With the starting of this month the market cap of cryptocurrency soars to record $28 billion. Experts believe that this trend is going to continue in coming years.
Out of so many cryptocurrencies Bitcoin’s market share is around 65%. So you can do the math what is 65% of $28 billion. We have already posted about Bitcoin & its importance. Hence there isn’t any need for further explanation why you must start investing in buying Bitcoins.
Why Investing in Bitcoin & How to Buy Bitcoin?
Apart from soaring market cap of cryptocurrencies like Bitcoin, they also come with many advantages that you do not find in fiat and digital currencies.
For example, people around the world love using Bitcoin because it ensures anonymity. As you know, Bitcoin does not require your name just digital wallet IDs is enough.
Credit card users expose their full credit line to the merchant they are giving their card to. But on the other hand a Bitcoin holder sends exactly what he or she wants to the merchant without any further information.
Moreover, Bitcoin is designed to eliminate any involvement of a third party because of Blockchain system.
Finally, transaction fees are very low for any Bitcoin exchanges.
I hope after reading until now you might think of buying few Bitcoins now. So in this article, I am going to show you fast, easy & safe ways to buy Bitcoin.
Bitcoin Exchanges and Wallets
Buying bitcoins is not very easy because transactions using credit cards or PayPal can easily be reversed with a phone call to the card company using chargebacks.
So as a newcomer before you start buying bitcoins you need to know about Bitcoin Exchanges and online wallets. These two are very important tools for buying bitcoins.
There are number of exchanges and wallets available in the market that you can choose from. Usually exchanges are of two types, full blown exchanges for institutional traders on the other hand basic wallet services with a limited buying and selling options.
Majority of these exchanges and wallets store fiat as well as digital currency for you just like a regular bank.
Moreover, these exchanges and wallets do not guarantee total anonymity and requires lengthy setup procedures involving your id proof and detailed contact information.
Every regulated exchange has to follow these procedures and meet KYC as well as anti-money laundering requirements whichever country they are operating in.
But they are the best option if you are looking for trading and speculation with Bitcoin.
However, as a newcomer you do not have to care about full blown exchanges because you are not going to trade or speculate. Because you just want to buy bitcoins.
How to Choose a Best Bitcoin Exchange?
There are over hundreds of bitcoin exchanges depending upon the country you live in. A new Bitcoin buyer might get confused choosing an exchange.
Choosing a best Bitcoin exchange can depend upon various factors.
1. Exchange Rate: You need to compare local Bitcoin exchange’s price to the global average price given on an index. This comparison will help you getting best Bitcoin exchange rates.
2. Transaction Fees: Different exchanges charge different fees for its services. Usually most of the brokers charge flat 1% per transaction. If you are a trading for high volumes, then charges can be 0.25% – 0.5% per trade. Choose an exchange with lower transactional fees.
3. Payment Method: Choose an exchange that accepts your preferred payment method like credit card or direct bank transfer. Fees can depend upon the payment method you choose. For example credit card purchases charge 5% – 10% and direct bank transfers could be free.
4. Amount Limitations: Each exchange limits buying of bitcoins depending upon the level of identification. For example, in certain exchanges regular users can buy bitcoins worth up to $1000 – $1500 per day and verified users can buy up to $50,000 per day. So you need to choose an exchange depending upon how much you are willing to buy bitcoins.
5. Delivery Speed: Buying bitcoins take time especially if you want to buy in large volumes. Verification can take weeks because there are various levels of verification that you need to qualify. So you need to go for an exchange with higher delivery speeds.
6. Privacy: Although every exchanges are required by law to collect information about user’s identity but choose an exchange that requires your minimum personal information.
7. Regulatory Compliance: If you want to avoid fraud, then always go for a regulated bitcoin exchange. First time users must have trust on the exchange that their funds are secure with them.
So check for regulatory compliance on the exchange’s website.
These were 7 factors you need to keep in mind before choosing an exchange.
Getting a Bitcoin Wallet
As you know cryptocurrencies are nothing but private keys that are generated and the information is needed to be stored in some safe place.
So Bitcoin wallets are the place where you can store private keys and access your public bitcoin addresses whenever you want to spend your funds.
Bitcoin wallets come in various forms.
1. Desktop Wallets
You can install original bitcoin client Bitcoin Core to start running a wallet. It will allow you to create bitcoin address for sending and receiving of the cryptocurrency, and also storing the private key.
You can choose other desktop wallets like MultiBit, HIVE, Armory, DarkWallet etc depending upon your operating system, security and anonymity.
2. Mobile Wallets
If you are always on move, then you can download mobile wallets as an app onto your mobile phone. You can take advantage of NFC (Near Field Communication) feature to tap the phone against a reader and pay bitcoins without entering any information.
However mobile wallets are not full bitcoin clients because the download size of entire bitcoin blockchain. Some Android based mobile wallets are Bitcoin Wallet, Xapo, Mycelium etc.
3. Online Wallets
These wallets are web based and store your private keys online and can be linked with your desktop or mobile wallet. Actually as a new bitcoin buyer you must choose online wallets like CoinBase, Circle, Blockchain etc.
You can access them from anywhere.
4. Hardware Wallets
Hardware wallets are dedicated device that stores your private keys and are manufactured in limited numbers.
5. Ledger USB Wallets
They use smartcard security and very popular among high volume bitcoin buyers. Some of them are Trezor, KeepKey, Ledger Nano etc.
6. Paper Wallets
The last wallet is paper wallets to store bitcoin address by creating an image containing two QR codes, one for public address and another for private key.
As a new buyer I recommend you to choose online wallets especially CoinBase as your bitcoin wallet.
A Comparison of 5 Best Bitcoin Exchanges
You can choose from 5 different bitcoin exchanges to buy your Bitcoins from. You have to choose an exchange depending upon factors that we mentioned in paragraph called choosing a Bitcoin exchange.
- Best exchange to get started for newcomers.
- Instant buying options from Credit or debit card.
- Higher buying Limits
- If your purchasing through bank transfer, then it can take a week for a transaction.
- It tracks you so not good for security reasons.
- Only available in 33 countries.
- Available around the world.
- Higher limits with a credit card
- Fees is very high compared to other exchanges.
- Fees are very low almost 0% if you live in US and Europe.
- Your account can be banned if you are sending bitcoins to a questionable site.
- Cluttered UI.
- For higher level verified users require no personal information.
- Fast purchase via cash deposit.
- Not good for buying large volumes of bitcoins.
- Prices are higher.
5. Bit Quick
- Physically very secured.
- Higher fees for cash trading.
You can choose any one of these 5 exchanged depending upon your need. But here I am showing you how to buy bitcoin with Coinbase
Step by Step Guide to Buying Bitcoins with Coinbase via Credit Cards
You can use Coinbase to buy bitcoins in just less than 10 steps.
Step 1: Download the Coinbase App on your phone and Open the app, you will see the Bitcoin price.
Step 2: Now Sign Up giving your name, email address and password. Your sign up is complete.
Step 3: You can select your city and enter the home address.
Step 4: You can also switch to desktop from your mobile.
Step 5: Give your phone number and you will get a code on your mobile phone, verify with the code.
Step 6: Now Choose Payment Method. It can be either bank account or credit/debit card.
Step 7: I recommend to use credit/debit card. Fill the required information and you are done.
As a new buyer you can buy bitcoin worth up to $1000 per day.
Step 8: Choose the number of bitcoins you want to buy. It is not necessary to buy 1 full bitcoin as you can buy in decimals like 0.1 bitcoin or 0.2, 0.3 etc.
Step 9: As a beginner try buying 0.1 Bitcoin for around $100+. Give your credit card details and mobile wallet information for storing the bitcoin. Click the “buy bitcoin Instantly” button.
Step 10: You are done! The bitcoin will be delivered to your mobile wallet.
With Coinbase the regular users can buy bitcoins up to $1000 and fully verified users can buy $50,000 per day. With the passage of time you can increase the daily buying limit from $121 to $1000 to $50,000.
In coming articles we will talk more about buying strategies for bitcoins.
4 Other Different Ways for Buying Bitcoins
Here are some other ways of buying Bitcoins other than Credit/Debit card or bank transfer.
1. PayPal: On the contrary buying bitcoin through PayPal could be bit risky and only few exchanges offer this option.
2. Cash: If you use LocalBitcoins then buyers and sellers located nearby can meet and exchange Bitcoins using cash or wire transfer.
3. Gift Card: Only applicable for users in US who can buy bitcoin using Visa, MasterCard or Discover Gift cards.
4. Money Order and Personal Checks: You can buy bitcoins using money order and personal checks also.
New bitcoins buyers do not have to go for above mentioned ways because credit card or bank transfer are the best ways.
Caveats in buying bitcoin
I also need to give you other side of the picture also. Bitcoin can be risky at times because of following reasons.
Risk of Loss: You lose your bitcoin if it is not stored properly. Hackers can hack your private key anytime.
High Volatility: Their value is very volatile and can depreciate and appreciate with no bounds.
Not Liked by Establishment: Moreover, governments around the world are wary of bitcoin because of its anonymity. You really do not know who is buying and selling illegal commodities like drugs or weapons.