Before you can either use or make money with Bitcoin, you’ve got to get your hands on it.
Unless you have the computer power to mine it, by far the best and easiest way to get Bitcoins is to buy them. We’ve written this “How to Buy Bitcoin” guide to show you how to do it step by step in a safe way.
It’s important that you take your time to digest this information properly, so grab yourself a cup of coffee, a cold beer, or whatever your favorite beverage is, and settle in.
This is how to buy Bitcoin step by step from scratch.
Exchange vs. Direct Buying
There are two ways to buy Bitcoin – on a cryptocurrency exchange, or directly from someone.
When two parties exchange Bitcoin without an exchange being involved, that’s a direct buy. For example, you might you have a friend who is willing to sell you Bitcoin for cash, or you might have access to websites where you can engage in this sort of trade.
We don’t recommend direct buying unless you know what you’re doing and trust the person selling it 100%. There are too many Bitcoin scams out there, and too many people have sent money to supposed companies or people who promised to send them Bitcoins but never did.
It’s far safer to buy Bitcoin on an exchange, and that’s how we (and most) other people do it. Exchanges are central marketplaces where people can buy and sell Bitcoin for various currencies or other cryptocurrencies.
You can register at an exchange in minutes, and you could have your first Bitcoin within 20 minutes if you use some of the more user-friendly sites. One such site is Coinbase, which we’ll walk you through now.
Buying Bitcoin on Coinbase
Now for the fun part – we’re going to show you how to buy Bitcoin step by step.
By far the best Bitcoin exchange for beginners is Coinbase. While it’s true that you’ll probably move on from it when you get more used to cryptocurrencies, it really is the ideal starter exchange. They don’t get any more user-friendly than Coinbase. Follow these steps to buy Bitcoin with ease.
Register an Account
The Coinbase registration process is incredibly simple, and that’s part of what makes it ideal for beginners. When you click the “Get Started” button, you’ll see the following registration form pop up.
As you can see, you’ll be given a choice between registering as an individual or as a business. We’ll be talking you through how to register as an individual, but if you’re interested in investing in or trading Bitcoin to make money, there may be some tax advantages to doing it as a business, depending on where you live.
You’ll then have to verify your email address by clicking the link Coinbase will send you. Don’t skip this step, and whatever you do, don’t use false details. This could cause you to have your account frozen (with your cash locked in it).
Once that’s done, you’ll be asked to enter your mobile phone number. You have to do this, and it gives you the benefit of 2-Factor Authentication (2FA). We’ll explain more about that in a little bit, but for now, let’s just say it’s a big security boost.
Once you’ve entered your phone number, click “send code,” and you’ll receive an SMS. Enter the code and click “Submit.” If you enter it correctly, you’ll then be taken to your dashboard.
Then we come to the next step, which is where Coinbase can get a little cranky, but stick with it. It’s well worth persevering.
Verify Your Identity
This is the one part of Coinbase that can really tick people off, but it has to be done. Coinbase has to comply with strict KYC (Know Your Customer) laws, so it asks you to upload a photo of a government-issued ID such as a driver’s license, passport, or photo ID.
Be aware that it can take several attempts to get this verified. When signing up, one of our team members had to submit their ID three times. However, we’ve also read reports from people who got it verified the first time they tried, so this may not be the case for you.
Note that if you opt to upload your driver’s license, you’ll need to upload photos of both the front and back sides. The best way to do so is to snap photos with your phone. Be sure the lighting is right and that all the information is clearly visible to avoid failed attempts at verification.
How long will Coinbase verification take? Usually, it’ll only take a few minutes. However, keep in mind that during the huge Bitcoin bull run at the end of 2017, some people reported it taking days to get verified. You’ll want to do this during a relative lull in the market, if at all possible.
Once your account is verified, it’s time to get a payment method set up.
Hook Up Your Payment Method
Before we start here, we have to say that there are certain banks that have taken a rather hostile approach to cryptocurrency. Some US banks have banned purchases of Bitcoin and other cryptocurrencies using their credit cards. You should still be able to make purchases using your debit card, though.
There are also some banks that flat-out refuse to have anything to do with Coinbase. Natwest Bank in the UK is one example, and Coinbase displays a notification to UK residents informing them of this.
That aside, setting up your Coinbase payment method is an easy and painless process. This user-friendliness is one of the reasons why Coinbase is so popular.
Click the “Debit/Credit Card” option on-screen. You should see this as soon as you verify your ID. From there, enter your card information and click “Add Card.”
Once that’s done, it’s time for the main event…
Now we get to the part you’ve been waiting for – it’s time to buy some Bitcoins. Coinbase makes this super easy, and you can buy them just as easily as you would buy a book on Amazon.
Click the “Buy/Sell” tab on the main menu bar at the top of the screen. You’ll then see various cryptocurrencies for sale. Obviously, in this case, you’ll want to select Bitcoin.
You can either enter the amount of Bitcoin(s) you want to buy or can enter the amount of money you want to spend. Either way, you’ll see how much it’ll cost and how much BTC you’ll get. You’ll also see a breakdown of the entire transaction including fees on a form at the right side of the screen.
There’s no need to say much else here. It’s a simple enough process whereby you enter the amount of Bitcoin you want to buy and execute the trade. After a few minutes, your Bitcoin(s) will appear in your BTC wallet. You’ll be able to see exactly how much this is worth at any given time thanks to the interactive interface Coinbase provides.
From here, we highly recommend moving your Bitcoins off Coinbase and onto a secure Bitcoin wallet. Coinbase has so far never had a major hack or intrusion, but it’s still much safer to store your coins in a digital or hardware wallet if you plan to hold them for any length of time.
What Is 2-Factor Authentication?
2-Factor Authentication is an extra layer of security that Coinbase and some other cryptocurrency exchanges offer as an optional security layer. We highly recommend setting it up as soon as you create your account.
With 2FA, you’ll receive a numerical code to your mobile device each time you log in, and you’ll have to enter this in addition to your username and password. This makes your account that extra bit secure since a would-be hacker would have to be in possession of your mobile device to gain access.
You can choose to receive an SMS, or you can use the Google Authenticator app. This free app automatically generates new 2FA codes each time you log into your account. This happens in real-time, so there’s no waiting around for the code to arrive.
Do not skip setting this up. There are lots of people who have, and many of them have lived to regret it. Security is of paramount importance when it comes to buying and selling cryptocurrencies.
Things to Think About When Buying Bitcoin on Other Exchanges
While we’ve shown you how to buy Bitcoin on Coinbase above, the truth is that you have lots of options, and there are now hundreds of cryptocurrency exchanges online.
For the more adventurous among you, or for those of you who don’t want to use Coinbase for some reason, we’ve outlined some of the important things to think about when considering buying Bitcoin on other cryptocurrency exchanges.
Remember that the specific buying process will be slightly different on every exchange, so take the time to familiarize yourself with the processes when you sign up.
Anyhow, let’s get back to the main point, which is what you need to consider when buying Bitcoin on other exchanges.
- Make sure you can buy Bitcoins directly for your local currency. Some exchanges don’t even sell Bitcoins for fiat currencies. Instead, you’ll have to exchange other cryptos for them. Obviously, these won’t be suitable for your first purchase
- Consider the fees. Some charge as little as 0.0075%, whereas others charge as much as 1.4% per transaction. Also, consider other fees for withdrawing Bitcoins from the exchange to another wallet, and any other random fees the exchange may charge
- Research the reputation of the exchange. How long has it been in operation? What do other users say about it in reviews? Does it have a good track record? Try to find out as much as you can about it before buying Bitcoins on it
- Think about whether you want to trade Bitcoin for other cryptocurrencies to make money. If you do, make sure the exchange lists the coins you want to trade. Most list Bitcoin, Ethereum, and Bitcoin Cash, but when it comes to other altcoins, it’s hit and miss
- Check that the exchange has solid customer support. It’s a good idea to fire off an email and see what sort of response you get. Note how long it takes to get a reply and whether the agents are helpful. Note that customer support is one of the weak points of Coinbase. They claim they have addressed it, but during the 2017 bull run, people had to wait weeks for replies
- Consider transaction limits. Some exchanges place buy limits on newly registered customers. Others set daily withdrawal limits, although you can often raise these by taking extra account verification steps. Consider how much Bitcoin you want to purchase and whether the account limits work for you
- Assess exchange security. If 2FA isn’t available, give it a miss. Even if it is, do some research and make sure it’s a legit exchange based in a jurisdiction with regulations and laws to govern their conduct. There are lots of scammy exchanges with lax security. It really pays to do your research before making a decision
How to Buy Bitcoin – Questions and Answers
When is the best time to buy Bitcoin?
We can’t give you financial advice, and you should always consult a financial advisor before making any purchase. However, a good rule of thumb to follow if you’re planning to sell for a profit later is “Buy low, sell high.”
There’s no telling what way the Bitcoin price will go at any given time. Even if you buy low, it can still go a lot lower, and you might have to wait for it to go back up. In fact, there are no guarantees that it will. That’s just the nature of the beast.
If you’re hoping to buy Bitcoin in order to use it, such as by playing at a BTC casino with it, that’s a different thing, and you can buy it anytime. However, even in these circumstances, you’ll want to buy when there’s minimal volatility. In other words, you’ll want to buy when Bitcoin is in a relatively calm period.
Do I have to buy a whole Bitcoin?
No, you can purchase fractions of a Bitcoin. Technically, you could buy $50 worth of Bitcoin, but the exchange fees might make it pointless to do so.
Generally speaking, you would probably need to buy at least $100 worth to make it worth it once fees are considered.
Can I buy cryptocurrencies other than Bitcoin?
You can, but which ones you’ll be able to buy depends on the exchange you sign up at. Some exchanges list hundreds of altcoins like Litecoin, Dash, Monero, Litecoin, and others.
Usually, you’ll have to trade your Bitcoins for these altcoins on a reputable exchange like Binance. However, as the industry matures, more “fiat pairs” are being introduced. You can easily buy Litecoin or Ethereum for USD, GBP, EUR, CAD, AUD, etc.
Doesn’t uploading your ID to an exchange kill the purpose of Bitcoin? Isn’t it supposed to be anonymous?
This is indeed the catch with buying Bitcoins on an exchange. However, since that initial purchase would be linked to your credit or debit card anyway, it hardly matters much.
If you really do want to go dark, buy Bitcoin directly for cash from someone you trust. Do keep in mind that all transactions are recorded on the blockchain, though, so you’re never 100% anonymous when using BTC.