How to buy Bitcoin – Everything you need to know
Are you thinking about buying Bitcoin but you’re unsure how to get started? This covers everything you need to know and will hopefully answer any questions you had about Bitcoin.
Bitcoin is quickly becoming one of the most popular mediums of exchange worldwide. You may know the basics about what Bitcoins are and how they are used, but to take advantage of this knowledge you need to acquire some. For that purpose, this quick and easy guide on how to buy Bitcoin has been compiled. Although they can be purchased in a variety of ways, including directly from exchanges or in transactions with individuals using various payment methods, with this guide in hand you will be able to determine what works best for you.
Getting Started As A Buyer
While it may seem quite simple to do, it is still somewhat difficult to buy Bitcoins with payment methods that you are accustomed to using (such as credit cards or PayPal) depending on where you live. This is because of the danger of chargebacks removing value from the purchase after the Bitcoin has already changed hands. Since proving that Bitcoin was exchanged can be next to impossible and retrieving them significantly difficult, exchanges avoid credit card transactions. However, as Bitcoin gets more popular remedies to this problem are emerging. Within the United States, Circle and Coinbase are offering purchases via credit card. Similar services exist in the United Kingdom via Coinbase, Bittylicious, and CoinCorner. As the cryptocurrency becomes more mainstream, more services are sure to emerge to serve this market overseas.
Procuring A Bitcoin Wallet
The first thing that you need to do is to have a place to store purchased Bitcoin. Normally, this is called a wallet but your storage provider may have another name for it. Wallets serve as a virtual bank account and provide different levels of security and options for spending. They may come in the form of a software application stored on your computer hard drive, a cloud-based service, or an electronic vault where the Bitcoin are hard-stored remotely. Choose the method that is best for you and gives you the most peace of mind as buying even one Bitcoin can represent a substantial investment.
Choosing An Exchange
With so many exchanges and wallets competing for your business, it can be difficult to choose the right one. Some are in line with international exchanges of other currency with significant barriers to entry, while others can offer simplicity but also limit buying and selling. The one you choose should be in line with your goals, how much currency you want to store, whether you want to engage in speculative trading, and how much bureaucracy you are prepared to tolerate. Anonymity may be a factor for you as well, so consider how much personal information you are willing to divulge to these entities.
Where Is Bitcoin Trading Happening?
The largest current exchanges that are handling Bitcoin transactions include the following:
• CoinBase (US)
• Bitstamp (US)
• Kraken (US)
• Cryptsy (US)
• Blockchain (Europe)
• Bitfinex (Hong Kong)
• OKCoin (China)
• Huobi (China and Hong Kong)
• BTCC (China)
• BTC-e (unknown)
New exchanges are planned for the future, both large and small, and a huge amount of venture capital is flowing into developing a worldwide exchange.
A Note Of Caution
Even though you may be asked to meet certain proof-of-identity requirements when joining an exchange, wallet, or coin bank, be aware that these do not provide the level of protection that you would expect from a traditional bank. For example, most accounts offer limited insurance or none at all. These exchanges have been targeted by fraudsters and hackers in the past and if for any reason an exchange is compromised there is a significant risk that you could lose some or all of your investment. Legal obligations of exchanges in the wake of thefts can be muddied by the fact that Bitcoin lacks legal status as currency in most of the world.
OTC (over-the-counter) trades are one of the most direct ways of buying Bitcoin. It is a direct trade from a seller that is local to you, placing funds in escrow until the trade is completed in a satisfactory way for both parties involved. This can also be a method that leaves you vulnerable to violence, theft, or fraud. Take any precautions with this method that you would when buying something on a classified ad. Some areas will host safe places to meet to exchange Bitcoin, and these are preferable to just meeting up with a random person in a random location. These direct trades usually carry a premium paid by the buyer, which gives sellers an incentive to sell and covers the cost of convenience. This should be negotiated or agreed on before the meeting.
Mining is the process by which Bitcoin is created. Originally, it may have been possible to do this at home with a PC, but normally huge networks handle these functions in the current market. Huge companies run pools set up to mine Bitcoin and individual mining is no longer a cost-effective option to procure Bitcoin.
Is An Investment Trust Right For You?
If other options seem sketchy to you or for any reason you are uncomfortable with them, you can still invest in Bitcoin without purchasing large quantities of them. Examples of investment trusts include The Winklevoss ETF and the Bitcoin Investment Trust (BIT). While many of these trusts are difficult to join and only cater to wealthy, well-established investors they are accountable financial entities and may become more egalitarian as the market for Bitcoin continues to mature.
How To Find Bitcoin ATMs
Although a recent addition to the methods of buying Bitcoin, ATMs that dispense Bitcoin instead of cash are becoming increasingly popular. While there are a wide variety of vendors (including BitAcess, Genesis Coin, and CoinOutlet) the easiest way to find if there is one near you is to search on an engine such as Coin ATM Radar, CoinDesk, and WeUseCoins. This may maximise your convenience and safety concerns, as you can insert cash for the Bitcoin purchase and in turn complete the transaction by QR code or a paper receipt with the codes needed to load the Bitcoin into the wallet of your choice.
While buying Bitcoin can be intimidating at first, it becomes easier once you get comfortable with the transaction methods and experience how easy it can make online purchasing in an open global market. It is also getting easier as it grows, so you can expect it to become more customer-friendly in the future.