2.1 How To Buy Bitcoins
Chapter 2.1- Buy Bitcoin
You can buy bitcoin in a number of different ways. One of the cool things about the world’s most popular cryptocurrency is that you don’t need to buy it from a specific exchange, person, or marketplace. You don’t need to use a specific payment method – like a certain credit card or bank transfer. You can even buy bitcoin in cash and receive it instantly
First, let’s talk about one of the core benefits of bitcoin: P2P trading. Bitcoin was designed from the ground-up to facilitate peer-to-peer (person to person) trading. That means bitcoin can easily be transferred from you to another person over the bitcoin network. This is one of the core features and benefits of bitcoin.
With that in mind, you don’t need anything to buy or sell bitcoin. Bitcoin was designed to easily be transferred from one person to another. You might give your plumber 1 bitcoin after he completes a project, for example. Or, you might transfer 0.001 bitcoin to the bartender who just served your drinks.
Of course, it’s not always easy to find someone willing to exchange bitcoins in person through a P2P trade. That’s why, in most cases, you’re going to be buying or selling bitcoin from exchanges and other online platforms.
How to Buy Bitcoin from an Exchange or Online Platform (Recommended)
Buying bitcoin from an exchange or an online platform is the easiest and most-recommended method. You can buy bitcoin within minutes using various online platforms or exchanges. You don’t need any special skills to buy bitcoin from an exchange. You just need an internet connection and a computer or phone.
Typically, here’s the process you use when buying bitcoin from an exchange or online platform:
Step 1) Visit an online exchange like Bittrex.com, Bitfinex.com, or Kraken.com.
Step 2) Sign up for a free account by entering your email address. Choose a username or password.
Step 3) At this point, you have a free account and can view the exchange’s main dashboard. You should be able to view cryptocurrencies available to purchase. However, you won’t be able to deposit money or buy cryptocurrencies until you complete the verification process.
Step 4) Most exchanges require verification. That means you’ll need to provide things like your full name, date of birth, and your driver’s license or other government-issued photo ID. Some exchanges also require you to take a picture of yourself. Some will even ask for a selfie of you holding your ID card. You should be able to see the required documents on your account overview screen. The exchange will let you upload photos or documents to prove your identity.
Step 5) Wait for the exchange to complete the verification process. This can take anywhere from a few minutes to a few days.
Step 6) Once verification is complete, you should be able to deposit money into the platform. Exchanges typically allow you to deposit money using credit cards, debit cards, bank transfers, wire transfers, and other payment methods. Choose the one you feel most comfortable with, then deposit any amount of money you wish to deposit. Remember: you don’t need to buy 1 BTC or 1 BCH at full price. You can buy a fraction of a bitcoin for as little as $5 or $10.
Step 7) Wait for your deposit to arrive in your exchange wallet. At this point, your money is stored with the exchange. Once the money is listed in your account, you can use that money to purchase bitcoins or other cryptocurrencies. You might see a USD/BTC pair, for example, or an BTC/EUR pair. Choose the pair that corresponds to the cryptocurrency you deposited, then buy your desired amount of bitcoin.
Step 8) Once you’ve purchased bitcoin from the exchange, the fiat currency (like USD or EUR) will be deducted from your account, while the bitcoin will appear in your account. Congratulations! You’re now the proud owner of bitcoin.
Step 9) At this point, you’re not technically the owner of your bitcoins. The bitcoins are still stored with the exchange, and you have no claim to your bitcoin if the exchange shuts down or gets hacked. Typically, crypto users will withdraw bitcoin from an exchange and store it in their wallet. The exchange will charge a withdrawal fee for bitcoin. Enter your bitcoin address into the exchange’s withdrawal screen (say, the wallet address for your Mycelium mobile app), then withdraw your bitcoin. Within 10 to 30 minutes, your bitcoin should appear in your wallet.
Step 10) Once your bitcoin is off the exchange and in your wallet, you’re now officially the owner of your bitcoin. You’re in control of your own private keys. You can secure your bitcoin with your 12-word passphrase (which you may have established when you setup your wallet for the first time).
That’s it! The process seems a lot more complicated than it is due to verification requirements. Exchanges are required to verify your information to comply with Anti-Money Laundering (AML), Counter Terrorism Funding (CTF), and Know Your Customer (KYC) regulations, all of which are required for businesses handling money. These verification steps are designed to prevent money laundering, among other illegal activities.
Once you’re verified on an exchange, it becomes much easier to buy bitcoin.
After verification, you can login to the exchange at any time, deposit money, then buy bitcoin immediately.
Pros and Cons of Buying Bitcoin from an Exchange
- Easy verification and signup process
- High liquidity on all major crypto exchanges
- Straightforward buying and selling process
- Low fees (typically between 0.1% and 0.4% on each trade)
- Long verification process
- Exchanges aren’t always secure, and even the largest exchanges have lost customer funds
How to Buy Bitcoin from a Bitcoin ATM
Another option for buying bitcoin is to use a bitcoin ATM. Every major city in the world now has at least one bitcoin ATM.
A bitcoin ATM works in a similar way to a bitcoin exchange. The main difference is that you complete the verification process over the ATM instead of through an online dashboard. An ATM in the United States, for example, may require you to scan your driver’s license before buying bitcoin.
A bitcoin ATM can either be a one-way or a two-way ATM. A one-way ATM only allows you to buy bitcoin, while a two-way ATM allows you to buy and sell bitcoin.
ATMs are straightforward. You can typically buy bitcoin using cash. You give the machine cash, and it sends bitcoin to your wallet. The machine will count your cash and convert it to bitcoins (while deducting a 5% to 10% fee). Then, the machine will ask you to display your wallet QR code. You scan the code, and the machine sends bitcoin to your address.
There are a number of websites dedicated to tracking bitcoin ATMs worldwide. Right now, CoinATMRadar.com seems to have the most complete listing. You can view a map of bitcoin ATMs in your area here: https://coinatmradar.com/
Pros and Cons of Buying Bitcoin from a Bitcoin ATM
- Available in virtually every major city worldwide
- Immediately delivers bitcoin to your own wallet (no need to temporarily hold your bitcoin in an exchange)
- You still need to verify your identity
- Not available in rural areas or small cities
- Bitcoin ATMs typically charge fees of around 10%, making them one of the most expensive ways to buy bitcoin
How to Buy Bitcoin Using a Debit Card, Credit Card, or Bank Transfer
Most of us have a debit card, a credit card, or a bank account. Yes, you can use these payment cards to buy bitcoins.
Fortunately, there are a number of easy ways to buy bitcoin using credit cards, debit cards, and bank transfers.
Many cryptocurrency exchanges accept direct bank transfers, for example. Europe-based exchanges often accept SEPA transfers, for example, and similar payment methods. Canadian exchanges can accept local bank transfer methods like INTERAC. Australian exchanges may accept BPAY.
Some exchanges now offer support for debit cards and credit cards. These exchanges will allow you to deposit money into your account using ordinary payment cards. You may need to undergo an extra level of identity verification before depositing money with a credit card. You might also pay high fees of around 5%. Once you’ve added your credit card or debit card, however, you can deposit bitcoin to the exchange at any time and purchase bitcoin.
Pros and Cons of Buying Bitcoin With Debit Cards, Credit Cards, and Bank Transfers
- More exchanges than ever now accept debit cards, credit cards, and bank transfers
- Regional exchanges often accept region-specific bank transfer options like SEPA, INTERAC, and BPAY, among many others
- You can buy bitcoin using your ordinary payment cards with no additional work required
- Credit card deposits come with high fees, including fees of 5% or higher
- Some banks flag credit card or debit card payments when they’re used to buy bitcoin
- You’re always taking some risk when providing your credit card information over the internet, especially when you’re giving it to a relatively unknown cryptocurrency exchange
How to Buy Bitcoin Using a Bitcoin Wallet
Whether you’re using a mobile app or computer software as your bitcoin wallet, you should be able to buy bitcoin from within that wallet.
You typically use bitcoin wallets to store your bitcoins. This is their primary function. However, a growing number of bitcoin wallets now make it easy to buy cryptocurrency from within the wallet software itself.
Just open your bitcoin wallet app and you should see links to “buy bitcoin”. Click on any of these links, and you’ll typically be able to buy bitcoin using credit cards or other payment methods, then have that bitcoin delivered directly to your wallet.
These payment methods are fast, easy, and convenient. However, watch out for fees: wallet software developers often get a cut of your transaction, and that means you’ll be paying significantly higher fees than you would on an ordinary exchange.
Pros and Cons of Buying Bitcoin with a Bitcoin Wallet
- It’s fast and easy
- Bitcoins are deposited directly into your bitcoin wallet (no need to enter a recipient address)
- You can buy bitcoins from within the app or software you already know and trust
- Expect to pay high fees
- Not available in all wallets
- Some wallets have partnered with shady exchanges or payment platforms, so be careful where you’re buying from
How to Buy Bitcoin from an Online Payment Platform
You should be able to buy bitcoin from any online payment platform. Online platforms like Coinbase, for example, make it easy to purchase bitcoins using credit cards and other popular payment methods. Coinbase is just the user-friendly version of the popular cryptocurrency exchange GDAX. Using Coinbase.com, you can buy bitcoin quickly and easily – but you’re going to pay fees of 5% or higher, compared with fees of less than 0.5% when buying from GDAX.
There are plenty of online platforms like Coinbase that will be happy to handle your payments. A quick Google Search for “buy bitcoins” will turn up hundreds of similar payment platforms. All of these platforms work in a similar way: they handle the entire bitcoin buying process in a user-friendly way, but they also charge high fees.
Pros and Cons of Buying Bitcoin from an Online Payment Platform
- Fast and easy
- Requires no tech skills or experience
- Get your bitcoin delivered anywhere you like
- High fees
- Some payment platforms do a poor job of managing user security
How to Buy Bitcoin Using Cash
Many people prefer buying bitcoin using cash. It’s the only truly anonymous way to buy bitcoin. When buying bitcoin with cash, you’ll typically meet up with someone, give the person cash, and then wait for them to send you your desired amount of bitcoin.
Websites like LocalBitcoins.com arrange in-person cash transfers for bitcoin and other cryptocurrencies. These websites have built-in reputation systems for buyers and sellers, making it easy to see which users are reputable.
Obviously, it’s risky to meet anyone in person while carrying a significant amount of cash. That’s why many ordinary users shy away from cash transfers.
Pros and Cons of Buying Bitcoin Using Cash
- As anonymous as it gets
- Buy any amount of bitcoin
- Keep transactions offline and off the books
- Find reputable buyers or sellers using online marketplaces like LocalBitcoins.com, which can also provide escrow services for enhanced transaction security
- It can be dangerous meeting someone in person while carrying cash
- Some bitcoin sellers still charge high fees (say, when accepting bank transfers for bitcoin)
- Unless you live in a major urban area, it may be difficult finding a person willing to exchange cash for bitcoin
Buying bitcoin was once an expensive, annoying, and difficult process. Today, thanks to the surging popularity of bitcoin, it’s easier than ever to buy the world’s most popular cryptocurrency. Whether you’re buying from an exchange, purchasing bitcoin with cash, or using any other payment method, we’re confident the payment methods above will help you buy however much bitcoin you need.