Investing

How To Buy Bitcoin

Updated on June 23, 2021 by
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Want to buy Bitcoin?

The best and fastest way to purchase bitcoins is by using an online exchange like Coinbase.

All you need to do to buy Bitcoin from any exchange that offers cryptocurrency purchases is create a free account, deposit US Dollars, then convert the dollars into Bitcoin.

You can buy and sell Bitcoin on Coinbase, the largest cryptocurrency exchange in the US.

What is bitcoin?

Bitcoin is a digital currency created in January 2009 by Satoshi Nakamoto (identity still unknown). Unlike traditional fiat currency, there is no middle man. It is operated completely by a decentralized authority. There's no physical “coin” but everything is digital. All balances and transactions are kept on a public ledger that everyone has access to. Bitcoin is a truly decentralized payment network because nobody (including governments) has control over the network.

Bitcoin works on a technology called the Blockchain. Blockchain consists of many blocks, and each block is a record of transactions of particular data. It is not controlled by any organization and thus is decentralized. New transactions are added to the blockchain through bitcoin mining. Individuals who choose to mine bitcoin use high-speed computers to solve computational puzzles that confirm transactions. And they are paid in bitcoin for their endeavors.

Where are bitcoins stored?

Bitcoins are stored in digital wallets. A bitcoin wallet is a software program that holds a private key and a public key. It is similar to an online bank account where you store your virtual currency. These wallets are stored on a server or in the cloud and are used to sell and purchase cryptocurrency. A private key is a secret key that allows bitcoin to be sent from a particular wallet. It’s important to keep in mind that you cannot withdraw bitcoin without this key. So, if you lose your private key, you will not be able to access your bitcoins or other crypto assets. A public key, on the other hand, is an address that everyone can see and is used by other people to send bitcoin to you.

You should make sure that you take into consideration security features and account backup when choosing a wallet. There are primarily two types of bitcoin wallets: cold and hot wallets.

A cold wallet is usually offline and not connected to the internet. It stores your digital currency on a physical device, such as a USB stick, that you can purchase from a store. This makes cold wallets an excellent long-term storage solution and difficult to hack.

On the other hand, a hot wallet is online and connected to the internet. If a hacker managed to get control of your hot wallet through some malicious code, then they would be able to steal your cryptocurrency. Hot wallets are convenient. They are connected to the internet through web apps, desktops, or phones, meaning they can be used straight away. Some of the widely used hot wallets are Trust wallet and Electroneum.

How do I purchase Bitcoin?

There are several methods to purchase Bitcoin. You can buy them from Bitcoin ATM's, use a Peer-to-Peer trading platform, use Over the Counter trading, buy them directly from other holders, or use an online exchange.

Let's look at each method below.

Bitcoin ATMs

A bitcoin ATM is a kiosk that lets you buy bitcoins usually with real money. However, some bitcoin ATMs may allow you to buy bitcoin using debit or credit cards.

You will be happy to know that the US has more than 800 Bitcoin ATMs available. And most of the ATMs are located in Toronto, Montreal, Vancouver, and Ottawa. Bitcoin ATMs are commonly found at restaurants, supermarkets, grocery stores, and airports.

Peer-to-Peer (P2P) Trading

P2P exchanges enable users to sell or purchase directly with each other without any third party to help to conduct transactions. The best thing about these exchanges is that they normally won’t charge you fees to trade on the platform.

P2P exchanges don’t provide a fixed market price. You get to negotiate the payment method and price with the seller. Other than that, these exchanges let you sell or purchase cryptocurrency without disclosing crucial information. The good news is that most of these exchanges have no or minimal Anti-Money Laundry or Know Your Customer requirements. Some P2P exchanges will require you to submit ID documents to trade a specific amount of coins annually. These exchanges provide a number of payment options, such as PayNow, credit cards, Western Union, Paypal, and gift cards.

Over the Counter OTC Trading

Bitcoin over-the-counter trading is the process of selling or purchasing Bitcoin outside of exchanges, mainly used when you need the utmost privacy and security. A person who offers this service is known as a Bitcoin OTC broker. They will facilitate the trades between two parties over computer networks or by mobile phone. They will find the potential seller and negotiate with them for your desired trade. It’s easier, faster, and safer than using a regular exchange. OTC trading is popular among people who want to settle big orders fast.

There are many advantages of OTC trading. Generally, you deal with reliable OTC brokers directly and get more personalized services customized to your requirements. Unlike an exchange where the trading activities are open to the public, OTC desks keep their trading activities private, so you enjoy a greater degree of privacy. Bitcoin OTC lets you sell and purchase a large number of Bitcoins without price slippage. OTC trading lets you trade sizable amounts of bitcoins without a considerable impact on market price.

In-Person Purchases

You can also get bitcoins through an in-person exchange. You may find a person in your locality who is ready to sell their bitcoin for money.

Exchanges

The most popular (and most convenient) method of purchasing Bitcoin is through using an exchange. You can deposit CAD currency into your account, then convert the funds to Bitcoin.

The best exchange to purchase Bitcoin is Coinbase.

Which exchange should I choose to buy Bitcoin?

All exchanges that we mentioned are solid and secure choices for US citizens to purchase Bitcoin. There isn't any “best” option. You can't fail by choosing either or, and you can also create accounts on all exchanges. You don't have to pick just one.

Coinbase is an American cryptocurrency trading platform. It is one of the world’s largest cryptocurrency exchanges in the world and has an outstanding reputation for security. The trading platform keeps 99% of your digital assets in offline cold storage.

If you're an advanced trader, you might want to look into Binance.

Binance is one of the world’s most famous cryptocurrency exchanges. It offers several different coins and services and it supports more than 300 different cryptocurrencies. You can purchase crypto directly on this platform using Paxos, credit cards, debit cards, and Swift bank transfer.

In addition to this, you can earn revenue in many ways, for example by staking and earning interest on your crypto holdings. This is not all. You can receive discounts trading with Binance Coin (BNB). The cryptocurrency platform has won the hearts of many bitcoin traders with a standard trading fee of 0.1%. Last but not least, it offers you a way to access trading products like futures contracts, partake in margin trading, and trade P2P.

Remember: You can use more than one exchange

If you've never purchased Bitcoin before, you might find yourself trying to decide which platform to use to purchase Bitcoin.

It doesn't matter. Once you purchase your Bitcoin, you're free to move it around however you like. You can move it into other exchanges. For example, you can purchase Bitcoin on Bitbuy, and then send it to your Coinbase account.

Why move your coins to other exchanges?

Because not all exchanges offer the same cryptocurrencies. Every exchange sells Bitcoin, but some exchanges will let you buy/sell other cryptocurrencies that others may not have available.

And remember, once you purchase your Bitcoin, you should store it securely in a hardware wallet.