Bitcoin is becoming more popular every day. Its popularity is influenced not only by new price records but also by increasing the amount of information about cryptocurrencies in media sources. Those factors lead to a rise in the number of investors. And then the question arises – how to buy bitcoin?
When investing in cryptocurrency, a user must choose a reliable exchange, not overpay due to high commissions, and consider many more aspects. At the same time, even one mistake can lead to a loss of money. In this guide, we’ll help you buy your first bitcoin or any altcoin.
A beginner, as well as an experienced investor, can lose money when buying digital assets. The reason for this may be their own mistakes or scammers. Our guide will help you avoid risks and make your cryptocurrency experience a smooth one.
How to Start Buying Bitcoin
One of the easiest ways to buy bitcoin is to use special exchange services. Exchangers allow you to buy and sell many popular cryptocurrencies for fiat currencies. You can pay for the operation in various ways, such as electronic payment systems, bank cards, and cash through ATMs. All you need is a created wallet for your Bitcoins. By the way, we have already talked about how to choose the right cryptocurrency wallet for your purposes.
When you use an exchanger, it is essential to specify the wallet address for the exact cryptocurrency you are using. Suppose you, for example, purchase Bitcoin and indicate an Ethereum wallet in the application. In that case, the funds will be irretrievably lost, and it is impossible to cancel such an operation after it has been processed.
When making transactions, it is important to remember that in many payment systems, they are non-refundable. If you send your crypto to the wrong address, they are likely to be lost.
At Changelly, we offer users a wide variety of options to buy Bitcoin and other cryptocurrencies. You can choose from the list of the most attractive rates for you and pay by any convenient method, including card, bank transfer, or Apple Pay.
Step One: Choose an Exchange
The easiest and most convenient way to buy cryptocurrency is to do it directly on the exchange. Today, many trading platforms allow you to deposit funds through electronic payment systems or directly from bank cards. The user can replenish the balance on the exchange wallet with your local currency and then buy digital assets with these funds.
Exchanges charge fees for their services. Their size may vary depending on each site. Usually, it is 2-5%. It depends on the deposit method and the platform rules. Before replenishing an exchange wallet, you can check the commissions on several exchanges and choose the most profitable option. This will save 1-2% of the amount that will later be invested in Bitcoin or other coins.
Not every exchange can be trusted. There is always a risk of using the services of a fraud site that was created by scammers. So, what are the criteria for assessing the trust of the exchange?
- Exchange’s publicity and reputation. It should be easy to find information about the owners of the platform and its team. This fact is one of the indicators that the company has nothing to hide. Exit scams, an event when a team abandons a project and hides with clients’ funds, happened primarily with exchanges that adhered to anonymity.
- Registration and license of the exchange show the company’s transparency. The country of registration itself can say a lot since the activities of the site must comply with the relevant legislation.
- Website and social nets activity. The availability of fresh news, updates, and new products indicate that the company is determined to develop its business in the long term. A scam from an exchange that has been operating for several years is significantly reduced.
- Technical support, quick responses, and problem-solving are also essential and sometimes play an important role in preventing fraud.
- Partners. Cooperation with large and well-known companies also testifies to the good faith of the exchange. For example, when connecting any payment system, the exchange undergoes a thorough legal check from the opposite side.
- Anti-money laundering requirements. Although identity verification (KYC) and anti-money laundering measures are often perceived ambiguously in the crypto community, this requirement gives an opportunity to work legally. Moreover, it helps to prevent hackers from withdrawing funds after being hacked on another exchange.
- Ease of withdrawal. It is quite reasonable to first test the work on it, get acquainted with the functionality, security measures, as well as the possibilities of withdrawing funds and its implementation in practice.
Step Two: Connect Your Exchange to a Payment Option
Usually, such cryptocurrency platforms require to pass the Know Your Customer (KYC) process. It means that the user should share some personal information like a driver’s license or ID, information about the employer, source of funds, etc. If a user does not want to give his/her personal information, it would be hard to find a place to buy crypto for fiat. However, users can exchange stablecoins such as USDT or USDC on the decentralized exchanges without sharing personal information.
The requirements of KYC can be regulated by the government and depend on the country of residence. After the confirmation, you can connect your account to the payment method. There is a wide range of them – from bank transfers to ApplePay. The fees may vary.
Step Three: Place an Order
Once you have chosen the method of payment, you may select a cryptocurrency you want to buy. When you use an exchange, you should place an order to buy Bitcoin (or an altcoin). There are quite a few variants to choose from.
Let’s start with the most convenient way for novice users. You can place a market order to buy or sell cryptocurrency immediately at the market prices. This kind of order is used when the user wants to buy the asset regardless of its price changes. Keep in mind that the crypto market is extremely volatile, so if you have time to wait for a better price, do it!
The limit order is used to buy or sell cryptocurrency at a specific or better price. The order is executed once the market reaches a determined price. However, the transaction is not guaranteed to be executed.
One more to discover is a stop order. The main feature is that the user can place an order at a price that is not yet available on the market. Once the price is available, the stop order is triggered.
We’ve already told all about the trading orders in our article. Check it out to get acquainted with all of them.
Some cryptocurrency exchanges have the detached integrated exchange and purchase feature, allowing users to buy or swap crypto without being on the exchange terminal. It reminds the typical instant exchanger. However, it also requires the KYC process to pass.
Step Four: Safe Storage
Bitcoin, like any other cryptocurrency, needs a place to be kept in. Obviously, it can be just an internal exchange address, but it’s not quite safe. Keeping cryptocurrencies in your personal wallet is more secure. However, it would help if you differentiated the types of wallets according to your goals.
The best place to store Bitcoins (if you are not going to trade it) is any hardware wallet. This device protects your cryptocurrency from an internet connection and consequently from any kind of invaders. There is also a great variety of wallets available on the market. They differ in their functions – some of them are used for only storing the coins, others give an opportunity to swap, trade, and sell cryptocurrencies. Furthermore, the wallet can be a place where users can buy Bitcoin. Some have an integrated exchange or purchase function, so it’s easy to buy crypto right in the wallet and get it at your address.
You can simultaneously have two or more wallets: one account on the exchange to trade cryptocurrencies, one mobile/desktop wallet (we recommend using multi wallets) to keep small amounts of crypto, and a hardware or paper wallet to hold Bitcoins long-term.
By the way, we’ve collected the best Bitcoin wallets, so you can choose the one that suits you the best. There is a brief explanation of the wallet types below.
Centralized exchange provides users a custodial account. Holding your crypto assets on the exchange account is not safe. In order to keep them safe and sound, you can transfer the coins to your personal account, so you will be able to control your funds. If the account becomes compromised, your funds will be lost. Exchange cannot reach your cryptocurrency if you are holding it on another wallet.
Examples: Changelly PRO, Binance, Kraken, etc.
Desktop/Web Wallet or an App
Desktop, web, and mobile wallets, or any wallet that is connected to the Internet, is called a hot wallet. Hot wallets store information about the cryptocurrency state and all users’ transactions in the blockchain system and allow you to send money if you have access to the Internet instantly. Since all the data about this is stored on the network, it can be insecurely protected.
Examples: Jaxx Liberty, Exodus, Mycelium, Lumi wallet, Freewallet, etc.
Hardware wallets are a separate device that stores your data independently of the network. Such a wallet is great for the long-term storage of cryptocurrencies. However, you won’t be able to use such a wallet quickly: to pay with cryptocurrency or enter it on the exchange, you will need to wait for confirmation of transactions from several network users, which can take several hours.
Examples: Ledger Nano S/X, BC Vault, Trezor, Bitfi, etc.
A paper wallet is another cold storage used to keep your crypto for the long term. A paper wallet is a piece of paper on which private and public keys are printed in the form of a QR code. Paper wallets are generally better and safer than any other type of wallet. It doesn’t take much effort or technical knowledge to create one. A few simple steps will significantly secure your coins.
Paper wallets are safer and more secure than hardware wallets, which can get corrupted or have software glitches. A paper wallet is the simplest form of cryptocurrency storage. Find the precise steps of paper wallet creation in our guide.
Alternate Ways of Buying Bitcoin
While exchanges and instant swap platforms are the most popular way to buy Bitcoin, there are two more options to consider if you want to buy Bitcoin for cash or with your credit or debit card.
Bitcoin ATM is a real physical ATM created to buy Bitcoins both for cash and bank card. To buy Bitcoin using Bitcoin ATM, you should insert the cash into the machine, fill in the wallet address, and proceed with the transaction. It’s easy to find the nearest ATM thanks to the ATM Radar. Currently, there are almost 14,000 Bitcoin ATMs around the world.
Peer-to-peer exchanges (p2p) are platforms where users can connect directly. There are quite a few of these kinds of services, such as Binance P2P, LocalBitcoins, and BitcoinGlobal.
The p2p exchange gives an opportunity to get the best deal possible. How to buy Bitcoin on p2p exchange? You should create an account on the platform, post a request to buy (or sell) BTC, or choose the ready bids. The sellers provide some info such as desirable payment method, price, and place (in case he/she wants to meet and pay in cash).
Find out more about p2p exchanges in our guide.
Should you Buy or Sell BTC Now?
Now, we are watching the real bull run of Bitcoin. Recently, the price broke through the all-time highest point and proved to be a great long-term investment. How did Bitcoin become great again? Let’s make a recap of the events of 2020 to answer the question of whether or not to buy Bitcoin now!
During 2020 Bitcoin proved to be stiff despite its inherent volatility. Reportedly, the recent price movements to $40,000 were driven by the short-term investors and novice holders. The experts say that we are now at the beginning of the new Bitcoin bull run. How is it possible? The past years’ experience shows us that the global negative news seems to affect the price of cryptocurrencies — for instance, the COVID-19 effect.
How the coronavirus influenced the Bitcoin price? The fact is not only Bitcoin and other cryptocurrencies’ price. In March 2020, we saw a strong correlation between stock, oil, and cryptocurrency markets – they all collapsed.
Investors’ first reaction was panic. People started to move into cash: stock investors and traders withdrew their money to cash, and crypto investors swapped their crypto assets to stablecoins (so-called crypto-cash equivalent). This moment was the right time to buy the dips on any market, including cryptocurrency (btw, Bitcoin fell to a bit more than $5,000).
People calmed down when the government promised to give payouts, and the market began to recover. Bitcoin fans pointed out that the halving in May may help to correct Bitcoin price, too.
There are more factors to consider when speaking about Bitcoin’s recent success. Last year, PayPal announced that it would allow its customers to trade, buy, and store cryptocurrencies on its platform. Moreover, the merchants will receive payments in crypto coins as an alternative to other methods.
Why is it so crucial for the crypto industry? Well, PayPal has an enormous audience (220 million people only in the USA). So, PayPal gives the opportunity to get acquainted with cryptocurrencies for those who haven’t yet considered it a means of payment. This implementation is a way to embrace the crypto, and it triggered the big comeback.
We’re sharing this idea, however, we are not saying that Bitcoin will replace fiat. It can become just ‘another type of money’ for those who want to use a more ‘liberated money system.’ So, the answer to the question ‘should you buy Bitcoin?’ is ‘yes.’ However, maybe you need to wait for the moment to buy the dips.