Exchange (Centralized or Decentralized)

A digital exchange is a place where you go to purchase cryptocurrency. Depending on the value of what you would like to purchase, you should need to register yourself, using government ID (this depends on the regulations in your country) and answering a set of questions to validate who you are. Picking the right exchange is very important. An exchange that requires no information from you to proceed might sound good, but it might also be a low-budget operation that is susceptible to fraud, malicious intrusions or other issues where you might end up losing your cryptocurrency and any investment that you may have on the website.

Before you sign up with an exchange, you will need to do some research for your particular area and see what has a good reputation, proper security measures in place and also the ability to buy/sell the cryptocurrency that you are most interested in. If you want to buy Bitcoin, just about any exchange will service this. If you wanted to buy another coin like Dogecoin for example, not all exchanges offer this ability. There are usually ways to figure this out by purchasing a currency that is available and then trading for another currency (purchase Bitcoin, then trade that for dogecoin either on the same website, or transfer to another website) but this can be subject to exchange fees which you will want to research in the first place.

If this sounds daunting or complicated, it’s best to think of it just like exchanging for another currency when travelling. I personally live in Canada and when I vacation in Florida, Mexico or Cuba, I always change my Canadian dollars to US Dollars. I either go into the bank and do this, or visit an exchange booth in the mall or airport. Then I get my exchange done and enjoy my vacation. Sometimes on vacation, I’ll end up with local currency which I exchange while on vacation to USD and then when I return home I can either exchange back to CAD, or leave in USD for the next vacation. That’s not too dissimilar to cryptocurrency exchanges. I can leave in one currency or exchange to another depending on what my goals are.

At this point, you’re best to establish what your goals are before you start purchasing and exchanging back and forth. This is when transaction fees or exchange fees can start to add up.