Cryptocurrencies have become one of the most popular topics of conversation in recent years – over coffee with friends, at work, on social media. And yet most of the people who write to me start the conversation with a similar sentence: “Žan, I’d like to get started with crypto, but I don’t even know where to begin.” If you recognize yourself in that, you’re in the right place.
In this article, I’ll explain everything you need to know before buying your first cryptocurrency – without unnecessary theory, without complicated jargon, and without pressure. I’ll explain every term as I go, so by the end of the article you’ll understand how cryptocurrencies actually work, how to buy them safely, and how to lay the foundation for real earnings.
If you want an in-depth, step-by-step explanation with more examples, I’ve also prepared a free crypto e-book that you can download and use as a companion to this article.
What Cryptocurrencies Actually Are (Explained Simply)
A cryptocurrency is a digital form of money that doesn’t exist in physical form (you can’t hold it in your hand like a banknote). Instead, it exists solely in digital form on a special technology called blockchain (a chain of data blocks). Think of a blockchain as a big digital book in which all transactions are recorded – who sent how much cryptocurrency to whom, and when. This “book” isn’t stored on a single server but is spread across thousands of computers around the world, which makes it very difficult to forge or delete anything in it.
The best-known cryptocurrency is Bitcoin, which was also the first of its kind. Besides Bitcoin, there are thousands of other cryptocurrencies, among the best known being Ethereum, Solana, BNB, and many others. Each has its own purpose – some are designed primarily as “digital money,” others enable building applications, and still others are used in specific industries (gaming, art, finance).
Why are cryptocurrencies interesting to the average person in the first place? Because they offer:
- Ownership without an intermediary – you hold your money yourself, without a bank controlling your account.
- Access from anywhere – all you need to buy is a phone or computer and an internet connection.
- Potential for value growth – historically, some cryptocurrencies have recorded exceptional growth during certain periods, which has attracted investors looking for an alternative to traditional investments.
- Easy entry with a small amount – you don’t need a thousand dollars; you can start with a smaller amount.
It’s important to understand that cryptocurrencies are an investment that fluctuates in value – prices can rise or fall considerably in a short time. That’s why the knowledge you’ll gain in this article is crucial before you invest your first dollar.
How Cryptocurrencies Actually Work (in Practice, Not in Theory)
I won’t burden you with technical details about cryptography and algorithms – you don’t actually need to understand that to get started. What you do need to understand are three practical concepts:
1. A crypto exchange is an online platform where you buy and sell cryptocurrencies – similar to buying stocks on a traditional stock exchange. You transfer regular money (euros, in the Slovenian context) to the exchange via bank transfer or card, and you swap it for a cryptocurrency at the current rate.
2. A crypto wallet is the place where you store the cryptocurrencies you’ve bought. There are two main types: a “hot wallet,” which is connected to the internet and suitable for more frequent transactions, and a “cold wallet,” which is a physical device not connected to the internet and is the safest form of storage for holding larger sums long term.
3. A private key is a kind of password that proves you’re the owner of certain cryptocurrencies. Whoever has access to your private key has access to your money – so you must never, ever share it with anyone.
Once you understand these three concepts, you’re already in a better position than the vast majority of people who buy cryptocurrencies in a rush, without understanding the basics.
How to Choose the Right Crypto Exchange
This is one of the most important questions beginners ask me. When choosing an exchange, I’d recommend paying attention to the following:
- Security – whether the exchange has a solid track record, two-factor authentication (an additional security code when logging in), and a clear policy on protecting users’ funds.
- Ease of use – as a beginner, you need a clear interface, not a complicated professional trading platform.
- Fees – every exchange charges a fee for buying, selling, and withdrawing funds. These differ quite a bit between exchanges, so it’s worth comparing before you decide.
- Supported cryptocurrencies – not every exchange offers every cryptocurrency, so check whether the exchange supports the ones you’re interested in.
- Option to deposit in euros – for a Slovenian user, it’s convenient to be able to deposit money directly in euros, without additional currency conversion.
In my free crypto e-book, I compare some of the most popular exchanges in detail and show you which ones I use myself and why – this will save you a lot of research time.
Step by Step: How to Buy Your First Cryptocurrency
Now that you know the basic concepts, let’s walk through a practical purchasing process – just as you would do it yourself.
Step 1: Sign up on an exchange. You create an account with an email address and password. I recommend a strong, unique password that you don’t use anywhere else.
Step 2: Identity verification (KYC). KYC stands for “Know Your Customer” – it’s a process in which the exchange verifies your identity using an ID document. This is a standard and mandatory step on all regulated exchanges, so don’t be put off by it.
Step 3: Deposit funds. You deposit money to the exchange via bank transfer, card, or other supported methods. I recommend starting with an amount you feel completely comfortable with – one whose loss you could easily afford, since cryptocurrencies are a volatile investment.
Step 4: Buy cryptocurrency. You choose a cryptocurrency, enter the amount, and confirm the purchase. The exchange shows you the current exchange rate and the fee before you finalize the transaction.
Step 5: Transfer to your own wallet. For smaller amounts and for learning, you can keep your cryptocurrency on the exchange at first, but in the long term I recommend moving it to your own wallet – that gives you full control over your money, which in the crypto world is summed up as “not your keys, not your coins” (if you don’t hold the keys, you technically don’t own the cryptocurrency).
This process may sound complicated when you read it for the first time, but in practice the whole thing takes less than half an hour. In the free e-book, I illustrated the process further with screenshots, so I recommend that you download it for free here if you want a visual aid by your side during your first purchase.
Basic strategies people actually use to make money with cryptocurrencies
Now we come to the part that probably interests you most – how people actually make money with cryptocurrencies. There are several approaches, each with its own level of risk and time commitment.
1. Long-term investing (HODL)
The term “HODL” comes from the crypto community (it originally arose from a typo of the word “hold”) and refers to a strategy in which you buy a cryptocurrency and hold on to it for the long term, regardless of short-term price swings. This approach is the best fit for beginners, since it doesn’t require daily market monitoring and is emotionally less taxing than active trading.
2. DCA strategy (regularly investing smaller amounts)
DCA stands for “Dollar Cost Averaging” – a strategy in which you invest the same fixed amount every month (or every week), regardless of whether the cryptocurrency’s price is high or low at the time. This helps you avoid the risk of investing all your money at a price “peak,” since you spread your investment out over time. It’s one of the most popular strategies among beginners because it reduces emotional decision-making and doesn’t require you to try to “guess” the right moment to buy.
3. Staking (passive income on cryptocurrencies you already own)
Staking is a process in which you “lock up” your cryptocurrencies on a particular network, helping that network operate, and in return you receive a reward in the form of additional cryptocurrency – similar to earning interest on a savings deposit at a bank, except that the returns can be significantly different and the risk is not the same. Not all cryptocurrencies support staking, so it’s important to check which ones do and under what conditions.
4. Short-term trading
Trading means actively buying and selling cryptocurrencies over a shorter period in order to take advantage of price swings. This approach can bring faster profits, but it requires a lot of knowledge, experience, and time, and it also carries significantly higher risk. Personally, I don’t recommend it to beginners as a first step – you need to learn the basics first, and only then think about more active strategies.
I explain each of these strategies in more detail and show them with concrete examples in my free crypto e-book, where you’ll also find my personal approach, the one I use myself.
The most common mistakes beginners make
Over the years I’ve seen the same mistakes repeated again and again. Here are the ones you most need to avoid:
- Investing money you can’t afford to lose. Cryptocurrencies are a volatile investment. Invest only what you can afford to lose without it affecting your everyday life.
- Buying out of panic or euphoria (FOMO). FOMO stands for “Fear Of Missing Out” – an emotional state in which you buy a cryptocurrency only because you see the price rising fast, without thinking it through. Such decisions often lead to losses.
- Neglecting security. Using the same password in multiple places, sharing your private key, clicking on suspicious links – these are all common reasons people lose their funds.
- Putting all your money into a single cryptocurrency. Diversification means spreading your money across several different investments, which reduces the risk of being hit by a drop in a single cryptocurrency.
- Not understanding the basics before investing. That’s exactly why you’re here reading this article – knowledge is your best protection.
How to reduce risk and stay safe
Security in the world of cryptocurrencies is entirely in your hands, so I recommend a few basic rules:
- Use two-factor authentication (an additional code besides your password, which you receive on your phone or through a special app) on all your accounts.
- Never share your private key or “seed phrase” – a seed phrase is a string of words (usually 12 or 24) that works as the master key to your wallet. Anyone who knows it has full access to your money.
- For larger sums, use a cold wallet that isn’t connected to the internet.
- Don’t trust promises of “guaranteed profit.” There are no guaranteed returns in the world of cryptocurrencies – anyone who promises you that is almost certainly trying to profit at your expense.
- Invest gradually and keep learning as you go. The knowledge you gain is worth more in the long run than short-term profit without understanding.
How to Track Price Movements and the Market
To keep track of prices and the overall state of the market, there are websites where you can see the exchange rates of individual cryptocurrencies in real time, along with their market capitalization (the total value of all units of a given cryptocurrency on the market) and other data. I recommend taking a few minutes a week to look over the general state of the market, without checking prices every hour – checking prices too often tends to lead to emotional decision-making, which is exactly what we want to avoid.
How to Set Realistic Expectations
One of the biggest differences between those who succeed with cryptocurrencies in the long run and those who quickly give up or lose money is their attitude toward expectations. Cryptocurrencies are not a way to get rich overnight – they are an investment that requires patience, discipline, and continuous learning.
Before you invest your first euro, ask yourself a few simple questions: How much money can I invest without it affecting my everyday life? What is my goal – am I building a long-term portfolio or gaining my first experience? How much time am I willing to devote to learning before I start actively investing larger amounts?
Realistic expectations also mean understanding that there will be periods when the value of your portfolio drops – this is a normal part of the crypto market, not a sign that you made a mistake. Those who stay calm during such periods and stick to their strategy (for example, the DCA I described above) usually have better long-term experiences than those who panic and sell at every price drop.
A Short Glossary of Crypto Terms for Beginners
To make everything even clearer, I’ve gathered in one place the terms you’ll most often come across as you move around the crypto world:
- Altcoin – any cryptocurrency other than Bitcoin (the name comes from “alternative coin”).
- Market capitalization – the total value of all units of a given cryptocurrency that currently exist, calculated by multiplying the price of one unit by the total number of units in circulation.
- Volatility – the degree of price fluctuation over a given period of time; cryptocurrencies are known for high volatility, meaning the price can rise or fall considerably in a short time.
- Wallet – a digital place where you store your cryptocurrencies and through which you send or receive them.
- Transaction fee (gas fee) – the cost you pay to carry out a transaction on a particular network; the amount varies depending on how busy the network is.
- Bull market – a period when prices in the market are generally rising.
- Bear market – a period when prices in the market are generally falling.
- Whitepaper – an official document in which the authors of a crypto project explain how the project works and what its purpose is.
You can save this glossary and come back to it whenever you run into a term you don’t quite understand.
Frequently Asked Questions About Cryptocurrencies
Do I need to understand blockchain technology to buy cryptocurrencies? No. Just as you don’t need to understand how the internet works to use it, you don’t need technical knowledge of blockchain to buy cryptocurrencies. What you mainly need is an understanding of the basic terms I’ve explained in this article.
How much money can I start with? You can buy cryptocurrencies in very small amounts – you don’t have to buy a whole unit of a cryptocurrency; you can buy just a fraction of it. What matters is that you start with an amount you feel comfortable with.
Which cryptocurrency is best to start with? There’s no single answer, since it depends on your goals and risk tolerance. Most beginners start with more established cryptocurrencies that have a longer track record, and then gradually expand their knowledge and portfolio.
Is it safer to buy cryptocurrencies on an exchange or through an app? What matters most is not whether it’s an exchange or an app, but what level of security and organization the platform offers. Check the security measures, the platform’s reputation, and the experiences of other users.
How do I know when it’s the right time to buy? It’s practically impossible to determine the perfect “right moment” in advance. That’s why many investors use the DCA strategy I described above – by regularly investing smaller amounts over time, you avoid the pressure of trying to find the “perfect” moment.
Do I need special technical knowledge to understand staking and DCA? No. Both strategies I described above are designed so that anyone can use them, even without a technical background. All that matters is that you understand the basic logic of each strategy, which we’ve already covered in this article.
What should I do if I lose access to my wallet? This is exactly why the seed phrase (a string of words that acts as the master key to your wallet) is so important – if you have it safely stored on paper in a secure place, you can restore access to your wallet even on a new device. If you don’t have your seed phrase stored, access to your funds generally can’t be recovered, which is why secure storage is crucial from day one.
Conclusion: Take Your First Step Thoughtfully
Cryptocurrencies offer an opportunity that didn’t exist decades ago – anyone, no matter where they live or how much prior knowledge they have, can start building their own digital portfolio. But as with any investment, knowledge is what separates thoughtful decisions from impulsive mistakes.
In this article, we’ve gone through all the basics together – what cryptocurrencies actually are, how they work, how to choose an exchange, how to make your first purchase, what strategies exist for long-term earnings, and how to protect yourself from the most common beginner mistakes.
If you want to build on this knowledge and see concrete, step-by-step examples from practice (including which platforms and strategies I use myself), download my crypto e-book here for free – in it, I give you everything I’ve learned in a simple, practical guide that will save you a lot of time and potential mistakes at the start of your crypto journey.
See you in the next article!
