How Do You Buy Bitcoin? A Beginner's Guide to Buying and Selling Bitcoin.
Buying Bitcoin isn't as difficult as you might think. If this is your first time wading into cryptocurrency, then follow these easy tips for choosing an exchange, creating an account, funding your account, and ordering (and storing) your Bitcoin.
Bitcoin is everywhere.
A few years ago, you could have gone without knowing about cryptocurrency, but over the past few years, it seems that everyone and their Shiba Inu are trading crypto, with Bitcoin being the most popular choice.
Bitcoin was first introduced in 2009 by an anonymous coder, Satoshi Nakamoto, and it has now gripped the world — prompting investors to take notice. The price of Bitcoin has risen from just a few dollars to over $20,000 per coin in just over a decade.
But where’s the best place to buy Bitcoin
? And how do you keep it safe?
If you are looking to buy Bitcoin for the first time, this guide will show you exactly where to buy Bitcoin, how to safely exchange cash for crypto, how to place an order (the easy way), and how to safely store your Bitcoin (including the most secure storage solutions).
How To Buy Bitcoin.
Buying Bitcoin used to be a very involved process, but crypto exchanges have made it much simpler.
Follow these five steps to buy Bitcoin and keep it secure:
1. Choose a Bitcoin Exchange.
Buying Bitcoin requires exchanging your dollars for some of those sweet, sweet golden coins.
OK, cryptocurrency Bitcoin isn’t a physical coin, but you will need to find a reputable crypto exchange that allows you to purchase Bitcoin with U.S. dollars (or other fiat currency). Cryptocurrency exchanges vary wildly on their fees, user experience, and security practices, so it’s important to find a reputable exchange that offers transparent fees and multiple ways to secure your account.
There are several hundred exchanges available to choose from, but not all of them are created equal. Here are are a few of the most reputable exchanges on the market that we recommend:
As one of the original Bitcoin exchanges, Coinbase has been around longer than most exchanges, and offers the simplest user experience. You can quickly sign up for an account, deposit funds, and purchase Bitcoin
with a few taps on their app.
Coinbase also offers recurring purchases, allowing you to buy Bitcoin at scheduled intervals (daily, weekly, monthly).
FTX has recently become one of the largest exchanges in the world, and the FTX.us exchange offers a low-fee way to purchase Bitcoin. The FTX.us mobile app is slick and makes it easy to purchase Bitcoin and other cryptocurrencies.
This aggressive cephalopod-like creature is known for destroying entire ships and dragging sailors to their doom. Wait… I mean, this crypto exchange based in California offers a super-simple mobile app to buy Bitcoin on their ultra-secure platform.
2. Create Your Exchange Account.
Once you have selected one of the top crypto exchanges to use for buying Bitcoin, it’s time to create your account.
Crypto exchanges typically require you to create an account and verify your identity before you can make any purchases. Here’s what that process looks like:
Create your account with an email address and password. Provide personal details, such as legal name, address, and Social Security number. Provide a picture of a government issued-ID (like a driver’s license). Take a selfie picture.
This may seem like a bit much, but this verification helps prevent fraud and protect your account, as well as allows the exchanges to stay compliant with government regulations.
3. Fund Your Exchange Account.
Once your account is created and your identity is verified, it is time to fund your account. This can be done one of several ways:
ACH (Bank Account) Transfer.
This is the most common way to fund your account. Most exchanges utilize a third party (such as Plaid) to securely connect to your bank account and allow transfers.
There are typically no fees for ACH transfers.
You can do a standard wire transfer from your bank to the exchange, though there may be fees associated.
Most exchanges allow you to fund your account with a credit or debit card, but this is not recommended. Not only are there additional fees for btc using a card to purchase Bitcoin (up to 4%), but your credit card may classify the transactions as a "cash advance" and charge additional fees.
Some exchanges allow you to use Apple or Google Pay to purchase Bitcoin, but again, these apps are linked to credit and debit cards, and may come with additional fees.
Transferring funds may take a few days to reach the exchange, though some (like Coinbase) allow you to start trading right away while the transfer is in process.
4. Order Your Bitcoin.
Once you have funded your exchange account, you can now purchase Bitcoin.
If you have never purchased cryptocurrency before, it’s important to note that you don’t have to purchase a whole Bitcoin (which can be $20,000 or more), but rather you can purchase a fraction of a coin, for a smaller amount. Most exchanges have a minimum, but typically you can buy as little as $5 or $10 worth of Bitcoin at a time, similar to purchasing fractional shares of a stock.
To place an order, you will need to select Bitcoin as the cryptocurrency you wish to purchase and fill out the order form. You can usually fill in the amount of Bitcoin you want to buy, and press "order." This will execute a trade at Bitcoin’s current price, and deposit the Bitcoin into your account.
But while most exchanges offer a simple "buy now" option, some offer more complex order forms with multiple choices. Here’s a quick breakdown of a more advanced order form and how to fill it out:
Coinbase order form | Source: Jacob Wade.
Market orders purchase Bitcoin at the current market price. This is the default of most exchanges, and is the simplest way to order.
Limit orders allow you to set the price you wish to pay for Bitcoin. For example, if you think Bitcoin will drop in price, you can set the limit price at a lower price than Bitcoin is currently at, and place the order. The order will go through if/when Bitcoin drops down to the price you set.
Stop Limit Order (Advanced)
Stop limit orders allow you to set a price to buy or sell Bitcoin with more control. You can set the "stop" price to trigger the order, and the "limit" price to execute the order. This is an advanced strategy for experienced traders.
Price Controls (Advanced)
Some order forms allow you to customize the order you place by selecting which price you are willing to pay between the bid and ask price on the order book.
This shows you the amount of Bitcoin you will purchase, and is shown as a decimal when purchasing a fraction of a Bitcoin.
Most quality exchanges will show a fee estimate before the order is placed, allowing you to see how much it costs to purchase Bitcoin. Keep an eye on this, as some exchanges charge more than others.
Order forms can feel complicated, but essentially you just need to select how much Bitcoin you want to purchase, check the fees, and place your order. Market orders are the simplest option for beginners, and give you the fair market price (less fees) for purchasing Bitcoin.
5. Store Your Bitcoin.
Owning Bitcoin is not like owning stock. Stocks simply represent ownership in a company, but Bitcoin is a digital currency that is owned by the entity that controls the private keys to access it. While most crypto exchanges are a secure place to hold your coins, this means they technically have ownership of your Bitcoin until you transfer it to your own digital crypto wallet.
A crypto wallet is an app or hardware device used for storing digital assets, such as Bitcoin.