With digital assets becoming more mainstream, one may want to invest directly in multiple cryptocurrencies. There are many ways to do so, but by far, the most popular gateway into crypto has been by opening an account in a centralized crypto exchange. 

Before diving into the crypto world, it's crucial to conduct thorough research and choose a reliable trading platform. There are a handful of exchanges available for U.S. residents that operate domestically and are able to take in U.S. dollars directly from customers and allow them to trade them for cryptocurrencies.  

There are several cryptocurrency exchanges of note: Crypto.com, Kraken, LMAX, and Gemini are fairly well-known and do brisk volume every day. However, the most popular platform is Coinbase, a cryptocurrency exchange founded in 2012. Coinbase offers over 250 cryptocurrencies to U.S. customers and is available in over 100 countries. As of May 2024, Coinbase accounted for roughly 40% of volume for all U.S. dollar-supported exchanges, according to data from The Block.  

While Coinbase's fees may be slightly higher than those of many of its U.S. competitors, Coinbase's user-friendly interface and fairly simple-to-understand instructions do for cryptocurrencies what AOL did for the internet in the 1990s—they provide a type of "walled garden" for those just starting out in crypto. 

Step-by-Step Guide to Creating a Coinbase Account

If you’re ready to join the crypto community, follow these steps to create and open a Coinbase account.

1. Choosing the Right Coinbase Account Level

To start, you will be asked which account level is the best fit for you. Account levels can unlock additional features within your Coinbase account, including sending and receiving cryptocurrency. Purchase or deposit limits are determined by many factors, including verification completed on your account, your purchase history, your payment type, and more.

2. Identity Verification or Know-Your-Customer (KYC)

Next, enter your basic information, such as your name and email address, to create a free account. After this, you will be asked to verify your email address and send a code to your phone number.

You will then select the country of which you are a citizen, as well as more personal information like your date of birth, address, and the last four digits of your social security number.

3. How Will You Use Coinbase?

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Once verified, Coinbase will ask three key questions:

• What will you use it for (trading, investing, trading on other exchanges, online purchases, payments to friends, online payments)?
• Source of funds (occupation, investments, savings, inheritance, credit/loan, employment status)?
• What’s the total value (cash and crypto) you expect to transfer in the next 12 months?

4. Connecting Your Payment Method

To transfer payments, Coinbase uses Plaid's services to connect accounts. Plaid will text a verification code and then connect to your financial institution. Once connected, it will ask for the routing number and the account number.

5. Buying Your First Cryptocurrency

The final step is to enable the sending and receiving of crypto. This requires your driver's license, passport, or government-issued ID. After your financial institution has been verified and connected, you can buy your first crypto. You will be able to trade your cryptocurrency immediately on Coinbase.

6. Further Verification for Sending and Receiving Crypto

You can also send $1.99 in the token of your choice off of Coinbase immediately, and the rest starting within a week when Coinbase expects to receive payment from your bank and complete checks to ensure the safety and security of your account.

Final Thoughts

Investing in cryptocurrency can be an exciting venture, especially with the right platform like Coinbase. By following the outlined steps to create and verify your account, you can start trading and investing in various digital assets confidently. As always, ensure you conduct thorough research and stay informed about the latest trends and security measures in the crypto world.