How To Buy Bitcoin

Before you can either use or make money with Bitcoin, you’ve got to get your hands on it.

Unless you have the computing power to mine them, buying Bitcoins is by far the best and easiest way to obtain them. This makes them no different from any other investment, really, where a combination of wealth, work, and luck allows you to acquire an asset. We've written this guide to show you how to do it safely, in a way that's good for you and the people you're dealing with.

It is important to absorb this information properly, so don't rush. Take your time to digest this information properly. Grab a cup of coffee, a cold beer, or whatever your favorite beverage is, and make yourself comfortable.

This is how to buy Bitcoin step by step from scratch.

Exchange vs. Direct Buying

There are two ways to buy Bitcoin – on a cryptocurrency exchange, or directly from someone.

When you convert your cash into bitcoin, it's a direct purchase of digital currency. You may have a friend who wants to sell you cash for bitcoin, or you may stumble upon a website that allows for such pixelated transactions with pixelated people (i.e., avatars). Trading currency directly with friends for glitch currency can be easier.

We don't recommend buying Bitcoins directly unless you know exactly what you're doing and can absolutely trust the person you're buying from. There are just far too many bitcoin scams out there, and far too many people have sent money to nearly non-existent organizations or supposed individuals who promised to send them bitcoins but never did. Learning by doing can be a dangerous way to go.

Buying bitcoin on an exchange is much safer, and that's how we (and most other people) do it. Exchanges are centralized markets where you can buy and sell bitcoin for all sorts of currencies and other cryptocurrencies.

It only takes a few minutes to sign up for an exchange, and you can have your first bitcoin in no time at all-sometimes less than 20 minutes-if you choose one of the more user-friendly platforms and follow the straightforward instructions. Coinbase is one such platform, and we will guide you through its use in the next section.

Buying Bitcoin on Coinbase

Now for the fun part – we’re going to show you how to buy Bitcoin step by step.

The best bitcoin exchange for beginners is undoubtedly Coinbase. You're almost guaranteed to leave it behind as the easy-to-use gateway to the world of cryptocurrency-when you're ready to venture beyond the boundaries of the ideal starter exchange. What lies beyond that threshold? Well, that's best left for another post. For now, here are the steps to easily buy bitcoin on Coinbase.

Register an Account

The process of registering with Coinbase is very simple, which is one of the reasons it is so beginner friendly. When you click on the "Get Started" button, the following registration form will appear.

As seen, one can choose to register either as an individual or as a business. Here we will talk about how to register as an individual. But if you are registering or thinking of registering as a business, you may also want to do so because there may be tax advantages to doing it that way depending on where you reside.

Next, you will need to verify your email address by clicking on the link that Coinbase sends you. This is a critical step, and it is important to use truthful information. Using false information could result in your account being frozen and you will not be able to access the funds you have stored in your account.

Once you have done that, the next step is to submit your number. You need to do this part if you want 2-factor authentication (2FA), which is a huge security upgrade. You don't need to understand how it works to take advantage of it, but I'm going to explain it in the hopes of shedding some light on the subject.

After entering your phone number, click "Send Code" and you will receive an SMS. Enter the code and click "Send". If you entered it correctly, you will be redirected to your dashboard.

Our next stop is Coinbase, which can be a little annoying, but stick with it. This is a very "it is what it is" step, but it's worth the effort.

Verify Your Identity

This is one part of Coinbase that can really upset people, but it has to be done. Coinbase must adhere to strict KYC (Know Your Customer) regulations, so it requires you to upload a picture of a government-issued ID such as a driver's license, passport, or photo ID.

Please understand that verification may take a few tries. One of our team members submitted his ID three times when he signed up. However, we've also read reports of people getting verified on the first try, so this may not be the case for you.

Note that if you choose to upload your driver's license, you will need to upload pictures of both the front and back of your license. The best way to do this is to take pictures with your mobile device. Make sure the lighting is just right and all details are clearly visible to avoid rejection during the verification process.

How long does Coinbase verification take? In general, it only takes a few minutes. However, keep in mind that during the massive bitcoin bull run in late 2017, some people reported that it took several days to get verified. If you can, do it during a relative lull in the market.

Once your account is verified, it’s time to get a payment method set up.

Hook Up Your Payment Method

Before we begin, it is important to note that several banks have taken a rather antagonistic stance towards cryptocurrency. Some banks in the United States have banned the use of their credit cards to purchase bitcoin and other cryptocurrencies. However, you should still be able to use your debit card for such transactions.

Some banks outright refuse to have anything to do with Coinbase. One example is Natwest Bank in the UK, which along with a few other banks, is not allowed to be a part of the Coinbase experience. Coinbase has posted a notice for UK residents informing them of this.

Other than that, setting up your payment method for Coinbase is simple and straightforward. This is one of the reasons why Coinbase is so popular, a user friendly factor.

Select the "Debit/Credit Card" option on the screen. You should see this once you have verified your ID. From there, enter your card details and select "Add Card".

Once that’s done, it’s time for the main event…

Buy Bitcoin(s)

Now we come to the part you've been waiting for - it's time to get some Bitcoins. Coinbase makes this extremely easy, and you can get them as easily as you would get a book from Amazon.

Select the "Buy/Sell" tab from the main menu bar at the top of the screen. After making your selection, you will see a number of different cryptocurrencies available for purchase. At this point, you would naturally choose Bitcoin.

You can either enter the total amount of Bitcoin(s) you wish to purchase or the amount of money you wish to invest. In either case, the next part of the interface will present you with a clear and straightforward display of the costs, the amount of BTC you'll end up with, and a breakdown of the fees associated with the transaction. This is all presented in a form located in the right column of the screen.

There's not much more to say here. It's a simple enough process where you enter the number of Bitcoins you want to buy and execute the trade. After a while, your Bitcoin(s) will show up in your BTC wallet. You can see with some precision what this is worth at any given moment because of the interactive interface that Coinbase provides.

We strongly recommend transferring your bitcoins from Coinbase to a secure bitcoin wallet. To date, there have been no major hacks or intrusions on Coinbase, but it is much safer to keep your coins in a digital or hardware wallet if you plan to hold them for any length of time.

What Is 2-Factor Authentication?

Two-step verification is another way to describe the extra layer of security that Coinbase and other exchanges offer. Instead of simply displaying a login screen, two-step verification requires the user to enter a second piece of information to access the account. This way, if someone manages to get your password, they still can't access your account without the second piece of information.

With 2FA, a numeric code is sent to your mobile device each time you log in. You enter this code, along with your username and password, to access your account. Your account is a little safer because a hacker would need to know your username and password as well as your mobile device to access your account.

You can choose to get a code via SMS or you can use the application known as Google Authenticator. This free app generates codes for you and delivers them in a miraculous way, right when you need them. You will never have a more reliable or faster 2FA experience.

Don't skip this one. Countless people have, and many of those people have come out the other side regretting that decision. When it comes to buying and selling cryptocurrencies, security is paramount.

Things to Think About When Buying Bitcoin on Other Exchanges

Although we've shown you how to buy bitcoin using Coinbase, you actually have many alternatives, and today there are hundreds of cryptocurrency exchanges available online.

If you're the adventurous type, or if you just don't want to use Coinbase for whatever reason, we've outlined many (though certainly not all) of the pertinent points to consider if you're considering buying bitcoin on another cryptocurrency exchange.

Keep in mind that each exchange has its own unique buying process, and it's a good idea to understand that process before you make a purchase. So when you sign up, pay close attention to the different steps involved in the exchange's buying process.

Let’s return to the main point—what you need to think about when purchasing Bitcoin on different exchanges.

• Make sure you can buy bitcoins directly with your local currency. Some platforms don't even offer bitcoins for sale in exchange for traditional, fiat currency. Instead, you'll have to exchange it for other cryptocurrencies. These other cryptos will certainly not be available to you for your initial purchase
• think about the cost. Some charge an almost ridiculous 0.0075 percent, while other exchanges charge as much as 1.4 percent for the privilege of doing business with them. And then think about what it costs to move your bitcoins from the exchange's wallet to one of your own. The prices involved in this little transaction can also vary widely - mix in several other fees the exchange will charge for the privilege of making a withdrawal, and you can see why it's so important to really understand an exchange's fee structure
• Investigate the exchange's reputation. How long has it been around? What do other users say about it in their reviews? Does it have a seemingly solid history? Try to find out a considerable amount of information about them before buying bitcoins through them
• consider whether you intend to make a profit by trading bitcoin for various other cryptocurrencies. If this is your plan, make sure the exchange platform allows you to do so and also lists all the cryptocurrencies you want to trade alongside bitcoin. They almost all list bitcoin, ethereum, and bitcoin cash as tradable pairs, but when it comes to other types of altcoins, it can be a little spotty
• make sure the exchange offers good customer service. It's wise to send an email and see what kind of response you get. Pay attention to how quickly you get a response and whether the support staff seems to know what they're talking about. Keep in mind that Coinbase has one of the shakiest customer support setups around. They swear they've improved, but during the 2017 bull run, people waited weeks for all kinds of emails to be returned
• Think about the transaction limits. Some exchanges limit how much you can buy if you're a new customer. Others limit how much you can withdraw in a day. (If you take a few extra steps to verify your identity, you can usually raise these limits.) Either way, you need to figure out what's right for you. What and how much do you want to buy? And can you do it under the rules imposed by the account you choose
• Evaluate the security of the exchange. If 2FA is not offered, don't use the exchange. Even if 2FA is available, you should research the exchange to ensure that it is a legitimate operation based in a jurisdiction that provides sufficient regulatory oversight to ensure that laws governing conduct are followed and that you and your cryptocurrency are safe. There are plenty of not-so-good alternatives out there. Your research can really pay off;

How to Buy Bitcoin – Questions and Answers