The most important thing to do when you are new to crypto is KISS. Keep it simple. And crypto can be simple. At its highest level, it is just another transaction medium that anyone can operate if they avoid the over-advanced distractions that crypto offers nerds who want to do more with it.

There are four main areas to know just a bit about. Those are purchasing, storage, transactions, and record keeping. Feel free to skip to the summary at the end if you prefer.

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For purchasing, it's best to keep it simple. Go with a US-based established exchange that operates with all the standards a bank does. The top three I can recommend are Kraken, Crypto.com, and Coinbase. Coinbase has very high fees. All of them will let you fund the account with a debit card or credit card. If you are thinking about doing this often or transferring money the other direction, it is easy to connect your bank account to them. But you don't have to do that.

Keeping things simple rather than advanced, once you have USD in your account, just go to their trade tab and select what pairing you want to trade. Likely USD and something else. Then just make a market order for the amount you want to exchange. If you are moving a very large amount, it can be good to split up the trades and learn how to do limit orders. But that's getting into advanced things that this guide is avoiding.

Once that trade resolves, you now own that currency, obviously. So now the next question is whether you are purchasing something with it right away or if you want to put this into longer-term storage. If you are looking to send it to someone else right away, then just treat it like a withdrawal. You want to click either the deposit or withdrawal button. On some platforms, the withdrawal button is sometimes behind the deposit button, so if you can't find a withdrawal button, hit deposit, and then toggle to withdrawal.

Optional step: Storage. You might be just spending the crypto or have only purchased a small amount, such that securing it outside of a bank (what an exchange is) isn't needed. But if you do want to store it off the exchange, you can. It's helpful to use a multi-wallet. A multi-wallet can handle more than one kind of currency. That way you don't have to download multiple softwares, one for each currency. The other advantage is that multi-wallets tend to be what are called light non-custodian wallets. What that means in practice is you avoid downloading the entire blockchain you would probably end up downloading if using the official wallet for that currency. The most standard multi-wallet is Exodus. When setting up that wallet, it will give you a random 12-word recovery phrase. You want to write that down and store it somewhere safe. Then you also lock the wallet with a password. Now that the recovery phrase is important. You never know if something will happen to the computer. OS installs get corrupted, things get reinstalled, hard drives fail, and computers get recycled when they become an old model. That 12-word phrase is your wallet. You can delete your wallet and start over with that 12-word phrase, and you will be back in business. You can even take that 12-word phrase to an entirely different software and switch to that one if Exodus isn't your brand of tea anymore. You can also use it to get set up on both your desktop and phone. The 12-word phrase is your wallet. The software is just a temporary way to access it.

So now that you have your personal wallet set up, you might want to send some money to it. In Exodus, you can search for the currency you want to work with. Once you've navigated to it, you can press the receive button, and it will give you an address for that currency. My top tip is this: Send test transactions before sending any large amount of money. I've heard horror stories of celebrities losing a million dollars in a single fumble. I don't know how. You just type in the correct address and hit send. But I guess if it is your first time doing it, you can mess up. So why not send $10 instead of $1mil first regardless? I don't care how much experience I have or how much I think my setup is right or my familiarity with an exchange. I still send $10 ahead of $500. And I will until the day I die.

Now for transactions. Crypto has improved a lot. If sending from your local wallet, these wallets do a good job of calculating fees. Fees on most currencies are a voluntary amount. As such, there is an opportunity to overthink them. If you were to decide not pay the market rate, your transaction will hang. But crypto fees are way down, and these wallets calculate reasonable numbers effectively. So I would suggest not messing with it. The exchanges have it even more figured out. They themselves are miners, and have relationships with other miners, so there isn't even a temptation to fiddle with that kind of nob, not that you should anyway. But that does bring up something, which is the Coinbase withdrawal fee. It's one of the reasons I recommend Kraken over them. It's actually a pretty stiff fee on Coinbase, while it is zero on Kraken.

If, for whatever reason, fees ever do go up again on crypto, the way to get around them isn't to play chicken with the suggested rate. It's to pick more efficient currencies. If you are using crypto for some small transactions, it is smart to use something like Litecoin or Solana over something like Ethereum or Bitcoin. Those last two at one time were notorious for high fees at the peak of crypto fees. They are at a reasonable level now, a few cents. But if fees ever rise again, it would still not be a reason to play fee chicken. Everyone has multi-currency support now. Just use the efficient currency when you need efficiency. If you decide you want to send someone bitcoin and the fee is $1.00, and you don't want to pay $1.00, and you see they also accept litecoin, then send them litecoin and pay $0.01. If you don't have Litecoin, it can be worth it to convert some of your BTC, so you have some excess Litecoin on hand. I like to keep some Litecoin on hand to pay for servers and stuff. It also moves faster.

The last subject is record keeping. This one is easy but necessary. Most people don't think about this. If you are purchasing and spending crypto right away, you don't really need to worry much about taxes because there are no capital gains when you don't hold at all. But even if you do that, you do want to put an entry into an Excel file. Here is why. If you withdraw from Kraken or some other exchange, you could be sending it to storage or donating it. Kraken doesn't know. Which means when it comes time to do taxes (if you are investing), the 1099 Kraken gives you is completely bogus. They know that. The IRS knows that. But it's just a requirement because they are a financial institution, so they make an attempt at generating one and give it to you. You are expected to ignore your exchanges' 1099s and do it yourself. A lot of people think that they can get around the problem of using multiple exchanges and prepping taxes by merging the exported data into a special crypto tax software that will do it all for them. Nope. Because Kraken, Coinbase, and others don't have the data to do the taxes correctly. No amount of giving it to another party is going to solve that problem.

So the critical thing is recording yourself if you take money out of an exchange to record on one line of an Excel file, whether it was a storage or an expense. It's easier to do and takes less time than it takes for us to talk about why to do it. So just do it.

The key reason for doing it is that even if you have no interest in investing now, if you ever decide to invest in crypto in the future, failing to jot down that one figure can bite you forever. When calculating capital gains, you need to pair purchases and sales. There are a lot of ways you can do pairings. LIFO was the standard. But the people pushed the IRS and apparently got their way. Now we can apparently do whatever we want. LIFO, FIFO, or even HIFO (which is nuts). But as flexible as that is, you still don't get around the core problem. You have to pair purchases with sales. And the exchanges don't know what is what. So you better hope you do. If you donate it, that's a sale. If you store it, that's a non-event. If you transfer it in from your wallet, that is a non-event. If you receive it from someone else, that is a purchase. And even if it is a small amount of money, that ambiguity of what pairs with what, and what even is an item to pair, will put you in a position where you have no option but to fudge numbers. You can't not, because you don't know what the numbers should be yourself. You could play it safe and fudge them in the IRS's favor. That's not a position you want to be in, handing the government free money. Or you could fudge them in your favor and deal with the stress. Or you could try to be as middle of the road as possible and find out even that is ambiguous and still deal with the stress.

So forget about why you want to do it. Just do yourself a favor and take 5 seconds to put it in Excel. I said this was going to be the simple guide. Anticipating capital gains accounting nightmares isn't simple. But what is simple is jotting down one entry into Excel.

Just remember, if you buy and spend crypto immediately, you should owe no capital gains. If you get a 1099 that says otherwise, ignore it. The IRS doesn't expect you to agree with a 1099 that it knows is bogus. It expects you to do your taxes correctly. And it is correct that you don't owe capital gains. So just say in Turbo Tax, "I don't have any crypto investments to report," if that is true. Purchasing and immediately spending crypto is not an investment. But your exchange might think something else happened with its incomplete data.

I had family that had received crypto from another person once, and sold it a year later. I had to help with their taxes when they died. Do you know what cost basis the exchange used for its reporting? Zero. By that, I mean it claimed it was purchased for $0 when Bitcoin was around $90K. This is because it's possible that it was a transfer from their own wallet instead of getting it from someone else. And if it was a transfer in, it doesn't know when it was actually purchased. Maybe they bought in 2012? So if BTC is at 95K at the sale, and it was given to them at 94.5K, it is a gain of 0.5K. It could have been a loss of 0.5K. But Coinbase will give you a 1099 that will say you earned 95k on a 0.5K loss. That family member only had those two events in their Coinbase, and Coinbase got a 100% fail rate with the simplest transaction history possible.

So you ignore the 1099. In fact, if you report taxes that agree with the 1099, that the IRS knows is wrong (because it is always wrong), the IRS now knows you didn't actually do your taxes and therefore lied on them. They might be ok with that because you are probably overpaying.

So if you are purchasing and spending crypto immediately, you really don't need to worry about that mess. You should have no taxes. But it is still worth making your own separate record (15 seconds of effort) in case you do decide to invest years later, because you'll need to have your own records of what is what from your very first transaction, so it doesn't corrupt your pairings.

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Summary:

Use Kraken.com. Coinbase will result in unfair fees. Use Exodus if storing. Spend your crypto right away if you don't want to do taxes. Regardless, note any crypto that goes in or out of an exchange if it came from you or from someone else, and if it went to you or someone else. Do your own taxes if you are investing. Ignore 1099s.