Do you want to learn how to buy bitcoins? Then you are at the right place. Follow me to the end of this article and you will learn what many don’t know about buying bitcoins.
After you finish reading this article, you will understand:
- How and where to buy bitcoin
- How to find the right bitcoin exchange for you
- How to secure your bitcoin after buying it, and
- How to avoid scams when buying bitcoin.
The steps involve trading your fiat currency, like US dollar, Euro or pounds for bitcoins and transferring your bitcoin to a secure bitcoin wallet.
We have listed some bitcoin exchanges we trust you can use to buy bitcoins. Use these exchanges or you do a proper research on any exchange you want to use, as some exchanges exist to steal your bitcoins or your personal information.
We have either had personal experiences or done extensive research on the exchanges listed here and we are careful not to list scam exchanges on our website.
What to look for in a bitcoin exchange
In general, bitcoin exchanges all share certain important functions, but what differentiates them as an effective trading platform are the small changes in operations.
Below are some vital factors you should look out for when selecting an exchange for buying bitcoin.
You will have a limit to payment options if you want to buy bitcoins privately. Obviously, you can’t use payment options like Credit Card, Bank transfer, PayPal, and others that need your personal information to buy bitcoins privately.
Most exchanges will need you to verify your identity before carrying out transactions with you. The most private way to buy bitcoin is with cash or cash deposits.
Bigger bitcoin exchanges and brokers will be your option if you want to buy bitcoin in large amounts.
Coinbase, for example, offers high limits for buying bitcoin with your bank account, while Coinmama offers the highest limit for buying bitcoin with a Credit Card.
How fast you get your bitcoin depends on the payment method you use. Buying your first bitcoins may be a bit slow, but once you get everything set up all later purchases will be much faster.
Bitcoin ATMs offers the fastest way to buy bitcoin if you’re lucky to have one in your area. Some brokers offer instant buys with banking transfer, Credit Card, or Debit Card, but they are kind of rare.
There is no official price for bitcoin, but you can use websites like Bitcoinaverage and Coindesk bitcoin price index to know the average price of bitcoin and compare with what your exchange is charging you to see if the deal is fair enough.
The CoinDesk Price Index shows the average price of bitcoin across leading global exchanges to create a strong reference point.
When trusting a bitcoin exchange with your money, you want to be sure they are reliable and have a proven record of trust among their customers.
Find out how long the exchange has been in existence and the experience users have gotten with them. Using discussion forums like Bitcointalk and Reddit to get users feedback will help.
An easy way to know a trustworthy bitcoin exchange is the kind of reviews they are getting from their customers. Our Bitcoin exchange reviews can help you find a trusted exchange.
How much does the exchange charge for their services? Most exchanges don’t usually display their trading fees so visible for users, but you can always find it in the footer of the exchange website.
The fee structure will vary based on the payment method you choose to use. In the bitcoin market, most exchanges use a volume-based fee plan, which charges small fees to customers who trade large chunks of bitcoin
This may be the most important factor to consider when buying bitcoins. I guess you already have a payment method in mind before now. If not, continue reading to learn more about available payment options.
Bitcoin Payment Options – Pros & Cons
To buy bitcoins, you’ll need to exchange your local currency, like the dollar or the euro, for bitcoin. Here’s an overview of the most common payment methods.
Buying Bitcoins With Credit Card
The most common way to buy bitcoin online is via Credit/Debit card, which is why it’s no surprise so many people want to buy bitcoins using this method.
- Credit/Debit card is a payment method many are familiar with.
- Delivery of bitcoins is instant once initial verification is done.
- Higher fees: If you are not in a rush, use bank transfer for lower fees.
- It is not a private way to buy bitcoin as you’ll need an ID to buy bitcoins with Credit Card
Where to buy bitcoins with Credit Card
Coinbase – Ideal for users in USA, Canada, Singapore, and Europe
Coinmama – Serves a global audience
CEX.IO – Buy and sell bitcoin globally
BitPanda – Offers service to customers in Europe and the rest of the world.
Buying Bitcoins With Cash
Cash deposit is or at least one of the fastest and most private ways to buy bitcoin. With this method, you will be able to get your bitcoin within minutes to a few hours.
Using a site called MeetUp, search for bitcoin meetup places around you to meet people to buy bitcoins with cash. For security purpose, it is always advisable to meet people in open places like a restaurant when buying with cash.
- Can be more private since you don’t need to show any personal information
- Can be fast; No need to wait for days for a bank transfer processing time.
- Buying bitcoins privately comes at a cost. Cash exchanges have prices that are 5-15% above market rate
- High risk of getting scammed
Where to buy bitcoins with cash
LocalBitcoins – Global marketplace. Buy and sell bitcoin with your local currency and many more payment options
BitQuick – USA market
Wall of Coins – USA market. Uses a cash-based system to buy and sell bitcoins.
Buying Bitcoin With Bitcoin ATM
There are Bitcoin ATMs all around the world that lets you buy bitcoin with cash. You insert cash into the machine and get bitcoins sent to your wallet.
Some Bitcoin machines enable you to buy bitcoin as well as exchange it for cash, which is bi-directional, while others enable only single direction trade.
You may need an existing account to buy from some ATM providers. Use the CoinATMRadar map to find a Bitcoin ATM location in your city and neighborhood. Currently, there are over 1104 bitcoin ATMs in 56 countries.
- Can be more private since in most cases, they don’t demand any personal information.
- If you have an ATM in your area, it can be a convenient and fast way to buy coins.
- Privacy comes at a cost; Bitcoin ATMs sells bitcoin for 5-15% above market price.
Buying Bitcoins With PayPal
There is no way to buy bitcoins directly with PayPal. In fact, under PayPal’s terms and conditions, merchants are not allowed to sell bitcoins for PayPal.
I do not recommend buying bitcoins with PayPal because of the high fees and high risk associated with such transaction, but if that’s the only payment option you have, exchanges like Virwox or Paxful are good options to use.
VirWox is a digital currency exchanger for Second Life Linden (SLL). They convert your money to SLL and then convert the SLL to bitcoins.
Some Common FAQ on Buying Bitcoins
Why does it take long to buy bitcoin?
The delay in completing a bitcoin transaction is usually a problem of the payment systems and not with bitcoin. Bitcoin transactions only take about 10 minutes to confirm but, bank transfers in the U.S, for example, can take up to five days to complete.
This means a merchant cannot release bitcoins to a customer until five days have passed unless the merchant is willing to take the risk.
Why do Bitcoin Exchanges ask for ID verification?
This is in compliance with Know Your Customer (KYC) laws which require that bitcoin exchanges know the real world identity of their customer.
Have any question or comment? Let’s discuss in the comment below!
Photo credit: KryptoNatasha – Own work, CC BY-SA 4.0