How To Buy Bitcoins

Happily, the process to buy bitcoins has become considerably easier as time has progressed. The large number of startups in the space, coupled with venture capital funding have been able to make the entire ecosystem much more user friendly.

That said, it still takes some effort to get started. However, understanding how to buy bitcoins online is now easy enough that most people with a little computer savvy should be able to manage it.

Additionally, the process has been opened up to many more countries, meaning that there is a much wider geographic reach without needing technical skills.

Buy Bitcoins OnlineSo let’s look at the options:

How To Buy Bitcoins Online

The main locations are known as bitcoin exchanges. In their format, they are a little like a stockbroker – they are a central location for buyers and sellers to trade. Obviously they are virtual locations, website only.

When getting started I used three different exchanges to try and understand what was happening and why. One of those exchanges was just too complex for me to manage. The second was usable, just.

The third was Coinbase.com – you can find a link to the site in the sidebar. Coinbase is now the de facto leader in this space after raising lots of VC finance and using the money to solve the security problem. Their “vault” is about as safe as you are likely to get without taking some very major steps yourself.

Coinbase is an American firm, which means that ID is needed to open an account and buy bitcoins, but as the very first step they are a great place to start and to learn from.

Interestingly, they employ buying limits in the early period of your account. The reasons for this re explained below, but the result is that you can’t just open an account and buy 100k on day one. It takes some time to get going, but this is the safest place to buy bitcoins online for beginners.

buy bitcoinsTheir size means that they offer very keen prices with a low buy and sell spread.

To buy your first bitcoins it is possible to transfer money into your account or use a debit card. Yes, you can buy today!

How To Buy Bitcoins With A Credit Card

One of the strengths of Bitcoin has been that the system is unencumbered. This means that there is no debt attached, unlike in the fiat currency system where debt is actually how the money is created.

For a long time it was not possible to buy BTC with any instrument that could be reversed. Thus, PayPal could not be used since transactions can be reversed within 60 days. Similarly, credit cards could not be used, because most credit card transactions can be queried and potentially stopped.

This had the impact of making BTC much more trustworthy than most other currencies because whatever the price was, it was a real price with no debt or risk of default (no options, futures, swaps or derivatives).

Now it is possible to buy bitcoins with credit cards, however, generally your account needs to be in good standing at the exchange. This means that it is unlikely that you can purchase with a credit card on day one, but by month two (depending upon the exchange and it’s rules), you will probably be able to buy this way.

Additionally, the possibility is opening up constantly. For example, in late 2015, Coinify announced that it is possible to buy with a credit card in 34 counties.

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What Are Bitcoin ATMs?

Bitcoin ATM

In March 2015 it was announced that there were almost 400 Bitcoin ATMs worldwide. Their use is growing, actually quite quickly, but they are still very niche. Despite this, it is possible to buy and sell through a Bitcoin ATM. Some machines allow both buying and selling, however the majority only make it possible to buy, being one-way machines.

For now, given the size of the world and the low number of ATMs, it seems unlikely that this will be your first option to get started.

How To Buy Bitcoins With Cash

Any community as strongly independent as this is going to have an underground element to it. For us, yes, it is possible to buy bitcoins for cash. Mostly, this happens locally by meeting up with a seller in person and making an exchange.

Obviously, we don’t all know who is willing to trade with us, so there is a useful site to help bring people together. LocalBitcoins.com uses the geo information from your IP address to suggest people willing to purchase or sell that are nearest to you. They might actually be a long way away, depending upon where you live, but the site will recommend the closest.

It is worth pointing out that if you are new to this, you will need to have yourself organised in advance. In other words, you will need to know the address of your wallet to have coins transferred into…

In some US states, selling BTC for cash needs a license, if the regular sales are above a pre-determined limit. The regulations differ from state to state, so just be warned that it may be that your seller needs to be registered.

Can I Buy Fractions Or Part Of A Bitcoin?

Each coin is split into 100 million parts (seriously) called a Satoshi. In theory, it is possible to purchase, sell and transact with just one Satoshi. In reality, it will take a very long time before a single Satoshi is valuable enough to use.

When you use an exchange like Coinbase, the money that you are willing to spend buys as much BTC as possible, using the current market price. This means that your actual transaction will purchase a very unusual amount – something like 0.24058729. Gradually as you buy more and more, those numbers add up until you have some real wealth!

How Long Does It Take To Buy Bitcoins?

On most exchanges a transaction should be virtually instantaneous. Everything ought to be confirmed in just a couple of seconds. This really comes down to the liquidity of the exchange, which means that bigger exchanges have more buyers and sellers so trades can be matched immediately. It is worth noting that your home currency can play a role in the speed of your transaction. This is because there might be few buyers and sellers in smaller currencies. If, however, you buy and sell in the major global currencies such as US dollars, euros, sterling or yen, your transaction ought to be priced keenly and concluded instantly.

Where Can I Buy Bitcoin The Cheapest?

The current market prices quoted by exchanges represent the price globally in your respective currency. However, it might be possible to find good deals if you buy from an individual for cash as described above. Of course, it might be possible to find very bad deals as well!

In terms of mass market transactions, the more buyers and sellers an exchange has, the better their prices can and should be. This is because they can offer their pricing power as a marketing strength and combine it with competitive fees to win market share.

If you happen to have had any experience in the stock market, say in smaller companies, then you might be familiar with the idea of liquidity. If you are, then apply some of the same ideas to bitcoin. As time goes on, BTC becomes more liquid in larger amounts in more currencies, but that is a process of time and development.

For this reason, Coinbase is a great place to transact because they are the largest exchange with a wide range of available currency options and countries serviced.

How To Buy Bitcoin Anonymously?

If you are reading this because you are just getting started, I would suggest that you find a way to purchase through the normal channels first. There is quite a learning curve – as you must have noticed by now – so I recommend that you start with normal transactions and then, once you are more comfortable with the process, move up to more complexity. The blockchain means that most transactions are only semi-anonymous, so if you hope that by buying bitcoins the world will never find out, it isn’t quite that simple. To buy with complete anonymity requires a little more skill and effort.

There are also tumblers – I’ll leave you to do your own research and due diligence – that enable coin to be sent between wallets and shuffled numerous times in between to make the ultimate transaction almost impossible to trace.

If anonymity is your number one priority – then there are other alternative cryptos, Dash and Monero – that might be more suitable. Other currencies obviously have different investment profiles and associated risks.

Can Anyone Buy Bitcoin?

One of the overarching goals that people have for the currency is that because it is decentralised, it can cross borders and barriers and be a global form of digital money. Therefore in theory, yes, anyone can buy bitcoin.

However, there are some obvious limits. The buyer needs to have funds available and some kind of digital connection to enable access to a wallet.

This would seem to put some real world limits in place, but there are a number of African countries where digital money is growing strongly in use and popularity and the technology driving that adoption are low cost smart phones!

Depending upon what survey you read, there are perhaps 2 billion people globally that are considered to be “unbanked”. These people do not have access to a bank account or many of the other services that can accompany an account, such as savings or transfers.

There is a real chance that bitcoin, low cost mobile telephones and solar chargers have the combined leverage to bring tens of millions, or more, of these people into the global economy. Clearly this would be a huge achievement and a massive boost to reducing poverty levels.

Or to put that another way, if someone in Eritrea with a phone and a solar charger can buy bitcoin, so can you!

There are some countries that have existing currency controls in place and as such all cryptocurrencies might be viewed dimly, but these situations are generally in a state of evolution as more and more governments are trying to decide upon their philosophical position to digital coins.

Can You Buy A Physical Bitcoin?

Not a real one, no. The only physical bitcoins that exist are curiosities to be sold in joke shops or on eBay. If you want to get one with actual value that can be used, then it is virtual only!

There have, however, been a number of documented situations where officials at airport security have stopped travellers and specifically told them that they are looking for bitcoins! Needless to say the individuals were rather shocked since the officials were searching for something that has no physical form.

Can You Buy Bitcoin Stock?

Although it has exchanges and it’s own market, Bitcoin is distributed which means that it does not have an owner per se. There is no controlling company or individual, therefore, there is no stock that can be invested in. There are a number of fast growing companies that have raised venture capital, so in the future there may be exchanges or blockchain companies that can be invested in.

Can You Buy Bitcoin Investment Funds?

It is a little early in the overall development for bitcoin funds as I write this (late 2015). There are only perhaps two or three bitcoin investment funds, such as ETFs, worldwide in existence currently.

These funds are designed to provide a way for private or institutional investors to buy without needing to own and secure the coins themselves. This area is one being pioneered by the Winklevoss twins (of facebook fame), otherwise known as the Winklevii. In time, it seems quite reasonable to presume that there will be many funds offering long-term low cost investment opportunities to be packaged into stockbroker and nominee service offerings. If and when that does happen, the additional funds that will flow into the ecosystem will be very good for the price.

For now, any fund will be following one price, up and down. In the future there will almost certainly be funds that invest in a “basket” of cryptos, just as happens now with metals, commodities and other currencies.

how to buy bitcoinsRound up…

If you would like to get started today, I suggest that you click on the ad below and visit Coinbase to begin there. Presuming that they operate in your country, once you are over the hurdle of providing ID, it is a fairly fast and easy process. This will at least get you started and help you to really understand what is happening.

Once you have that start underway, moving on to other exchanges, other currencies, other wallets will be another step, but not quite so scary. Good luck!