Fund Your Wallet
While the web3 space is ever-evolving, the easiest way to purchase a digital asset on the Solana blockchain is to use its native token, $SOL.
You can now purchase Solana assets such as Geckos using $ETH on the Magic Eden marketplace, but $SOL remains the best choice for the uninitiated and Solana natives alike.
Soon you may be able to even use a credit card to purchase and NFT, but for our purposes here, let's walk through the process of converting your native currency (USD, GBP, etc.) into a cryptocurrency for use on its respective blockchain.
A cryptocurrency exchange is a platform through which you can buy and sell cryptocurrency. You may hear of a centralized exchange referred to as a “fiat on- or off-ramp”, as the exchange is the conduit for converting native fiat currency to or from cryptocurrencies, and also to and from your banking institution.
Some exchanges deal only in cryptocurrency and stablecoins such as USDC/USDT, while many others allow users to trade fiat currencies such as the USD or GBP, for example. Exchanges may accept credit card payments, allow direct wire transfers, or utilize other forms of payment in exchange for cryptocurrencies.
Of note: not every exchange offers the same cryptocurrencies for sale, so you'll want to verify that the exchange you choose offers the tokens you are interested in purchasing. For our purposes here, you will want to use an exchange that offers SOL, and allows withdrawal to a personal wallet.
Examples of centralized crypto exchanges (known as CEXs) are Binance, Coinbase, Gemini, and Kraken, among others.
Decentralized Exchanges (DEXs)
Another term you may hear when discussing the buying and selling of cryptocurrencies is that of a “DEX” —a decentralized exchange. Decentralized exchanges play a large role in swapping cryptocurrencies like SOL for stablecoins like USDC on the Solana network, but also a host of other tokens that exist on a specific blockchain. There are several main differences between centralized and decentralized exchanges, but the main difference is that any transactions on a DEX are done through wallets and self-custody; you cannot store your tokens on a DEX, they are stored in your own personal wallet, and most DEXs do not allow for fiat conversion — they are crypto native only.
While there are numerous arbitrage and liquidity pool opportunities on a DEX, those differences are outside the range of this discussion. For basic use, DEXs are a convenient way to move between stablecoins and SOL, or to purchase more illiquid tokens for a specific purpose on the blockchain. Swapping USDC for SOL through your Phantom wallet, for example, will use a DEX to conduct the swap.
Some examples of Solana ecosystem DEXs include Orca, Radium, and Lifinity, among others, and a popular aggregator for finding the best swap rates is the Jupiter Aggregator.
A cryptocurrency broker can act as an intermediary between you and the cryptocurrency markets.
You will be able to purchase crypto at the price set by the broker via an easy-to-use interface. Some may prefer the ease of “paper” cryptocurrency; it is a way to gain exposure to the underlying asset without having to self-custody the cryptocurrency itself. Some crypto brokerages allow purchases but do not allow withdrawals of cryptocurrencies to an external wallet. If you want to transact with your crypto, make sure your broker or exchange allows withdrawals and self-custody. Some brokers also may also charge higher fees than exchanges; it is mainly a matter of convenience and risk, but something to be aware of.
An example of a crypto broker is Caleb and Brown.
Some services exist (and more are likely to follow) that allow purchasing of cryptocurrencies with a credit card through an integration with your hot or cold wallet. For example, the MoonPay service will let you buy crypto directly from your Phantom Wallet. You can also purchase crypto through a service like Paypal, but the available cryptocurrencies can be limited, as are the withdrawal options.
Depending on your personal situation, here are some aspects you might want to consider when choosing crypto service providers.
If you already own crypto, you can easily convert some of your existing crypto to SOL — these trading pairs are usually limited to ETH and BTC. Otherwise, you would sell your other tokens (whatever they may be) for USD or a stablecoin such as USDC, and then use that token to purchase SOL.
If you don't own any cryptocurrencies yet, you'll want to make sure your exchange or brokerage of choice allows fiat currency transfers and purchases made with your preferred fiat currency. They may accept debit or credit card payments, wire transfers, bank transfers or other forms of payment.
Depending on the service provider and your funding method, you may have to wait a few days before you can use the money you deposit to buy cryptocurrency.
Account Creation and Verification
Depending on the platform you choose for buying cryptocurrency, you may have to go through a process known as KYC —short for Know Your Customer — which is formal identification for tax purposes and anti-money laundering (AML) statutes. This is more common with on-shore CEXs, especially in the US and EU, when fiat on- and off-ramps are in use.
Off-shore and crypto-native platforms that do not provide fiat transactions, only a place for trading or swapping tokens, may simply require an email address. DEXs require neither: just use your wallet and crypto to make your transactions.
For centralized exchanges, account creation and KYC requirements can vary, but generally speaking it requires some forms of photo identification and accompanying data. It can be anything from a video-call to a scanned ID, to more advanced security measures, should you require higher deposit and withdrawal limits.
In most cases, you will not be able to buy or sell cryptocurrency until you complete the verification process.
Cryptocurrencies are not backed by any central institution, such as the FDIC as in a US bank, so if your account is compromised or the platform where you store your crypto is hacked, you could lose your investment. This is why most crypto users choose to store their own assets in cold wallets or third party cold storage for the utmost security.
Crypto exchanges and brokers will always be vulnerable to various attacks, just like any financial institution. This is why most users recommend storing your crypto off-exchange when you're not conducting transactions. The popular slogan “Not your keys, not your coins” pertains directly to this situation. Keeping your assets in your own hardware wallet is the best way to ensure your funds are safe.
Fees can vary between service providers. Some brokers might have higher transaction fees than some exchanges, but some exchanges might have higher withdrawal fees. Examples of fees are deposit fees, withdrawal fees, transaction fees, credit card fees, etc. Generally speaking, the cheapest way to purchase your crypto is to set a “limit order” for the price you wish to pay, and wait for that price to be reached and filled.
Depending on where you are located in the world, some exchanges and brokers might not be available to you. The cryptocurrency market is in varying stages of regulation in different parts of the world. Some companies would prefer to withdraw from certain jurisdictions than comply with the local restrictive laws. Others may create separate legal entities to comply with local regulations; for example, the popular exchange Binance created Binance.us to serve the US market, which operates alongside its Binance.com global entity.
The cryptocurrency market is new and emerging financial technology, and is evolving at a rapid pace. Be aware that the laws and regulations affecting your exchange or broker of choice can change over time affecting the availability or the nature of the service. Generally speaking, however, you will have plenty of time to take action on your account as regulations do not change overnight.
Funding Your Wallet via Binance
The following video, created by Magic Eden, explains how to buy Solana using Binance and transfer it to your wallet.
Funding Your Wallet via Crypto.com
The following video, created by Magic Eden, explains how to buy Solana using Crypto.com and transfer it to your wallet.
Funding Your Wallet via Coinbase
The following video, created by Crypto Casey, offers a complete walkthrough on how to set up a Coinbase account and buy cryptocurrencies. Even though it's not Solana specific, the steps are very similar. If you are a beginner, you might want to watch this video in its entirety. It covers many key concepts, security tips, and the crypto buying process in full detail.
Funding Your Wallet via Phantom/Moonpay Integration
The following video, created by Holaplex, explains how to initiate the process of funding your Phantom Wallet via the MoonPay integration.