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Are you wondering how to buy Bitcoin?
Bitcoin has taken the world by storm and captivated the minds of investors and technophiles alike. According to CoinDesk, the cryptocurrency’s current price is around $70,000.
No wonder countless people want to know how to buy and sell Bitcoins.
Before you buy, it’s essential to understand the nuances of the buying process. This guide will help you make an informed decision and avoid risks and scams.
So, let’s find out how to buy Bitcoins in our exclusive guide. You will need an internet connection, fiat currency, and a buying platform.
Before You Purchase Bitcoins
Let’s understand what sets Bitcoin apart from traditional and other digital assets. This cryptocurrency is not another stock of fiat money; it’s a groundbreaking digital currency that changes how we think about money.
Unlike currencies issued by governments, Bitcoin operates on a decentralized network. It means transactions are not controlled by a single entity like a central bank.
Instead, transactions get verified and recorded on a public ledger known as the blockchain.
Another revolutionary aspect is Bitcoin’s divisibility. It is more fluid than traditional currencies divisible into cents or pennies.
You don’t need to buy a whole Bitcoin. It is possible to purchase a fraction; making the currency accessible to everyone regardless of budget.
However, Bitcoin transactions are public and permanently recorded on the blockchain. This offers unmatched transparency and security, but also raises privacy concerns.
Every transaction you make is visible to anyone who cares to look. A person can trace the flow of funds through the network.
Bitcoin addresses are anonymous and don’t directly reveal your identity. However, sophisticated analysts can piece together clues to identify you based on your transaction history.
This brings us to the “Know Your Customer” (KYC). Many crypto exchanges and platforms mandate KYC for buying and selling cryptocurrencies.
KYC requires buyers to provide personal information such as:
- Name
- Proof of address
- Government-issued ID
KYC tries to prevent fraud and money laundering. However, it compromises privacy and anonymity.
As a result, some sellers prefer to trade on non-KYC platforms that don’t require you to disclose your identity. However, non-KYC platforms may come with higher transaction fees and lower liquidity.
Weigh the pros and cons before you make your decision. To make wise decisions, read more about KYC and its implications.
Where to Buy Bitcoin
There are plenty of options if you’re wondering how to buy and sell Bitcoin.
Crypto Exchanges
A cryptocurrency exchange is the most popular place to trade crypto coins. They offer user-friendly interfaces, a range of trading pairs, and robust security features.
However, you must fulfill KYC requirements that compromise anonymity. Additionally, centralized exchanges charge varying fees.
Kraken and Coinbase are two reputable exchanges for buying popular cryptocurrencies.
P2P Platforms
Peer-to-peer or P2P exchanges provide a decentralized approach to buying Bitcoins. They connect buyers and sellers directly, offering greater privacy and flexibility.
Transactions are generally facilitated using escrow to ensure security.
However, decentralized exchanges may have higher fees and lower liquidity than centralized exchanges.
In-person exchanges offer the highest level of privacy. Buyers and sellers can meet face-to-face to exchange cash for Bitcoins.
However, they are not practical for all users.
Secure P2P platforms to trade cryptocurrencies include Hodl Hodl, Bisq, and RoboSats.
Brokerages
Brokerage services like Robinhood allow the buying and selling of cryptocurrencies, stocks, and other assets. They are ideal for beginners with a familiar and intuitive interface.
However, you don’t have direct control over your crypto funds. They are stored in a custodial wallet managed by the online brokerage.
This might be risky as you rely on online brokers to secure funds.
ETFs
Exchange-traded funds (ETFs) provide exposure to cryptocurrencies without the hassle of owning or securing them. They track the market price of Bitcoin and allow trading like stocks on exchanges.
ETFs like BlackRock’s IBIT or Fidelity’s FBTC are convenient and offer adequate liquidity. However, they come with management fees and present the same vulnerabilities as any third-party custodian.
You trust them to hold your coins.
Bitcoin ATMs
A Bitcoin ATM lets you purchase Bitcoins with cash instantly. You can find them in public places like stores and waiting areas.
They allow you to buy coins without bank transfers or credit cards.
However, you must be ready to pay high fees compared to all methods.
Alternative Platforms
PayPal, Strike, Cash App, River, and Swan offer alternative ways to buy Bitcoins. They cater to different preferences and needs with features like:
- Instant purchases
- Recurring buys
- Seamless integrations with services
The charges for these platforms vary greatly.
How to Buy Bitcoin: Step-by-Step Instructions
Welcome to the most exciting part of our “How to buy Bitcoins guide.” Below are the steps for your favorite cryptocurrency purchase. These steps are applicable to most methods with a slight variation.
Set Up Your Account
- Choose your platform: Select a reputable platform for your purchase. You can rely on exchanges like Kraken or Coinbase.
- Create your account: Sign up by providing your email address, creating a strong password, and agreeing to the terms of service.
- Verify your identity: You must undergo KYC verification for some trading platforms. Follow the instructions provided by the crypto platform.
Fund Your Account
- Deposit funds: Move to the deposit or funding section once your account is verified.
- Select payment method: Select your preferred payment method. Ways may include wire transfers, debit and credit cards, and payment apps.
- Complete the transaction: Follow the instructions to fund your account and start buying.
Pros & Cons of Payment Options
- Bank transfers – Lower fees but may take longer to process
- Debit and credit cards – Instant deposits but come with higher fees
- Payment apps – Instant deposits but may not be accepted by all online platforms
How to Select the Right Method
- Consider the speed, convenience, and fees of each method.
- Weigh in any potential security risks.
- Be aware of implications of sharing sensitive financial information.
Buy Bitcoin
- Navigate to the trading section: Move to the trading section once your funds arrive.
- Select trading pair: Choose the trading pair for Bitcoin, like BTC/USD or BTC/USDT. This represents the exchange rate between Bitcoin, fiat currencies, and other crypto assets.
- Choose order type: Decide whether you want to place a market or limit order. Market orders execute immediately at the current market price. Limit orders let you select a specific price and buy automatically when that price is reached.
- Enter order details: Enter the amount of Bitcoin you want to purchase and review your order.
- Confirm purchase: Double-check everything and confirm the purchase to execute the order.
- Check your balance: Track your account balance to ensure the credit is successful.
Where to Store Bitcoin Safely
A Bitcoin exchange allows you to trade and store your coins. However, the coins in your account aren’t yours – you only own an IOU for them. To own your coins, you must take them into custody and control your private keys.
Therefore, you must store your Bitcoins in a safe and secure crypto wallet.
For a detailed comparison of both storage options, read about storing BTC in exchange vs. wallet.
Now, not all wallets are created equal.
Hot wallets that are connected to the internet are more convenient. However, they are more vulnerable to hackers. Cold wallets are offline and more secure. But, they are less convenient. For a complete overview, see the discussion of hot and cold wallets.
Next, pick the type of wallet based on your needs. Below are a few vital things to know:
- Hardware wallets
- Pros: Physical devices immune to online attacks.
- Cons: High cost, risk of loss or damage
- Software wallets
- Pros: Mobile or PC apps for everyday use, highly convenient.
- Cons: Vulnerable to cyber threats.
- Mobile wallets
- Pros: Mobile apps to manage funds on the go.
- Cons: Vulnerable to malware and physical loss.
- Paper wallets
- Pros: Write on paper; highly secure.
- Cons: Physical loss, not convenient.
Frequently Asked Questions: How to Buy and Sell Bitcoin
What is Bitcoin (BTC)?
Bitcoin is the first and largest cryptocurrency. It is a unique decentralized digital currency that is not controlled by a central entity.
Should I buy Bitcoin?
Yes, you should definitely buy Bitcoin if you want to protect your purchasing power. It is the only currency that can’t be printed or inflated.
Can I buy less than 1 Bitcoin?
Yes, you can buy less than 1 BTC. Bitcoin is divisible, and its smallest unit is called a “satoshi,” which is one hundred millionth of a Bitcoin (0.00000001 BTC). You can buy fractions of a coin to suit your budget.
Can I buy BTC anonymously?
Yes, you can buy BTC anonymously using non-KYC platforms, P2P, and in-person exchanges.
What is the best Bitcoin Wallet?
The best Bitcoin wallet depends on your needs, preferences, and security requirements. But we can recommend Trezor Safe 3, Ledger Nano X, and Passport.
How to sell Bitcoin?
The process of selling Bitcoin mirrors buying with similar steps but in reverse order. First, set up and verify your account on your selected platform. Transfer the Bitcoin you wish to sell from your wallet to your accoun on the platform. Place a sell order. After the sale, withdraw your funds to your bank account or another preferred method.
Will I owe taxes if I buy or sell Bitcoin?
Yes, buying or selling Bitcoin can have tax implications. Taxes are generally owed when you sell coins. Tax laws vary significantly by country and sometimes by region within countries. It’s essential to consult a tax professional familiar with local regulations to understand your specific obligations.
Ready to Buy Bitcoins?
You now know how to buy a Bitcoin. Select a reliable platform and check out the KYC requirements, or avoid them altogether.
Stick to platforms like Hodl Hodl if you want more privacy and anonymity. Otherwise, go for Kraken if you want more convenience and lower fees.
Set up your account, deposit funds, and place your order for purchase. Choose a secure wallet to store your funds and keep the keys securely.
Are you ready learn more about Bitcoin? Most traders join the bandwagon for the increasing price of Bitcoin but get addicted to the freedom.
You can be the next one in line.
