What is cryptocurrency and why is it interesting?

Cryptocurrency, also called crypto, is digital money that is not managed by a bank or government. The best-known cryptocurrency is Bitcoin, but thousands of different cryptocurrencies are available. More and more people are becoming interested in crypto as an investment or as an alternative way to pay.

In this article we explain step by step how you, as a beginner, can buy crypto safely. We cover the most important terms and reliable platforms, and give tips to avoid common mistakes.

Key terms to know

Before you start buying crypto, it helps to know a few basic terms. This helps you better understand how everything works.

Blockchain

The blockchain is the technology behind cryptocurrency. It is a kind of digital ledger in which all transactions are recorded. This data is spread across thousands of computers worldwide, which makes the system very secure.

Wallet

A crypto wallet is a digital wallet in which you store your cryptocurrency. There are different types of wallets: online wallets, mobile apps, desktop programs and hardware wallets. For beginners, a wallet at a reliable exchange is often the easiest option.

Exchange (trading platform)

An exchange is a platform where you can buy, sell and trade cryptocurrency. Well-known exchanges active in the Netherlands include Bitvavo, Coinbase and Kraken. These platforms are user-friendly and offer Dutch-language support.

How can you buy crypto? Step by step

Buying cryptocurrency is easier than many people think. Below we explain the process step by step.

Step 1: Choose a reliable platform

The first step is choosing a reliable exchange. Pay attention to the following points:

  • Is the platform registered with De Nederlandsche Bank (DNB, the Dutch central bank)?
  • Does the platform have good reviews and a long track record?
  • Does it offer Dutch-language support and customer service?
  • How high are the transaction fees?

For Dutch beginners, Bitvavo and Coinbase are popular choices because of their user-friendliness and reliability.

Step 2: Create an account

Go to the website of the platform you chose and create an account. For this you need:

  • A valid email address
  • A strong password
  • Your personal details (name, address, date of birth)
  • A valid ID document (passport or ID card)

Verifying your identity is required by law and usually takes anywhere from a few minutes to one business day.

Step 3: Turn on two-factor authentication

Before you deposit money, it is very important to turn on two-factor authentication (2FA). This adds an extra layer of security to your account. Every time you log in, you then receive a code on your phone that you have to enter in addition to your password.

Step 4: Deposit money into your account

Now you can deposit money to buy crypto. Most Dutch platforms accept:

  • iDEAL (instant and at no extra cost)
  • Bank transfer (SEPA)
  • Credit card (often higher fees)

For most people in the Netherlands, iDEAL is the most convenient option because the money is available immediately.

Step 5: Buy your first cryptocurrency

With money in your account, you can now buy crypto. Look up the cryptocurrency you want to buy (for example Bitcoin or Ethereum), enter the amount you want to spend and confirm the purchase. The crypto is added to your account immediately.

Which cryptocurrency is best to buy?

As a beginner, it is wise to start with well-known and established cryptocurrencies. Here are some popular options:

Bitcoin (BTC)

Bitcoin is the first and best-known cryptocurrency. It is often seen as digital gold and has the highest market value. Bitcoin has existed since 2009 and is considered relatively stable within the crypto market by many investors.

Ethereum (ETH)

Ethereum is the second-largest cryptocurrency. The platform makes it possible to build smart contracts and applications. Ethereum is widely used for various purposes, including NFTs and decentralized financial services.

Other well-known cryptocurrencies

Besides Bitcoin and Ethereum there are many other cryptocurrencies, such as Litecoin, Ripple (XRP) and Cardano. For beginners, we recommend first gaining experience with the larger, more established coins before you consider smaller altcoins.

Tips for buying crypto safely

Buying crypto comes with risks. With these tips you can avoid many common problems.

Only invest what you can afford to lose

Cryptocurrency is a risky investment. Its value can fluctuate strongly, both up and down. So only invest money you can afford to lose without it affecting your financial situation.

Do your own research

Don't blindly trust tips from others or social media. Read up on the cryptocurrency you want to buy and understand what you are investing in. Be extra careful with so-called get-rich-quick promises.

Keep your details safe

Write down your passwords and recovery codes in a safe place. If you lose them, you can lose access to your crypto. Never share these details with anyone.

Watch out for scams

Unfortunately, many scammers are active in the crypto world. Be alert to:

  • Messages that promise high returns
  • People who ask for your login details
  • Fake websites that look like real exchanges
  • Unsolicited phone calls about crypto investments

Taxes on cryptocurrency

In the Netherlands you have to declare cryptocurrency on your tax return. Crypto falls under Box 3, which means you pay wealth tax on the value of your crypto on January 1. So keep good records of all your purchases and sales.

Frequently asked questions

How much money do I need to start buying crypto?

You can start with a small amount. On most platforms you can buy crypto from as little as 10 euros. It is wise to start with a small amount while you learn how everything works. That way you can gain experience without risking much.

Is buying crypto safe?

Buying crypto at a registered Dutch exchange is relatively safe. The platforms are required to comply with strict rules. The risk lies mainly in the price swings of crypto itself and possible scams. Always use a reliable platform and secure your account well with two-factor authentication.

Can I sell my crypto for regular money again?

Yes, you can sell your cryptocurrency at any time and have the money transferred to your bank account. This is just as easy as buying. You sell your crypto on the exchange and request a withdrawal to your bank account. This usually takes one to two business days.

What happens if the exchange goes bankrupt?

This is a real risk. Unlike regular bank accounts, crypto is not covered by a guarantee scheme. So always choose a large, established exchange with a good reputation. For larger amounts, you can consider buying your own hardware wallet so that you manage your crypto yourself.

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