Especially geared for newcomers seeking to start investing on BTC today!
The use and trading of cryptocurrencies is a phenomenon that has globally been on the rise for some time now and the first ever cryptocurrency launched, namely Bitcoin, is nowadays literally everywhere, while hordes of people are currently interested in how and where they can buy Bitcoins. Truth is that this has now become easier than ever before, but exactly because there are now several platforms and options, discerning which is the most appropriate avenue for you, especially if you are completely new to the world of Bitcoin and cryptocurrencies in general, may be a confusing and daunting task.
The team at start-business-online, once again comes to the rescue through this ultimate guide on the purchase of Bitcoins, covering every aspect and aiming to equip you with all the necessary knowledge and information to be able to decide which are the best options for you. Read through and gain the insight and confidence to start investing in Bitcoin today!
Bitcoin: the basics
Before proceeding to buy Bitcoin, you need to know what it is. Abbreviated BTC, Bitcoin is a digital asset used like any other currency, allowing you to buy Bitcoin, sell Bitcoin, make payments and purchases through Bitcoin and even make transfers via Bitcoin. Contrary to fiat money, i.e. money issued by governments, Bitcoin is a completely digital currency whose payment system is not controlled by any government, and it was the first of its kind. Bitcoin’s payment system is stored in a secure online database, called blockchain. Bitcoin is not printed like traditional currencies, but instead created by computers linked to this database. These computers verify the Bitcoin transactions and are rewarded with new Bitcoins for doing so, in a process called mining, which is how new Bitcoins are being generated. Every Bitcoin made is recorded and stored in a digital ledger and the Bitcoin network also records and stores all transactions made in Bitcoin.
Important considerations before buying your first Bitcoin
Though you may be eager to jump on the bandwagon, there are a few important facts to be aware of, before proceeding to make your first Bitcoin purchase:
- Like other assets, and even perhaps more than most, Bitcoin’s price/value is highly volatile and can change fast and often in unpredictable ways and extents. Many may remember a few years back, in 2017, when over a few days Bitcoin soared to $19,000 and plummeted to $12,000. Such fluctuations may make some hesitant to buying Bitcoins, but in fact if you manage to understand and even better anticipate them, you can better time when to buy and when to sell Bitcoin to maximize your earning potential.
- Also like other assets, Bitcoin’s price is influenced by two major aspects, its own demand and supply, i.e. when more people seek to buy Bitcoin the price goes up, while when more people seek to sell Bitcoin the price falls, and the overall marker conditions and trends in the wider cryptocurrencies market. To put it simply, good news means the price goes up, bad news means the price goes down. Ideally you should be on the lookout to buy Bitcoin at a low price and sell it when the price rises again, to increase your chances for profit making.
- Though a digital asset, any profits you make from your Bitcoin transactions may still be taxed, depending on your country. Often such profits are considered capital gains and are taxed accordingly. It is therefore important to know, before proceeding to buy Bitcoin, especially if you are planning to invest large amounts, to know what rules apply in your location with regards to Bitcoin profits and their declaration and taxation.
Unravelling the Bitcoin Purchasing Journey
Feeling ready to go out and buy your first Bitcoin and can’t wait to read where and how to do so? Well, sorry but you need to wait just a tiny bit more, because the essential first step in the process is actually buying a wallet for your Bitcoin!
- Bitcoin wallet creation
A wallet is not only essential in your pocket or bag to store your physical, fiat money. It is also imperative when buying Bitcoin too, as you will need a safe and secure place to store your Bitcoins after purchasing them. A Bitcoin wallet is also necessary because through it you are able to send and receive Bitcoin. When choosing your Bitcoin wallet, you can choose between a custodial or noncustodial wallet. Custodial wallets are essentially third parties, usually exchanges, that store your Bitcoin on your behalf, ensuring that your Bitcoins enjoy full security and protections in their systems, while allowing you easily manage them without having to worry that you may lose your private wallet key and thus access to your Bitcoins. On the other hand, if you opt for a non-custodial wallet you enjoy the benefit of having directly full control over and access to your Bitcoins, without an intermediary. When setting up such a wallet you will be given private keys that you need to keep safe and never lose. Many non-custodial wallets also use further security measures in order to ensure your funds are effectively protected and always safe. Because we know you are eager to proceed, we shall be reverting to the matter of Bitcoin wallets, but as a first step just remember that you need to set up one before proceeding to buy your first Bitcoin. - Deciding how and where from to buy your Bitcoin
Once you have a wallet that your Bitcoin can be safely stored in, then you are ready to make your first purchase. The three basic methods you can choose from are either buying through an online cryptocurrency exchange, buying from another individual through a peer-to-peer service, or using a cryptocurrency ATM. Each of these methods has its own pros and cons, so let us explore them further, to help you decide which is the best method for your and which one suits you better.- Buying through a cryptocurrency exchange
Cryptocurrency exchanges are online trading platforms that facilitate the buying and selling for all kinds and types of digital currencies. They work similarly to forex brokers, who facilitate the trading of fiat currencies. Cryptocurrency exchanges allow you to buy a cryptocurrency, in this case Bitcoin, for fiat money or for a number of other digital assets. Usually, cryptocurrency exchanges accept a variety of payment methods, and it is normal to be able to pay in your local currency, via a traditional bank wire, or more modern payment methods such as PayPal and other similar services, while depending on the exchange you choose you may also be able to pay via debit or credit card. In order to be able to use a crypto-exchange, you will need to set up an account with them, registering your details and providing some sort of identification, such as a picture ID for verification purposes. But the process is fairly straightforward and once the purchase is completed your Bitcoin(s) will be send to your already created, dedicated wallet for safe storage. Luckily for you, there are now a good number of reliable and popular cryptocurrency exchanges that you can use to buy Bitcoins online, but please be aware that this industry is also plagued by crooks and hackers, so make sure to only use safe and secure exchanges, which are SSL certified, meaning your details and transactions are encrypted and remain private and safe. Most reliable exchanges a great venue for beginners, since they come with user-friendly, easy to navigate interfaces that simplify the purchasing process. Moreover, most are also mobile friendly, so you can do your buying anytime, anyplace and on the go. Examples of such cryptocurrency exchanges you should consider as your first post of call include Coinbase, which allows you to buy several different types of cryptocurrency use a really ease and appealing interface, Coinmama, which serves most countries globally and is great for beginners, allowing the highest limits when buying using a credit card, Binance, which boasts some of the lower fees around and is a safe and secure choice, and Bittrex, which is especially good for beginners as well due to its dedicated features and excellent support. Whichever crypto exchange you choose however, remember that the wisest and safest option is to then store your purchased Bitcoin not that platform, but transfer it to your own wallet. What is more is that you should perhaps opt for what are called “cold” wallets, such as for example Nano Ledger S or Trezor Wallet, since these are both hardware wallets and contrary to online and software wallets, they offer more security because they are not online all the time. They are only online when you plug in them into your computer and this makes them less vulnerable to attacks and security breaches, meaning your stored Bitcoins would be much safer in such a type of wallet. Also when choosing to buy Bitcoin via an exchange, by default your transaction is not anonymous and setting up an account with the exchange requires proof of ID. If for whatever reason you don’t want that, then perhaps you should resort to one of the next two methods for buying Bitcoin: - Buying through a Bitcoin ATM
Not many know that it is also possible to buy Bitcoins through an ATM, similar to those used to withdraw fiat currency cash from an account or card. The problem is that such Bitcoin selling ATMs are dedicated for this purpose and they are not allowed in all countries. So before you opt for this option you need to check if such an ATM is available in your vicinity and if you are lucky enough to live close to one, then you can head down and perform your buying transaction. An ID is not necessary when using an ATM to buy Bitcoins, though some ATMs may request some proof for security purposes. At a Bitcoin ATM you can buy Bitcoin either by putting paper bills in the machine or using your debit or credit card. You will also need to have your mobile phone with you and enter your phone number so that the ATM can send you a one-time password (OTP) to authorise your Bitcoin purchase. Once the purchase is completed the ATM will ask you for the address of your Bitcoin wallet in order to send your Bitcoins there and you can provide it by scanning your wallet’s QR code on the ATM. It is possible to buy from an ATM without a wallet, because ATMs can actually create a virtual wallet for you. In this case you should print out the created Bitcoin wallet address, but be extra careful cause the piece of paper will contain the public and private access keys to your wallet, and if you lose that, you lose access to your coins too. This is not the recommend option, and if you are to use it, make sure you soon get a proper wallet to store your Bitcoins in. Though perhaps the fastest and simplest method, purchasing via an ATM may not of much use if you live nowhere near such a machine, so what option is left? - Buying through a Peer-to-Peer Service
Well, since many people around the world now have and use Bitcoins, it is always possible to buy Bitcoins from another person. However, if none of your peers has Bitcoins or has none up for sale, you can always resort to online peer-to-peer services, such as LocalBitcoins, Bitquick and Paxful. Online peer to peer services allow you to connect with and buy Bitcoins from other people who are interested in selling their Bitcoins. The transaction can be completed online, if you deposit the money to the seller’s account via bank transfer or any other agreed method, or even in person if you are paying in cash. The obvious advantage of this method, especially if done through person to person meeting, is that it is much more discreet and private than online purchasing and no proof of ID or provision of personal information would be necessary. Also, since there will be no intermediaries and verification processes, the transaction may be carried out much faster, provided you locate a willing seller in an area near you. However, since there are also risks involved it would be wise to carefully scrutinize both the peer-to-peer service as well as the selling peers themselves, before proceeding to complete the transaction. - Other real-life options
If you are a true beginner and thus hesitant to buying Bitcoin online, there are a few other options for you, such as bank branches that accept cash deposits in exchange for Bitcoin. Moreover, there are also retail shops who enable the purchase of Bitcoins, and this demonstrates the widespread use of this particular cryptocurrency. However, both these options are not available worldwide and in fact are still not available in most countries, so being able to use them largely depends on your actual location. - The best instant method
Perhaps the most convenient way to buy Bitcoins instantly is buying using your debit or credit card and luckily there are several exchanges that accept this method, charging you of course with the corresponding fee. If speed and convenience are what you are after this is perhaps your go to method for getting your hands on some hot Bitcoins.
Is Bitcoin the best cryptocurrency for beginners?
It is true that due to its boom in recent years the cryptocurrency market is now packed with several dazzling coins that you could choose to purchase. Popular coins that you will find on offer in most crypto exchanges include Ethereum, Ripple and Litecoin, to name but a handful.
What is difficult when you are a beginner though is knowing which one to choose and you may well end up make the wrong decision. Our advice therefore, especially for those with no previous experience in cryptocurrencies is to start off with purchasing Bitcoins first.
Besides being the oldest cryptocurrency around, Bitcoin also boasts the biggest market cap around as well, i.e. there are more Bitcoins on the market in total, than any of the other cryptocurrencies. Launched in 2009, Bitcoin has been in use for over a decade now and it has worked its way up, consolidating its presence, acquiring a good reputation and being on a constant improvement of its features. This gives Bitcoin a competitive edge over other newfound cryptocurrencies and thus makes it the most suitable for beginners to purchase when first entering the cryptos world.
Moreover, Bitcoin can be traded on all platforms and it enjoys great availability in over 90% of the countries in the world. As a result, it is now widely accepted across the globe as a legit payment method and people all over the world are using Bitcoin in all types of transactions, from buying a house or a car, to paying their college fees or for having lunch at a local restaurant. Indeed, Bitcoin’s popularity and widespread use is perhaps its biggest advantage and renders it a truly versatile digital asset. It is therefore ideal for novices to buy Bitcoin because they can easily use it to replace fiat currency and also easily convert it back to fiat currency if the need arises.
What is also great and works in favour of Bitcoin as the preferred digital currency for beginners is that, as shown above, it is no longer reserved for the few who are experienced and tech savvy, but can be purchased by anyone with relative ease.
Bitcoin safety, security and privacy
If you are preparing to make your first Bitcoin purchase it is only natural to have concerns about whether doing so is safe, and it is also true that the crypto industry is constantly under attack by fraudsters and hackers. This however also means that credible crypto exchanges take all measures to secure your transactions and personal details, so if you decide to buy Bitcoin via an exchange simply make sure it is a legitimate, credible and secure one.
Once you buy from a trusted source, the next step is securing your Bitcoin wallet with the same, if not more care, that you would secure your physical wallet containing your fiat money. This is why we have repeatedly stressed above the need to have such a wallet and prefer wallets that are not constantly online, as this makes them more vulnerable. Of course, you should also choose your wallet wisely as well and prefer those with enhanced security features. When using non-custodial wallets, it is also extremely important to make sure you do not lose your keys. Private keys are great since only you know the passcode that gives access to your wallet, but the problem is that if you misplace or lose them, none will be able to help you regain them.
What is also prudent to keep in mind is that bitcoin transactions are not anonymous, in the sense that they are all recorded and stored permanently on the public Bitcoin network. Of course, the transactions are recorded per Bitcoin address, which is an encrypted public key and thus you cannot directly be identified and exposed as a person, but it does entail that you should be careful with using your Bitcoin address in a safe manner.
Concluding Remarks
In lieu of a conclusion, and since by now you know both why it is a good idea to buy Bitcoin, how to go about doing so, and how to keep your Bitcoins safe, let us clarify a few other logical queries you may have before actually proceeding to make your first purchase.
As with every other financial and trading transaction, if you are a novice the prudent and wise thing to do is to start off with small amounts and increase your purchases as you go along, once you feel comfortable and confident enough to do so. The good news is that most reliable cryptocurrency exchanges allow you to buy your first Bitcoin with just a handful of dollars, as low as one dollar actually.
That being said one dollar will not obviously buy you one Bitcoin, but this is not a problem since you can purchase less than one Bitcoin, since Bitcoins are divided in Satoshis, named after the currency’s alleged, unknown, original creator. So, the smallest amount you can buy is a satoshi, which is 0.00000001 bitcoin!
Once you get the hang of it all and your Bitcoin purchasing journey is a successful, smooth and exciting one you might decide that you want to purchase large amounts of Bitcoin. The first solution would be to set up accounts in multiple crypto exchanges and buy from more vendors, while if that will not suffice you can always resort to specific brokers and exchanges that deal with larger amounts since they offer Over the Counter services.
Hoping our guide has inspired you to start buying Bitcoins today, we are always just a message or email away if you need further guidance and advice.
- Buying through a cryptocurrency exchange
