So you want to buy your first bitcoin?
Luckily for you, this has become really easy to do and there are many different options and opportunities at your disposal.
Has purchasing bitcoin really become easier?
Yes, and that’s because there’ve been lots of changes since bitcoin first hit the scene. The cryptocurrency world is filled with many kinds of digital assets and there are many ways in which you can buy bitcoin, such as with your credit card.
It’s really that simple. But let’s start right at the beginning. Here’s everything you need to know about buying bitcoin for the first time.
- 1 Four Important Things To Know Before Buying Bitcoin
- 2 How To Get Started With Buying Your First Bitcoin
- 2.1 Step One: Create A Bitcoin Wallet
- 2.2 Step Two: Choose How To Buy Bitcoin
- 3 How You Can Purchase Bitcoins Instantly
- 4 Bitcoin Vs. Other Coins: Which One Is Better?
- 5 Is Bitcoin The Best Cryptocurrency For Beginners?
- 6 What To Know About Buying Bitcoin And Privacy
- 7 The Question Of Bitcoin Anonymity
- 8 Related Questions
- 9 Conclusion
Four Important Things To Know Before Buying Bitcoin
You’re raring to purchase bitcoin, but before you go ahead you should consider these important bitcoin facts.
- What, exactly, is Bitcoin? Maybe you’ve heard about bitcoin but you don’t really know what it is exactly. Bitcoin refers to the digital asset that’s sometimes abbreviated to BTC. This is just like any other coin but it’s digital. You can buy, collect, trade, and spend these bitcoins in the same way you would other types of money. Bitcoin also refers to the bitcoin network. This network is what carries the bitcoin transactions and it maintains a record of every bitcoin ever made before storing them in a digital ledger.
- Bitcoin is always changing. Its price can change quickly, and sometimes in unpredictable ways. Do you remember what happened in 2017? Bitcoin spiked to $19,000 and then its price dropped to less than $12,000 in just a few days! That’s probably what has made you hesitant to purchase bitcoin, but it’s important to realize the following:
- Bitcoin price is influenced by supply and demand. When more people buy bitcoin, its price spikes. The opposite is true: the more people sell bitcoin, the lower its price goes. In addition to being influenced by what people do with their bitcoins, bitcoin is also influenced by market trends. So, if there’s cryptocurrency news that’s positive, this can have the effect of making bitcoin’s price increase. On the flipside, when there’s negative news about cryptocurrency, this can make bitcoin less valuable. By staying up to date on the market, you can improve your chances of making a profit.
- Bitcoin can be taxed. You can still be taxed when it comes to bitcoin, but this will vary depending on your country. In some countries, any bitcoin profits you own are viewed as capital gains. This means that you’ll have to declare them for tax purposes. You should always ask your accountant what the rules are for bitcoin before you purchase any bitcoins to ensure that you’ll be doing everything lawfully.
How To Get Started With Buying Your First Bitcoin
Right! Now that you know a bit more about bitcoin, you’ll need to follow the right steps to getting started with your very first purchase. Here are the steps you need.
Step One: Create A Bitcoin Wallet
In the same way that you store your cash in a physical wallet so that it’s all in the same place and secure, you want to set up a bitcoin wallet so that your coins will have a place to go to when you purchase them. A good choice is to opt for a noncustodial wallet.
This is important because it gives you the chance to keep, send, and receive bitcoin cash and bitcoin core (BTC). Let’s look at the differences between custodial and noncustodial bitcoin wallets.
Custodial wallets are third parties, such as exchanges. These have control over your bitcoins as they will offer to protect your coins in their system.
They do have some important benefits, however: you can easily manage your coins and you don’t have to worry about losing your private key which would result in you losing all access to your money.
Noncustodial wallets, on the other hand, are appealing to many people because they ensure that you have complete control over your coins. This is because you will get private keys when you set up a noncustodial wallet.
You’ll usually also get a mnemonic phrase that has between 12 and 24 random words to protect your assets, which makes them more secure.
Step Two: Choose How To Buy Bitcoin
Once you’re sorted with your wallet and you’re happy with your choice, you’ll have to find ways to get your hands on your first bitcoin purchase so that you can deposit funds into your account.
You can do this via exchanges, through a peer-to-peer service, or via a cryptocurrency ATM. Let’s look at these methods in greater detail so you can find the best method(s) for you.
Option One: Buying Bitcoins Via A Cryptocurrency Exchange
If you’re new to the world of cryptocurrencies, you might wonder what cryptocurrency exchanges are. These are basically trading platforms that allow you to purchase and sell cryptocurrencies for fiat (which is currency issued by the government) or other digital assets.
You can buy cryptocurrencies in your local currency, and there are many payment methods you can use, such as credit cards, bank wires, and PayPal, depending on the type of exchange you choose to trade on.
When using exchanges, you will need to provide identification, such as in the form of a picture ID. Once you can purchase the cryptocurrency you want, you’ll be able to send it to the wallet you’ve already set up in the previous step.
Here are examples of some popular cryptocurrency exchanges:
Coinbase: This is a valuable crypto exchange because it enables beginners to easily purchase bitcoin, litecoin, ethereum and other types of cryptocurrency. Best of all, you can use the “instant buy” feature by using your debit card on the exchange. It’s especially great for beginners because its interface is really easy to use.
Coinmama: This exchange works in many countries around the world and boasts the highest limits when purchasing bitcoins with your credit card. It’s fast and easy to use, which is especially great when you’re a beginner because you want to get results quickly and smoothly.
Binance: This exchange is really popular with users because it offers some of the lowest fees on the market. You can use it from many places in the world and it’s hailed by many in the industry, so it’s a safe and secure choice for beginner and advanced traders alike.
Bittrex: Bittrex is an exchange that offers some valuable features for beginners. It’s quick and easy to sign up to the exchange and get verified so that you can start trading on it. You also get excellent support and high levels of security.
Option Two: Buying Bitcoins At An ATM
You might not know this, but you can get bitcoins from your local ATM machine in a similar way to how you’d receive cash. The catch is that the ATM has to a cryptocurrency ATM and you can’t use the regular ATM at your local café.
How cryptocurrency ATMs work is that you’ll put paper bills into the machine to buy digital currency and then these will be sent to your crypto wallet.
Bear in mind that some ATMs will require you to submit your photo ID for verification purposes in order to keep you and your transaction secure. You can visit Coinatmradar to find crypto ATMs that are located in your area for the ultimate convenience.
When using a cryptocurrency ATM, you’ll also probably need to submit your phone number into the machine. You’ll receive a one-time password (OTP) and then you’re all set to purchase bitcoin.
You’ll have to enter the amount of bitcoins you want to purchase in dollars, and then put the fiat notes into the deposit area on the machine. The machine will then send your bitcoins to your bitcoin wallet.
Now, when you previously set up your bitcoin wallet, you got a QR code printed on it. You can scan this QR code using the ATM scanner to have the coins sent to your wallet. Easy as pie and a simple way to purchase bitcoins with cash.
Option Three: Purchase Bitcoins Via A Peer-To-Peer Service
As “peer-to-peer service” suggests, you can buy bitcoins by making use of your friends who have digital currencies. Alternatively, there are peer-to-peer services that are available online, such as Bitquick and Paxful.
These services enable you to purchase bitcoins from people who are interested in selling them. You can choose to purchase them online or even in person.
There are many benefits to purchasing bitcoins in this way:
- If you choose the face-to-face option of buying coins, it’s more private than purchasing them online and you’re not required to provide personal information.
- The process is fast because the transaction won’t get slowed down by a verification process.
That said, you’ll have to scrutinize the peer-to-peer services on offer and see which one’s best for you as they will vary when it comes to exactly how they work.
How the process generally works is that you’ll find a seller and open a trade with them. They’ll send the coins to your account and you’ll pay them via a payment method that’s allowed on the site, such as via bank transfer.
If you don’t know anyone who wants to trade bitcoins, you can get started by checking out a bitcoin marketplace such as LocalBitcoins. This makes it really easy for you to connect with people who want to give you bitcoin for cash in person.
All you have to do is use the search bar on the website to choose the amount you’re interested in purchasing, choose your payment method and your location, and then see what available sellers there are.
If you don’t know how much you want to buy, you can simply choose the “all offers” option to receive a list of all the bitcoin sellers that are located in your area.
Option 4: Other Ways To Purchase Bitcoins In Real Life
Besides for dealing with your friends, there are other ways in which you can purchase bitcoins in real life.
Maybe this is an appealing option for you as a beginner because you’re not completely confident with purchasing bitcoins online. If that’s the case, here’s a rundown of some exciting options that might interest you.
Some websites find bank branches where you can deposit cash and get bitcoin in exchange. An example is Paxful.
You can also find local shops where you can purchase bitcoins by using the Bitit website. This enables you to purchase bitcoins from retail stores in various locations.
All you do is find a local store by using the map on the site, then request a Neosurf voucher. Once you have entered some personal info details, the site will send the bitcoins you’ve purchased to your wallet. It takes five to 10 minutes for you to have bitcoins in this way!
How You Can Purchase Bitcoins Instantly
One of the easiest ways to purchase bitcoins instantly is by making the purchase with your debit or credit card. An example of an exchange that has fast transaction times is Coinmama. Here, you can use your debit card to purchase bitcoins.
How the process works is that you’ll choose how many bitcoins you want to purchase, then sign up with the exchange and verify your identity. Once you have a cryptocurrency wallet set up, you’ll provide it to Coinmama and then complete your debit card info.
The coins you purchase will be sent to you immediately! To purchase bitcoins, you’ll be charged a fee that depends on your method of payment. You can find out more from the Coinmama website.
For instant purchases, you can also make use of the “Instant buy” feature of cryptocurrency exchange, Bitflyer. How it works is that you can buy bitcoins with the use of a credit card, debit card, iDeal, GiroPay, or Sofort.
After you’ve created an account, you simply go to the “Instant Buy” section and choose the cryptocurrency you want to purchase as well as the amount. Then you choose the payment method you wish to use. That’s it!
You can expect to pay a transaction fee of 1.95 percent but there’s a 0-percent processing fee.
Bitcoin Vs. Other Coins: Which One Is Better?
If you’re interested in purchasing cryptocurrency for the first time, you might wonder if you should opt for bitcoin or the dazzling variety of other coins that exist on the crypto market.
There are tons to choose from, so it’s not always easy to know if you’re making the right choice. With that in mind, let’s take a deeper look into some of the most popular coins.
Ethereum is a decentralized software platform. It ensures decentralized applications that can run without suffering any interference from third parties or downtime. These are run on the platform’s token, ether.
Ether is valuable because it can be used to purchase other digital currencies. As of 2020, ether is the second-biggest digital currency after bitcoin, as Investopedia reports, so it’s definitely one to watch!
One of the biggest differences between bitcoin and Ethereum is why the coins are used. Bitcoin replaces fiat money while Ethereum helps people develop decentralized apps.
You can, however, make purchases with Ether. It can also handle more transactions per second than bitcoin – you’re looking at 15 transactions versus bitcoin’s seven, as Bit Degree explains.
That said, bitcoin has the most traction for major financial institutions as well as private equity investors, as U.S. News reports. In addition to this, bitcoin is also becoming much more mainstream – you can even purchase a house with bitcoin!
Ripple is a global network that was established in 2012. It uses a consensus ledger that doesn’t require mining. At its most basic, mining refers to the process in which new bitcoins get entered into circulation.
What it means for Ripple not to require mining is that the Ripple structure can prevent network lagging and decrease the amount of computing power it needs to function. This has set Ripple apart from other coins and made it an interesting alternative.
Bitcoin and Ripple are both cryptocurrencies that can be used from all over the world, and both have their own native coins. Both clearly have pros and cons, so it depends on which ones seem to be a better fit for you based on what you’re looking for.
For example, Ripple scores higher points when it comes to having lower transaction fees and shorter processing times. But, on the other hand, bitcoin is better known and more widespread, which makes it quite appealing.
Litecoin is one of Bitcoin’s biggest competitors. Like bitcoin, it’s a digital currency and digital system of payment
Litecoin can be described as an open-source software project and peer-to-peer cryptocurrency. One of its best features is that it boasts high transaction speeds and low fees.
When compared to bitcoin, litecoin can’t be used as payment for as many things because it’s not as versatile. Many renowned companies will accept bitcoin as payment, which definitely gives it an edge over other coins.
While litecoin can be accepted as payment, there’s a fewer number of companies who will take it. That’s something to bear in mind when choosing what cryptocurrency is worth it.
Is Bitcoin The Best Cryptocurrency For Beginners?
When you want to purchase cryptocurrencies for the first time, you might wonder if bitcoin is the way to go. There are many good reasons to purchase bitcoin instead of other digital currency. Here’s a rundown of some of the most important reasons why beginners should purchase bitcoin.
- Bitcoin has a good reputation. Bitcoin was the very first cryptocurrency to enter the market, all the way back in 2009. This means that it has worked its way up over many years and has continued to improve its features, such as when offering people the chance to trade on many platforms.
- It’s available almost everywhere. You can find bitcoin in over 90 percent of countries in the world! Being so available means that bitcoin has become a method of payment in various places, such as restaurants. Therefore, having bitcoin will be versatile, no matter where you’re based, and you’ll be able to replace fiat currency with it in many instances.
- It’s for everyone. Gone are the days when bitcoin seemed to be digital currency reserved for people who had a lot of experience when it came to trading or were extremely tech savvy. These days, anyone can purchase bitcoin, and this is thanks to how the bitcoin platform has become really simple to use.
What To Know About Buying Bitcoin And Privacy
If you’ve heard about bitcoin, chances are at some point issues about privacy have come up. Once of the things you might worry about when purchasing bitcoin for the first time is whether or not it’s safe to do so.
The important thing to remember is that you have to secure your wallet, in the same way that you would want to secure your wallet in real life. It’s really up to you to use bitcoin in the safest way possible. You can do this in the following ways:
- Only use your bitcoin addresses once. This is because bitcoin is not anonymous. Every single bitcoin transaction is stored permanently and publicly on the network. This means that anyone can view both the transactions and balance of any bitcoin address, and this information is even provided on the Bitcoin website itself! Of course, despite the above, a person’s identity does not get exposed but that doesn’t mean you should use your bitcoin address multiple times. It’s just not safe.
- Stick to keeping small amounts of bitcoin in your wallet. You wouldn’t walk around with thousands of dollars in your wallet in real life, right? Similarly, you should be wary of having large amounts in your bitcoin wallet. Just because it’s digital currency, it doesn’t mean that you shouldn’t secure it as much as you would fiat currency. So, ensure that you only keep small amounts for your daily needs in what’s known as a “hot” wallet and store larger funds in a “cold” wallet.
What’s the difference between a “hot” and “cold” wallet? A hot wallet is connected to the internet, while a cold wallet is not. It allows you to store your funds offline, thus making them much more secure.
- Choose a secure wallet. Besides for considering “cold” wallets in which to store your funds, you should also choose a wallet that boasts excellent security features. One of the safest storage devices is Ledger Nano S, which is a secure wallet that has many security features in place for users, such as requiring them to press two buttons simultaneously when confirming transactions. Another example of a safe storage device is Trezor. It generates your bitcoin private keys offline and this wallet can be further secured with up to 24 words plus a passphrase.
- Never lose your keys. A private key is really just a term that refers to a secret number that only you will know when using your wallet. The great thing about having private keys to your bitcoin wallet is that no one else can gain access to your account. However, the danger is that if you lose your private keys, you won’t be able to gain access to your account and no one will be able to help you!
The Question Of Bitcoin Anonymity
Following the above-mentioned strategies to keep your bitcoin safe from loss or theft is important because there are some misconceptions when it comes to bitcoin anonymity. The truth is that bitcoin is not completely anonymous! In order to understand this, let’s take a look at how Bitcoin actually works.
Basically, the Bitcoin blockchain is a public record of every bitcoin transaction and these transactions can be accessed by anyone at any time, which is quite frightening. That said, it’s important to realize that all bitcoin transactions are encrypted with the use of public key cryptography.
What this means is that people’s identities are hidden and can’t be accessed when they make transactions. This is why people say that bitcoin is pseudonymous instead of anonymous
It’s like you’re operating with a pseudonym to protect you from hackers, even though your actual transactions are not hidden. For more information about bitcoin and why it’s not anonymous, read “How To Use Bitcoin Anonymously: A Detailed Guide.”
To make bitcoin transactions, you will receive two keys:
- An address (otherwise known as a public key)
This address is seen by anyone and everyone and will be published on bitcoin’s blockchain.
- A private key
We’ve already mentioned private keys and explained what they are but it’s also important to know that private keys are what keep your real identity hidden as they are only known by you.
In one way, you could say your private key is your signature because it’s also used as a way to verify that the transaction was made by you.
So, when a transaction appears on the bitcoin blockchain, it will show up as two public keys that signify the transaction has taken place between them. The time that the transaction took place and the transaction amount will also be displayed.
When we talk about bitcoin anonymity, it’s important to mention bitcoin exchanges. You might think you’re being secure when using these but bear in mind that if you’re using a bitcoin exchange you will have had to supply your personal information when creating your account.
This information could include your full name, telephone number, and even a photo ID, depending on the account level that you chose to set up. If there is a security breach on the exchange, then your details could be exposed to hackers.
This is always a valid concern and should be something important to consider when choosing the right exchange because you want to be sure that you’re staying as safe as possible so that security concerns don’t hamper your bitcoin trading experience.
How many bitcoins should you start with?
The cryptocurrency exchange you choose to buy your first bitcoin will often set a minimum amount to purchase. An example is Coinbase, which states users should buy bitcoin from $2. With other purchase methods, it’s a good idea to start as small as possible so you can become comfortable with it.
Can you buy less than one bitcoin?
You can definitely buy less than one bitcoin because a bitcoin can be split up into eight decimal points. So, you can buy half a bitcoin, or even one-hundredth of a bitcoin. In case you’re wondering how small you can go, the smallest Bitcoin amount is a satoshi, and it’s 0.00000001 bitcoin!
What do you do if you want to purchase many bitcoins?
Maybe you’re interested in purchasing large amounts of bitcoin. If you’re looking at thousands of dollars’ worth, then you’ll have to find specific brokers and exchanges that will deal with more expensive transactions. These services are called Over The Counter (OTC) services.
Buying BTC has never been easier! Whether you’re an experienced trader or complete beginner, there are many different ways in which you can easily and quickly purchase bitcoin. In this article, we’ve outlined different methods you can use when purchasing your first bitcoin.
We’ve also offered you valuable tips, such as when it comes to keeping yourself safe during transactions and when choosing the best cryptocurrency exchange on which to trade.
Now you have the most important information at hand to make your first bitcoin purchase. It might just be the start of an exciting trade.
Last Updated on August 12, 2020 by Eito