P Precautions: How to Avoid Becoming a Victim
Since P2P trading can carry risks, especially in such a volatile market, here are some key considerations:
1. Verify the Seller’s Reputation
- Check Feedback and Ratings: Before initiating a trade, check the seller’s ratings, feedback, and trade completion rates on Binance P2P. Reputable sellers will have high ratings and positive feedback.
- Number of Completed Trades: Prioritize sellers with a high number of completed trades. This indicates experience and reliability.
- Verified Sellers: Look for sellers with a “verified” badge, which shows they have completed Binance’s KYC (Know Your Customer) process.
2. Use Escrow for Protection
- Binance P2P uses an escrow service to hold funds temporarily while the trade is being completed. Ensure you only release funds once the seller has confirmed they have sent the cryptocurrency to your account.
3. Understand the Trade Terms
- Carefully Read the Trade Terms: Sellers may have specific terms for how they want payments to be made. Make sure you understand and can meet their requirements before committing to a trade.
- Ask Questions if Unclear: Don’t hesitate to ask the seller for clarification if the terms are confusing or unclear.
4. Enable 2FA and Strong Security
- Enable Two-Factor Authentication (2FA): This adds an extra layer of protection when accessing your account and conducting trades.
- Use a Strong Password: Make sure your Binance account has a strong, unique password that you do not use on other platforms.
