How do you use cryptocurrency? A beginner’s walkthrough
You use cryptocurrency by holding it in a wallet and sending or receiving it. You need a backup of the recovery phrase and a way to get crypto.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Crypto moves between wallets, not card networks.
- A recovery phrase restores a wallet you control.
- Check the address and network before you approve.
Crypto is a digital asset, so you hold it in a wallet instead of a bank account. Transfers move directly between wallets, and you approve each one. A confirmed transfer is usually permanent.
What do you need before you start?
To use crypto, you keep it in a wallet. You need an offline backup of the recovery phrase, which restores a wallet if you lose the device. You also need a way to get crypto, such as a US exchange or a transfer.
How do you use crypto step by step?
To send crypto, enter the recipient's wallet address and the matching network. Before you approve, check both, because a confirmed transfer is usually permanent. Send only to people and businesses you trust.
- 1Open your walletChoose the crypto and check the amount plus network fee.
- 2Copy the addressAsk for the recipient's wallet address, and use a fresh address when you can.
- 3Match the networkThe network must match the address, or funds can be lost.
- 4Review the detailsCompare the address and network with what the recipient sent, then approve.
- 5Wait for confirmationsThe transfer is not settled until the network confirms it.
What should you do after using crypto?
After you use crypto, keep records for taxes. The IRS treats cryptocurrency as property, so buying it with US dollars is not taxable by itself. Trading one crypto for another or paying with crypto can trigger tax.
Frequently asked questions
No. You can own and send a small fraction of a bitcoin.
A confirmed transfer is usually permanent. If the network does not match the address, funds can be lost. Contact the recipient or exchange, but a reversal is not likely.
Some merchants accept crypto through payment processors, but it is not common. Paying with crypto can be taxable, so keep the US dollar value.
Do not share your recovery phrase or private keys. Verify the address and network through a second channel. Treat urgent offers as red flags.
