Bitcoin is one of the newest and most popular ways of making investments, and people around the world are using it for this very purpose. Of course, you don’t have to invest in it and keep it for long periods of time — you can simply use it for trading if you are after a small amount of cash that can be obtained quickly.
However, whether you are after trading or investing, you still have to buy it first, which can be done in a few different ways. That is what we will talk about today — different methods of how to buy Bitcoin and what you should keep in mind while doing it.
Tips on how to buy Bitcoin
To make sure that you will properly understand everything that we are about to share with you, we advise that you check out our article on Bitcoin. That way, you will know exactly what it is, how it works, and all the necessary details about it.
Now, the first thing to note on how to buy Bitcoin is that there are only two safe ways of doing it:
- Offline — buying Bitcoin on a crypto ATM
- Online — buying on a crypto exchange
How to buy Bitcoin on an ATM
If you happen to live in an area that offers crypto ATMs, all you need to do beforehand is create your private Bitcoin wallet, to which you are going to send your coins.Â
Crypto wallets come in several forms, and you can learn all about them by reading our guide on crypto wallets. If you want the short version — there are online (hot) and offline (cold) wallets. Online wallets are those that have constant access to the internet, while the cold ones do not.
Online wallets are more practical due to constant internet connection, but they are also at risk of being hacked. They include browser extensions, while offline wallets can be hardware wallets or paper wallets. These wallets are safer, but less practical. There are also mobile wallets and desktop wallets, which can be considered hot and cold, depending on whether or not your internet is turned on on the device you are using.
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Now that you know all that, just pick the wallet that suits you best, go to the nearest Bitcoin ATM, insert your fiat money, and watch as the ATM converts them into Bitcoin. You can then store them on your wallet, and that is that. In the future, you can transfer them on an exchange if you want to sell them, or just keep them in your wallet for as long as you want.
How to buy Bitcoin on a crypto exchange
When it comes to buying your coins on a crypto exchange, the situation is somewhat more complicated. First, you will also need your own wallet, as holding your funds in an exchange’s wallet is never a good idea. While most exchanges these days still have pretty good security, it is better not to risk it.
Besides, many in the crypto industry like to say that you don’t own your coins if you are not the one who controls the wallet’s keys. Needless to say, if your coins are in an exchange-owned wallet — it is the exchange that owns the keys.
Next, you will have to choose an exchange that fits. This means that it needs to fulfill certain criteria, such as:
- Accepting fiat currencies
- Offering Bitcoin (pretty much all exchanges do)
- Services the area you live in
Not all exchanges support fiat trading, meaning that some of them allow you to only buy cryptocurrencies with other cryptocurrencies. In other words, you can’t use your USD, EUR, and other fiat currencies to buy Bitcoin on them. Instead, you need an entry-level exchange, which allows you to make deposits in traditional currencies, either via credit/debit card, or wire transfers.
Also, not all exchanges operate in all areas. There are many that would serve mostly all European countries, but they do not allow Americans to create accounts. And, since they require you to verify your account and prove your identity — that means that this is not something that you can bypass with a simple VPN.
Some of the best exchanges that are available to US citizens include:
Of course, if you already have some coins, and you wish to buy Bitcoin with them, you can use any crypto-to-crypto exchange, including:
- eToro
- CEX.io
- Coinbase
- ZBX
- EXMO
There are many others for each of our three categories, but these are among the most popular and the best-known ones.
How to choose a cryptocurrency exchange?
As mentioned before, choosing the right exchange is not as simple as randomly picking one and hoping that it will be all that you need it to be. There are some things you must seek out and check. Always remember that doing a background check on anything is the best way to reduce risks and losses in the crypto industry. With that in mind, here are some things that you should look for when picking an exchange.
It needs to be regulated
It is important for an exchange to be regulated, so that your chances of losing money pointlessly would be reduced. If you choose to operate on an unregulated exchange, you might end up in trouble with the law, which can result in large penalties for you and the exchange alike. Instead of taking that risk, just use one that was approved by the financial regulators.
It must have an AML policy
AML, or Anti-Money Laundering policy is a must-have for an exchange, but many out there still do not have it. This makes them risky, as they might get shut down by the government while your coins are still in the exchange’s wallet. Alternatively, it might also be a fraudulent exchange, which will just steal your money and disappear. Exchanges without an AML policy cannot be regulated, and we have already mentioned why you should always use only regulated services.
Make sure that you understand it
Some exchanges, such as Binance, offer a ton of tools for trading and investing. If you open up an account on Binance, you will see all kinds of tools, charts, options and more — most of which is difficult to understand, especially if you are new to the crypto industry. Of course, if you like that sort of thing, you will have a great time on Binance, and other similar exchanges.
If you do not, however, it might be best to seek out a simpler solution, such as Coinbase. Coinbase has a very user-friendly interface which you will understand with no issues, and it is a great place to start learning about crypto trading.
Check the exchange’s security
Security is one of the most important aspects of any crypto exchange. The more security features they have — the better. You should look for whether or not they offer two-factor authentication (2FA), where they store their funds (offline or online wallets, with offline wallets being preferable), whether or not they have DDoS attack protection technology, and alike.
You have probably heard at least something about massive crypto hacks, and each time it has happened — the exchanges’ security was flawed. You cannot hack a cryptocurrency, but hacking an exchange is not only possible, but also quite common. When choosing an exchange, always check to see if it was hacked in the past. If it was, it might actually be a good choice.
While this might seem contradictory at first, it does make sense, since these exchanges had found their weak spots while investigating the hacks. They had to improve their security and prove their competence to the regulators. Otherwise, they would have likely shut down. With one hacking incident already in their past, they are unlikely to be hacked again.
On the other hand, exchanges that were never hacked are still untested against attackers. Unregulated exchanges are especially risky, as they might even suffer data leaks, which would expose your personal information, such as your ID and alike. This has already happened in the past, and falling victim to something like this can have serious implications, and it could make your life much more difficult.
Conclusion
That is pretty much it when it comes to how to buy Bitcoin. As you can likely tell, it is much easier to simply walk up to an ATM, insert your dollars, euros, or other fiat currency, and simply transfer your coins to a wallet. But, with the crypto world spreading around the physical world relatively slowly — that might not be an option for you, at least for a few more years.
If that is the case, the exchanges are your only choice, so choose wisely, and keep these tips in mind. Doing so can help you avoid a lot of problems, financial loss, and privacy and security risks.
