When you want to start using cryptocurrency, the most common way to acquire it is through buying it for fiat or other cryptocurrency. The most common places to buy cryptocurrency from are exchanges, marketplaces and people. In this article, we will give you an overview of the most common ways to buy Bitcoin.
Create a wallet
To start with, you need to create a Bitcoin wallet. There’s a variety of websites and apps out there offering Bitcoin wallets, so the key here is to choose the most reputable and safe one. In most of the cases the use of such apps and online wallets will remind you mobile banking or internet banking due to similarity in working principles of both. It is important to note that there are several Bitcoin wallet types:
- Desktop wallet is downloaded as software and installed on PC. We highly recommend to download and install only the software coming from the official sources. These are the most frequently used desktop wallets for Windows: e.g. Electrum, Exodus, Copay, Armory, Bitcoin Core. Most of these are also compatible with Mac, Linux and Ubuntu and will also offer you a mobile app to match;
- Mobile wallet is convenient for payments in offline stores. These wallets are downloadable from Apple Store (Breadwallet, Airbitz) and Google play (Samourai wallet, Mycelium). Finding a wallet for Blackberry (Bitcoin Wallet) or Windows phone (BitPay) shouldn’t be a problem either;
- Online wallet works similarly to an online banking account and can be accessed from any device connected to the internet (Blockchain wallet, GreenAddress);
- Hardware wallet requires a special device (e.g. USB stick) to hold the user’s private keys. This wallet is generally considered to be much safer than all the previous due to a smartcard security system that it utilizes, and because it works independently from your PC, smartphone or internet. The choice for this type of wallets is not so big and is only limited to several brands: e.g. Trezor, Ledger, KeepKey, Digital Bitbox;
- Paper Wallet is a piece of paper with a QR-code, your public and private keys obtained through printing (Bitcoin Paper Wallet Generator). This method is convenient for ATMs (find closest Bitcoin ATM to you here) and shopping in physical stores. This type of cryptocurrency storage is also named cold storage, because it stores your private keys in a more secure offline environment.
There are several ways to add an extra layer of protection to your wallet:
- Encryption – setting a strong password;
- Backup – making several copies of your wallet and/or private keys in several locations on your computer, smartphone, memory-stick, piece of paper placing them where nobody else but you will be able to find them;
- Enable multiple signature (multisig) addresses – this requires an additional signature by a person you highly trust such as your partner, lawyer, spouse, significant other or a special device to confirm your transactions. Wallets such as Xapo, BitGo support this function;
- 2FA (two-factor authentication) – a method of access control by means of a special app for identity verification that can be installed on your smartphone for enhanced security.
Choose payment method
The next step is choosing the payment method that suits you best. This will define your choice of exchange, website or app to buy bitcoin from:
- Cash: this method implies that you meet the person willing to sell BTC in person, commonly on the bitcoin-related events or by searching the available seller in your area via Wall of Coins, LibertyX, for instance, or via a Bitcoin ATM that’s located close to you;
- Debit/credit card: for a complete beginner this might be one of the most suitable methods to acquire crypto, as the majority of Bitcoin exchanges support it (e.g. Coinbase, Coinmama, BitPanda, CEX.io, etc.). In most cases they will require you to register an account and go through ID verification process, which is generally a good sign for a user looking for a safe place to acquire crypto;
- PayPal: available via VirWox, Wirex, Paxful;
- Other cryptocurrencies: most of the cryptocurrency exchange websites/apps and even ATMs will allow you to buy bitcoin for other cryptocurrency. They are so many these days that the choice may not be so easy. You can use this page to find an exchange by location.
Buying Bitcoin via ATM
If you’ve located an ATM in proximity to your location, you can go there and buy Bitcoin with cash directly from it. Most of the Bitcoin ATMs are very intuitive and will not take you much to work out how to use them. You’ll find some guidelines here.
Buying Bitcoin on exchange
Choosing a reliable exchange to buy cryptocurrency from may not be easy considering the fact that there are 5000+ marketplaces out there. Luckily, there are services that can simplify your search and choice. CoinMarketCap.com is one of such helpers. This site allows to view rankings related to various cryptocurrencies, their trading volumes in a given period of time and the exchanges where they can be purchased or traded. According to the data from the screenshot from CoinMarketCap, the trading volume of Bitcoin within the next 24 hours is 33.52% of the trading volume of all traded cryptocurrencies.
This percentage is constantly changing in accord with the changing situation on the market, plus for each fiat currency there’s different statistics. What is true is that the unreliable exchanges will never appear in the top-10 of this rating, so you can basically trust the site to advise you on the best exchange. Before you start with any of those make sure to check their services fees, as the majority of exchanges charge them. The higher the fees – the less you are likely to use the exchange for buying small amounts of cryptocurrency. Each of the exchanges will have different payment methods, so that is another criteria for you. Thirdly, it is recommended to check the exchange price with the current price of Bitcoin on the market. Choose a service where Bitcoin is traded at the exchange rate that’s the closest to its market price at the moment. If you are interested in buying Bitcoin with your local currency, use the search by country or currency. The last, but not least point is the implementation of escrow by the exchange. Generally, it adds another layer of security to the trading order between you and the person you’ll buy BTC from.
It is also important to understand the difference between cryptocurrency exchanges which can either offer direct trading, act as brokers or as trading platforms. In most cases the difference will be in the amount of transaction fees charged from individuals for the use of the service and in the exchange rate offered by the site or in some cases set by the buyers/sellers themselves.
Once you’ve considered all these factors and chose an exchange, you will need to undertake the following steps:
- Register an account on the exchange website;
- Go through the standard ID verification procedure (e.g. KYC);
- Place buying order or choose among the list of available selling orders posted by the other users, and wait until the order is fulfilled from the other side;
- You got your Bitcoin, now you can spend it, trade it or sit on it (keep it).
No matter what you’ve chosen to do with your Bitcoin, it is highly recommended that you don’t keep large amounts of funds on exchanges. Which means that it’s best to withdraw your BTC to a safe desktop/online/mobile/paper or hardware wallet.
Remember that you shouldn’t by any means invest into Bitcoin more than you can afford to lose, as generally such an investment is associated with a lot of risk, but with the increasing Bitcoin market price these days the gains may also be high.
You may have heard of the other ways to acquire Bitcoin such as earning it or mining. You can earn it by means of utilizing game apps and website, but the rewards will be very minute. There are people who contribute to the community and receive tips for that on their personal website or social media accounts for creating videos, tutorials, articles, podcasts, etc. There are people who work on cryptocurrency-related projects full-time and are paid in crypto, e.g. software developers, coders, etc. Mining may be an option for advanced cryptocurrency users whose computer power is sufficient to crack the mathematical puzzles generated by the Bitcoin code to produce new coins. For individuals, this process is not as simple and as profitable as it may seem. Unless you’ve acquired enough experience and confidence using crypto, we would not recommend relying on these methods to acquire cryptocurrency.
If you feel like learning more about Bitcoin, we suggest following the links below: