New to cryptocurrency world? Don’t know from where can you buy Bitcoin? Then you landed on a right page. Here, I’ll explain you how to buy Bitcoin in plain English, no technical jargon. No matter what country you’re from, this guide is for you.
Bitcoin dominance across the globe was on peak on December, 2018, that time more and more investors wanted to take advantage of it. Though now some experts are saying that it’s too late to invest in Bitcoin, however, many are predicting that it’s just the beginning.
Crypto enthusiasts are predicting that one bitcoin value may hit $1 million by 2020. Many investors are showing interest in this thriving digital coin and many cryptocurrency startup companies have made Bitcoin buying and selling easy for them.
These Bitcoin startup companies allow all sizes of investors to start Bitcoin trading for example you can buy Bitcoin of any amount say $5 to any amount.
Individuals who have some money and want to invest in Bitcoin, the process of buying and selling bitcoins is somewhat confusing. They want to start Bitcoin trading but don’t know how to do so. Following questions may pop-up in someone’s mind while thinking of buy Bitcoin.
- What is Bitcoin?
- Why does its price fluctuate so much?
- What are the different ways to acquire bitcoins?
- Steps to buy XBT
- Where can I buy Bitcoin?
- Who can buy BTC?
- How much BTC can I buy?
- Is Bitcoin legal?
- Can I buy bitcoins anonymously?
- Do I need to pay tax on Bitcoin?
- How would I sell Bitcoin?
- What is the safest way to store coins? – Most important part.
Here in this post, I’ll be clearing all your doubts and will be providing you all necessary information that you need to start Bitcoin trading.
Let’s get started.
What is Bitcoin?
Bitcoin (BTC/XBT) is a form of digital currency invented by Satoshi Nakamoto that runs on a decentralized peer-to-peer network payment system. It gives a Bitcoin owner flexibility to send and receive payments without the involvement of a financial institute such as bank.
Famous acronym for this coin is BTC but due to ISO 4217 standard, its name was clashing with some other currencies (Bhutanese Ngultrum (BTN)) therefore there’s need to set a new abbreviation for Bitcoin and that is XBT. Don’t get confused both BTC and XBT are same.
Bitcoin supply is limited to 21 million, no more bitcoins can be mined. The smallest unit of BTC is called Satoshi, named after its creator. One Bitcoin is equal to 100,000,000 Satoshis or 0.00000001 BTC. Those who can’t buy 1 XBT coin can buy Satoshis.
You know what is the best part of this? No one owns Bitcoin network, it’s the people who run and use it. Network is fully open source and decentralized.
Instead of a third party payment partner, thousands of independent computers across the globe connected to the Bitcoin payment system, called Blockchain, verify Bitcoin transactions and make this system secure. In returns, these miners (people who deploy their computers to make BTC transactions successful) earn small incentives in the form of Bitcoin.
Bitcoin transactions are cheaper and more quick in nature than traditional digital payment methods. For example if you would send a payment to oversea using your bank than first your bank will charge a Forex transaction fee then it’ll facilitate your transaction and will convert your country’s currency into recipient’s country currency.
This entire process usually takes 3-7 days.
On the other hand, if you’ll send the same payment using BTC then first you’ll not pay any Forex transaction charges, you will only pay a nominal network fee (even you can decide your fee) and within 30 minutes (may vary) your payee will receive the amount.
Here one important thing that you must know is cryptocurrencies are highly volatile for example within minutes BTC price could plunge so drastically.
Let’s understand it with an example assume you sent 0.005 BTC who are equal to $100 to someone and current market trend triggers panic selling and within minutes BTC price drops by 30 percent, now your payee will still receive 0.005 BTC but their value in USD dollar will be $70 (due to 30% drop).
Why does Bitcoin price fluctuate so much?
First it’s an experimental digital currency which is still in its development face. Its price is determined by its demand and supply. More demand increases its price and with low demand price decreases.
Furthermore, market trends, panic selling, FUD (fear, uncertainty and doubt) and news pertaining to its ban/regulation also play important role in price fluctuations.
What are the different ways to acquire bitcoins?
There are basically two ways to acquire bitcoin: Bitcoin mining and Bitcoin trading.
Bitcoin mining is more sophisticated and require more skills along with more investment but returns are way high. In mining, you need strong internet connection, suitable hardware (normal computers are not sufficient, ASIC miner is recommended), and 24*7 power supply along with backup.
This way Bitcoin mining becomes more difficult for a layman. The advantage of having Bitcoin miner machine is that you can help others to mine Bitcoin using your miner and in returns you earn rewards in the form of BTC.
Although you can buy miner machine such as ASIC miner to start mining but it’s all a bit complicated for a non-techie.
On the other hand, Bitcoin trading is suitable for small and medium investors because you don’t need to do anything from your side apart from buying Bitcoin. It’s a quick way to acquire bitcoins.
No computer hardware running cost, no skills required! In trading, Bitcoin exchanges, who own Bitcoin mining machines, allow everyone to buy Bitcoin and in returns they charge you a small or reasonable fee.
Note: You can earn bitcoins by mining them, for that purpose you can use your computer or buy a miner rig. That’s a different topic and we’ll cover it in a different post. Today we’ll focus on how to buy Bitcoin.
Steps to buy Bitcoin through a Bitcoin exchange:
- Pick one exchange from whom you’d like to buy first Bitcoin.
- Check its background; if possible try to read customer reviews (very effective way but you need to read many to come on a decision), fees structure (deposit fees, transaction fees, and withdrawal fees).
- Once you decide from whom you want to buy Bitcoin, create a Bitcoin wallet account on that exchange; if that exchange does not offer web wallet service than create a wallet with another exchange.
- Complete your KYC (Know Your Customer) verification by entering your residential and contact details.
- Upload documents (JPEG or PDF format) like voter card and address proof, to verify your identity.
- Wait till your account gets verified; it can take a day or more.
- You can start buying and selling bitcoins once your exchange verifies your account. You can buy Bitcoin with credit card, debit card, internet banking, mobile wallet or any other listed method.
- Finally, move your coins to somewhere safe for example to a paper wallet, mobile wallet, software wallet or hardware wallet (recommended).
- You can sell Bitcoin anytime. There’s no minimum or maximum time limit for instance let’s say you’ve bought 1BTC at the rate of $10000 and after few hours its price reaches to $15000 then you’re free to make profit by selling it. It’s totally up to you whether to sell it or hold it for more gains.
Where can I buy Bitcoin?
Bitcoin trading is very easy but there’re some risks associated with it, and before jumping in, you should be aware of them. First its future is still in uncertainty like there’s no law to control Bitcoin currency. Recent China’s move is an example.
Although, Bitcoin price is rising again but my concern is here, “What if all countries announce that Bitcoin trading is illegal?”
We’ll cover pros and cons of cryptocurrency trading in another post and above are just probabilities. However, you’d be aware of them. Bitcoin trading is risky like Stock Intraday but it can give you very higher returns even it can make you millionaire.
Some experts are advising buy at least one bitcoin because they think Bitcoin price will hit $25,000 to $50,000 by 2025 (but no guarantee). I want to advise you if you’re willing to invest in Bitcoin then be ready to tackle with the consequences associated with it.
Also, diversify your funds don’t invest large portion of your savings in Bitcoin.
Golden words for beginners:
Bitcoin is not for faint hearted. It’s true only one coin can make you millionaire, but at the same time it’s also true that your coin’s value can become zero. Only invest that part of your money that you can afford to lose. Don’t store your savings with Bitcoin.
As of now, you’ve three options to buy Bitcoin:
- Cryptocurrency exchange
- Peer-to-peer exchanges
- Bitcoin ATM – Yes, these exist.
Let’s discuss them one-by-one.
1. Cryptocurrency exchange
Cryptocurrency or Bitcoin exchanges offer easiest way to Buy Bitcoin. Exchanges let you buy Bitcoin and other cryptocurrencies in exchange of your fiat money (dollar, euro, INR and the like) and other assets.
Some exchanges let you buy Bitcoin with credit card, debit card, or wire transfer. You can also visit your nearest exchange’s office to buy BTC with cash or direct deposit.
Crypto-to-crypto trade is also available on most of the exchanges where you can buy one cryptocurrency in returns of another.
Though cryptocurrency exchanges let you own digital assets easily and provide you web-based wallet to store them using their resources but these are highly prone to hacks (Bitpoint, Binance, recent eye-brow raising hacks) therefore these should not be considered to store coins for long.
In worst case scenario, if you bought BTC from an exchange who indulges in fraudulent trade practices then it may run away with your funds.
Therefore, after buying bitcoins, you’d immediately move them to somewhere safe for example to a paper wallet, software wallets or hardware wallet.
We’ll also discuss where should you store your coins safely in the end.
Here are the best Bitcoin exchanges
Currently, there are many renowned Bitcoin exchanges from whom you can buy Bitcoin. To find a best Bitcoin wallet company, you’ll need to put some extra efforts from your side.
Below are some of the best Bitcoin exchanges around the world to buy BTC. These exchanges are universally exclaimed for their best in class services and up-to-date security.
Coinbase is an international Bitcoin exchange which allows you to buy, sell and store bitcoins along with other cryptocurrencies like Bitcoin Cash, XRP (know more about best Ripple wallet exchanges), Ethereum, Litecoin. The exchange is very famous among cryptocurrency investors and is available in 103 countries.
It offers you secure atmosphere to buy and sell listed coins along with web wallet to store your coins. Its two-factor authentication feature makes your online wallet more secure.
You can use their user-friendly website, Android or iOS app to start Bitcoin trading.
Another prominent international Bitcoin exchange that offers reliable trading platform with many advanced features like price SMS alerts. Exchange has been in the business since 2011. You can trade Bitcoin, Ethereum, Litecoin, XRP and more coins.
Simple interface, low fees, mobile app and direct bank transfers are some key features of this exchange that make it stand out of the crowd.
Kraken is a well-known cryptocurrency exchange based in San Francisco, USA. The exchange, founded in 2011, is one of the largest and oldest Bitcoin exchanges in the world. It’s a trustworthy platform to buy, sell and trade Bitcoin and prominent altcoins such LTC, ETH, and more.
You can use your fiat currency (USD, Euro, CAD and the like) for cryptocurrency. Crypto-to-crypto trading is also available.
High level of security, low fees, and worth mentioning customer service are some key points that can encourage someone to choose this platform.
The exchange is in business since 2013 and operates in 190 countries. According to its site, it’s more than 1.5 million registered users who use its services.
On Coinmama, you can buy Bitcoin with credit card, debit card, and wire transfer. Of course, you can exchange one cryptocurrency with another.
Instant delivery, high spending limits, easy payment options, large user base and up-to-date security make this exchange a safe bet.
Depsite recent hack, exchange is still performing well. Because Binance is an established exchange and it’s its own digital currency, Binance (BNB) whose market cap has crossed $43.5 million benchmark, it’s prone to attacks.
But company is so committed that it’s been continuously improving its security by implementing state-of-the-art-security and making itself and users secure from future hacks.
Binance is providing its services worldwide, as of this writing, it’s users from 180 countries. You can certainly buy Bitcoin from Binance.
Exchange is capable of solving your queries within 24 hours with its 24/7 customer support.
2. Peer-to-peer Exchanges
Peer-to-peer exchanges do not facilitate buying and selling of bitcoins on their own. Instead, these provide a platform where buyer and seller can meet and can do Bitcoin trading. Buyer directly transfers the amount to the seller’s bank account and after receiving the amount, seller releases his BTC.
On these platforms, you can find many sellers selling their BTC at different prices, even you can talk to sellers to negotiate price. You can buy Bitcoin from a seller who has good ratings and positive reviews.
Some famous peer-to-peer based best Bitcoin exchanges to buy Bitcoin are:
- Local Bitcoins
Exchange lets you buy Bitcoin instantly.
LocalBitcoins.com is one of the largest peer-to-peer based Bitcoin exchanges across the world. Its trading platform is available worldwide, as of August, 2019, it operates in more than 248 countries including India. Its escrow service protects buyer and seller from any fraud.
The site is very simple, user-friendly and easy-to-use. You can also store your BTC using its web wallet. Though hot wallets are not recommended for storing Bitcoin, however, if you’d like to do Intraday trading then you can use its online wallet.
This Finland based exchange is know for its easy Bitcoin trading platform. I’ve been using this exchange since 2014 and so far my experience is quite satisfactory. I my recent post, I’ve showed you how to buy Bitcoin on LocalBitcoins.com.
BitQuick is another platform where you can buy BTC safely. It charges a 2% service fee and a 0.000106341304 BTC mining fee for its services.
Its escrow service ensures that you get your bitcoins after transferring money to the seller’s account. So far, 57,643.53 BTC have been sold on this platform.
You can sell bitcoins at your own price for bank cash deposit without paying any fee.
3. Bitcoin ATM
Yes, you read it right. You can also buy Bitcoin instantly using a Bitcoin ATM. Some companies have taken cryptocurrency buying and selling to the next level by installing Bitcoin ATMs in major cities.
These BTC ATM machines look similar to bank ATMs just these serve different purpose. Using these machines, you can deposit and withdraw money to buy and sell bitcoins. One thing that can stop someone from using these machines is high fees.
These ATMs charge more service fee (up to 16 percent) than cryptocurrency exchanges.
You can use crypto ATM finder service such as Coin ATM Radar to find your nearest ATM machine to buy Bitcoin.
Who can buy BTC?
Anyone who is interested to owning bitcoins can buy them. There is no rules who can buy Bitcoin. It’s just a digital asset whosoever believes in it or sees potential in it can own it.
As discussed above there are two ways to acquire bitcoins: Bitcoin trading and Bitcoin mining.
How much Bitcoin can I buy?
There are no limits, you can buy any amount of bitcoins. But some exchanges have limits for buying and selling BTC. For your knowledge, you can also buy partial Bitcoin say 0.005 or 0.5 or any other amount.
Is Bitcoin legal?
Not yet, but at the same time it’s not illegal too. Many countries are coming up with regulations and many are thinking to impose ban on it. As you may already know it is impossible to stop it because no specific country controls it, it’s a decentralized digital currency.
However, some rigorous laws can stop you from buying, selling and trading Bitcoin. Recent example is India, where RBI (Reserve Bank of India) had arbitrarily banned cryptocurrencies in India, but country’s crypto community approached top court and after a long battle, Supreme Court of India struck down RBI’s cryptocurrency ban.
As a result, now Indians can trade in cryptocurrencies at their own risk.
As of this writing, it’s not a legal as well as illegal tender.
Before acquiring any cryptocurrency, make sure it’s not considered as an illegal activity as per your country’s law.
Can I buy bitcoins anonymously?
Bitcoin is not anonymous instead it’s pseudo-anonymous. You can see real time Bitcoin transactions including sender and receiver’s public wallet addresses using a Blockchain Explorer service but can’t see details of the persons behind those transactions.
But this doesn’t mean you’re anonymous.
Exchanges don’t let you buy digital currencies unless you prove your identity by providing them your address proofs and bank account details.
Do I need to pay tax on Bitcoin?
Bitcoin is not a legal tender in any country right now but still your country laws may require you pay taxes on your returns and investments.
How would I sell Bitcoin?
Buying and selling this currency is very easy. You can sell your BTC as soon as you buy it. You can sell it using the same exchange from whom you bought it or you can sell it through another exchange or peer-to-peer directory.
You can also directly contact to someone who is willing to buy Bitcoin.
What is the safest way to store bitcoins?
It depends on your purpose. If you want to trade then you’d let them online to minimize transaction charges. On the other hand, if you’re going to hold for long then you’d choose paper wallet, software wallet or industry’s most safest solution so far, Bitcoin hardware wallet.
As of now, Bitcoin hardware wallet (Ledger Nano S, Nano X, Trezor, name a few) is a safest way to store bitcoins along with altcoins. Hardware wallets are small physical devices that lets you cold store your bitcoins safely.
You can send, receive and store your coins using a hardware wallet. Learn more about hardware wallets here.
Hardware wallet doesn’t cost too much but it can securely store your coins. It’s almost impossible to hack a hardware wallet without having physical access. And at the top, you control your private keys.
Exchanges are not secure therefore never keep your coins on a web wallet, no matter how prominent exchange yours is.
Recommended hardware wallet:
As per current scenarios, Bitcoin has potential to give you high returns but don’t ignore its volatile nature. A smart investor knows how to diversify his/her funds and does a thorough research before starting a new investment.
You can start Bitcoin trading but just remember don’t put all your eggs in one bucket. Only invest that part of your money that you can afford to lose. It’d not be seen as a get rich method.
Disclaimer: Above list of Bitcoin wallet companies is for information purpose only. Please verify these Bitcoin exchanges before purchasing BTC from any of them. We’re not associated with these companies so we cannot hold any financial or legal responsibility. This post is for information purpose only. Don’t take this information as an investment suggestion.