So your curious about how to buy bitcoins? Your in luck This guide will tell you everything you need to know! Just read the information below.
You can buy bitcoins from either exchanges, or directly from other people in other marketplaces.
You can pay for bitcoins in a variety of ways, ranging from physical cash to credit and debit cards to wire transfers, or even with other cryptocurrencies. It all just depends on who your buying bitcoin from and where you live.
Sometimes buying bitcoins with your credit card or PayPal can still be a hassle, depending on your jurisdiction.
This is because ‘chargebacks’ are a problem for bitcoin sellers when people can just call someone on the phone and have their transaction reversed. Giving the buyer both the money and the bitcoin. Since its hard to prove who received a bitcoin payment is why most exchanges avoid credit cards or PayPal payments.
First, get a bitcoin wallet
If your going to buy some bitcoin your going to need a place to store them. Your bitcoin wallet acts as sort of your own personal bank account.
Depending on how secure you want your bitcoins to be, some wallets are more secure then others. Some wallets are like everyday spending wallets and some are military grade level security. The difference between the levels of security is web based service wallets and other methods of storing bitcoins offline or with multiple factors of authentication. Its really about easy, smaller amounts, and less secure, verses harder, larger amounts, more secure.
The main options are:
Using a software wallet stored on the hard drive of your computer.
Using an ‘vault’ service that keeps your bitcoins protected offline or multisig wallet that uses a number of keys to protect the account.
Always be aware of vulnerabilities. If you store bitcoins locally on your computer, make sure you back up your wallet regularly in case the drive becomes corrupted. When it comes to online web wallets they have varying security, ranging from very good multi factor authentication, too very bad username and password protected only.
Exchanges and Online Wallets
Since your new to bitcoin you will find that lots of exchanges and wallets are competing for your business.
Some are complicated exchanges for more advanced traders, while some are more limited but easier to use.
The majority of exchanges and wallets will store both your digital and fiat currency for you. Similar to a regular bank account.
Using Exchanges and Online Wallets is best if you want to partake in trading and speculation. Total anonymity while possible with bitcoin is a hassle to do correctly. When you setup your exchange account you might encounter lengthy bureaucratic setup procedures that usually involve proof of identity and supplying detailed contact information. Dont let that get you down, its no different then setting up a regular bank account but takes less time.
Regulated Exchanges have these setup procedures because of the laws that govern them. Any company interfacing with the current financial system must meet ‘know your customer’ (KYC) and anti-money laundering (AML) requirements.
When it comes to choosing the best exchange for you, it really depends on your location. Exchanges located in other countries have different rules.
For more information here is a huge list of exchanges on the buy bitcoins wiki.
Currently, the largest exchanges by volume are Bitfinex (Hong Kong), Bitstamp (USA), BTC-E (unknown), Kraken (USA), Huobi (China), OKCoin (China), and BTCC (China).
Definitely check out the exchange Coinbase. They trade US dollars and euros for bitcoin. Coinbase is a US based exchange but recently started offering service to some of Europe. One cool thing about them is that they also exchange Ethereum and Litecoin.
Remember to always protect your coins
Storing your coins on exchange wallets despite some of them saying they have great security dosent make your coins totally safe. You have to protect yourself from the exchange as well. Those of us who have been around in the bitcoin game remember Mt.Gox. The example of when an exchange totally scams the market and takes everyone’s bitcoins because they control your wallets.
Stay ever vigilant and always use best security practices. Make sure to do your research on an exchange. For people that live in the US make sure the exchange you use is compliant to regulations.
When it comes to trading other digital currency to bitcoin on popular altcoin exchanges that’s always a risk. Often the altcoin exchange that you use are foreign and aren’t following any regulations. However this isn’t always the case. Just most often, so do your research!
In person physical trades
For people that live in big cities like New York going to meetups give you the opportunity to buy bitcoins in person. Some meetups even have bitcoin auctions. There bitcoin meetups worldwide check the list of over 1,700 local meetups here.
When buying bitcoins from strangers always make sure to protect yourself. Make sure you are in a public place and safe at all times. Also make sure that selling and buying bitcoins in your area is legal.
Also it can be a hassle but never let someone walk away with your money until the bitcoin transaction confirms and is in your wallet.
Maybe you want to invest in bitcoin mining?
You can get bitcoins from mining. Its not for everyone but if you have some serious computer skills then mining might be an option for you. The great thing about mining is that you don’t have to buy bitcoin from anyone. You get bitcoins as a reward for mining.
Unfortunately bitcoin is at the stage where mining costs a decent amount. The ASIC machines that effectively mine bitcoin these days cost a lot of money and electricity to power them is increasingly more expensive.
Dont get me wrong for some bitcoin mining is profitable. However most people that do it for hobby do it to get bitcoins direct and not having to buy them from someone else.
Heres our article on how bitcoin mining works check it out!
Bitcoin ATMs are an easy way to buy bitcoins. It takes just a few seconds to do. However there is a catch and that is the fees are high. Thats how the operators of the ATMs make their profit. Your trading ease of use for expense. Its a great way to get your first coins though. There bitcoin ATMs all over the world in lots of cities. Check out the bitcoin ATM worldwide map here.
I know that its a lot to take in for most new people. The process it takes to buy bitcoins is never as easy as people aspect it to be. However there options and more new options arise all the time. When you get use to the process of getting bitcoins it feels easier to do. You just have to get your feet wet and do it once.