After launching the "Zero-Cost Airdrop" series, some users have requested a "Beginner's Guide." Today is the first installment, and if there are no "Zero-Cost Airdrop" articles on Mondays, you can expect a "Beginner's Guide." This series is designed to help newcomers effortlessly enter the world of cryptocurrencies. Today, we'll explore how to buy Bitcoin (BTC) through a centralized exchange (CEX).
For many newbies, one of the biggest worries is not receiving the coins after payment. Rest assured, centralized exchanges require sellers to post a security deposit and have strict dispute resolution mechanisms.
There are two main channels for purchasing BTC: CEX and DEX. CEX stands for Centralized Exchange, and DEX stands for Decentralized Exchange.
Assuming you are a complete beginner, your crypto journey will start with a CEX.
1. What is a Centralized Exchange (CEX)?
A centralized exchange is managed by a central entity, much like a large supermarket. They provide a trading platform where users can buy cryptocurrencies with fiat currencies (like USD or EUR) or exchange cryptocurrencies for fiat. CEXs typically have the following features:
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Low Slippage: Due to high market liquidity, trades on CEXs usually don’t experience significant price fluctuations. Large orders can be executed with stable prices.
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Low Fees: Compared to other trading methods, CEXs generally offer lower trading fees. They reduce costs through optimized trading systems and high trading volumes, providing users with a more economical trading experience.
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Good Liquidity: CEXs have a large number of buyers and sellers, ensuring smooth transactions whether you are buying or selling cryptocurrencies.
Despite these advantages, CEXs have some notable drawbacks:
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Privacy Risks: CEXs usually require users to complete Know Your Customer (KYC) verification, which might not be ideal for those who value privacy. Submitting personal information also increases the risk of data breaches.
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Asset Risks: Users’ cryptocurrencies are stored in the CEX's accounts, meaning if the exchange is hacked or goes bankrupt, users' assets may be at risk. Historical incidents like FTX and Mt. Gox have resulted in significant user losses.
Therefore, CEXs are suitable for trading but not for long-term cryptocurrency storage. Users typically transfer their cryptocurrencies to personal wallets after trading to reduce risks and better control their assets' security.
2. How to Choose a CEX?
Among the many CEX platforms, I’ve used the following, which all offer spot and perpetual contract trading. The main difference lies in the number of available cryptocurrencies:
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Binance: Offers trading for over 500 cryptocurrencies.
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OKX: Offers trading for over 670 cryptocurrencies.
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Gate: Offers trading for over 1300 cryptocurrencies. If you must hold a small altcoin short-term, you can hedge price risks by selling perpetual contracts here.
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Bybit: Not recommended due to various issues. Refer to this article for details.
Today we’ll choose Binance, not for any particular reason. As the world’s largest exchange, it still cannot guarantee the safety of your funds. Remember, in the world of cryptocurrencies, your funds are only safe if you control the private keys. Even CZ (Changpeng Zhao) has acknowledged that CEXs will eventually become obsolete.
However, for now, CEXs are your gateway into the cryptocurrency world.
3. Guide to Buying BTC
The entire process consists of four steps:
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Register an account.
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Complete KYC verification.
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Buy USDT with fiat currency.
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Buy BTC with USDT.
Let’s go through each step.
3.1 Register a Binance Account
Click this link to register a Binance account and get a 20% cashback on trading fees. This cashback was originally a promoter's benefit, but I’m sharing it with you. It won’t amount to much, but it’s better than nothing.
After clicking the link, you’ll see the following page.
I recommend choosing "Continue with Google," which requires a Google email account. You should have one.
In the popup, select the email address for Binance registration.
In the next popup, confirm your selection, and you’ll see the following page.
Click "Next" to proceed to the following page, confirming that your account has been created and you can enjoy a 20% cashback. If the referral code field is blank, copy and paste this: XN6AV7YA.
Click "Next" to proceed to the following page.
3.2 KYC Verification
Click the "Verify" button to proceed to the following page.
Fill in your personal information accurately.
Click "Continue" to proceed to the following page.
Select "ID Card" and click "Continue" to proceed to the following page.
Click "Continue" to proceed to the following page.
Choose "Upload Photo" and click "Continue" to proceed to the following page.
Upload the front and back of your ID card, then click "Continue" to proceed to the following page.
Select "Mobile" for facial verification, click "Continue" to proceed to the following page.
Now, download the Binance App to scan the QR code and complete facial verification.
Click here to download the Binance app. Choose the appropriate app for your device.
Open the Binance app and click the "Scan" icon as indicated below.
On your phone, go to the "Facial Verification" page as shown below.
Click "I Understand" to confirm and follow the instructions for facial verification.
After completing facial verification on your phone, return to the web page where you scanned the QR code. Click "I have completed verification on my phone."
In about 5 minutes, your identity verification will be complete.
3.3 Buy USDT with Fiat Currency
Open the Binance app, select the "Funds" menu on the far right to proceed to the following page.
Follow the arrows in the image to click "Buy," then "Quick Buy" to proceed to the following page.
Click "Confirm" to proceed to the following page.
Click "Select Fiat Type" and choose "CNY" as shown below.
Click "Buy" to proceed to the following page, then enter the fiat amount, e.g., 550 CNY, equivalent to 75.14 USDT.
Click "Confirm Order" to proceed to the following page. Click "Chat" to learn how to pay the seller.
The seller may ask you to add them on WeChat and provide new instructions to pay via Alipay, with a note of your name.
After scanning the Alipay code, enter the same amount (550 CNY) and click "Pay."
Confirm the payment on the following page.
Once the payment is complete, you need to confirm receipt on Taobao if the seller hasn't delivered the USDT yet. If there are issues, contact customer service.
After confirming receipt on Taobao, return to the Binance app to see that your order has been completed. If not, remind the seller you have paid. Any problems can be resolved through Binance support.
Congratulations, you now own 75.13 USDT, also known as Tether, which is roughly equivalent to 1 USD.
3.4 Buy BTC with USDT
Note that your recently purchased USDT is in your "Funds" account. Transfer it to your "Spot" account to use it.
Follow the arrows to complete the transfer, then you’ll see the following prompt.
Click the "Trade" menu in the middle.
Find the BTC/USDT trading pair.
Enter the BTC amount you want to buy, e.g., 0.001, and choose the lowest red price to ensure quick execution.
Once the trade is completed, click as shown below to see your purchased BTC.
That’s it! You’ve successfully bought 0.001 BTC.
Conclusion
The most challenging part of this process may be the payment step. Follow the seller’s instructions carefully.
Your biggest concern might be not receiving USDT after payment. As mentioned earlier, sellers are required to post a security deposit on Binance, so you can file a complaint if necessary. Next, I’ll explain how to sell 0.001 BTC.
However, always remember: funds in a CEX are out of your control. You trust the CEX to temporarily hold your funds.
Only by controlling your private keys can you truly control your wealth. After you learn to buy and sell BTC, I will focus on decentralized finance (DeFi) applications, which represent the future of finance.
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