How to Buy Bitcoin: A Step-by-Step Guide to Buy Crypto
Written By
Jesse David Ifeanyi (Jaywrites)Cryptocurrency Writer
Reviewed By
Franklin IzuchukwuCrypto Writer, Business Writer and Radiographer
Bitcoin (BTC) has skyrocketed in recent years. In May 2016, you could purchase 1 BTC for around $530. As of January 2024, 1 Bitcoin was roughly $42,000. The original cryptocurrency's highest intraday price in the previous year was $73,835.57 on March 14, 2024. That is a more than 7,900% increase. At the time of publication, the price of Bitcoin is $66,226, and it is expected to continue rising as the year goes by.
This spike demonstrates increasing trust and interest in the cryptocurrency industry, bringing investors from all walks of life. As Bitcoin continues breaking down boundaries and reaching new milestones, it highlights the changing environment of digital assets and the opportunity it provides for investors looking to buy Bitcoin.
Buying Bitcoin is sometimes the first step investors take into cryptocurrency—and right now, more investors may be seeking to take that step. Purchasing a more mainstream cryptocurrency, such as Bitcoin, can feel strange to those acclimated to traditional financial products.
The good news is that there are numerous ways to purchase Bitcoin and other cryptocurrencies, ranging from stockbrokers to specialist exchanges and even in-app transactions in some cryptocurrency-related applications.
In this article, we will provide a detailed step-by-step approach to purchasing Bitcoin, outlining the advantages and disadvantages of each method, including tips on choosing a reputable exchange and protecting your holdings.
Understanding Bitcoin (BTC) and its Value
Bitcoin, invented in 2009 by an unidentified developer named Satoshi Nakamoto, is a decentralized digital currency transferred over a peer-to-peer network with no centralized authorities.
It is the world's first decentralized cryptocurrency, with transactions secured and verified via blockchain technology. Bitcoin uses "proof-of-work" to record transactions transparently, prevent double spending, and assure consensus.
One of the primary factors fueling Bitcoin acceptance is its perception as a store of value. Unlike traditional fiat currencies, which are prone to inflation due to central bank policy, Bitcoin has a fixed supply limit of 21 million coins. This scarcity helps to preserve Bitcoin's value and protect it from devaluation, as can occur with fiat currencies.
Institutional investment has also been critical in pushing Bitcoin acceptance to new heights. Bitcoin is increasingly recognized as an asset class worthy of investment by major enterprises, hedge funds, and asset managers. This shift in mentality has resulted in large money inflows in the Bitcoin market.
Choosing a Method to Buy Bitcoin (BTC)
Bitcoin wallets and crypto exchanges are two of the most popular ways to buy Bitcoin. However, you may buy Bitcoin through standard internet brokers and Bitcoin ATMs.
Here's an overview of how to buy Bitcoin:
Cryptocurrency Exchange
Cryptocurrency exchanges are privately owned platforms that allow cryptocurrencies to be traded for other crypto assets, such as digital, fiat currencies, and NFTs. There are two types of cryptocurrency exchanges: centralized and decentralized exchanges.
Centralized Cryptocurrency Exchanges (CEX) is a term in the crypto space used to describe platforms that act as an intermediary between a buyer and a seller, charging commissions and transaction fees. Binance, Coinbase Exchange, Kraken, and KuCoin are popular cryptocurrency exchanges.
A Decentralized Exchange (DEX) is another exchange that permits peer-to-peer transactions straight from your digital wallet without the need for a middleman. DEXs include PancakeSwap, Uniswap, dYdX, and Kyber.
You can buy Bitcoin via cryptocurrency exchanges. Many provide dozens of cryptocurrency options, but others only have Bitcoin and a few others.
Advantages of Cryptocurrency Exchange
- User Friendly: Beginner investors can trade and invest in cryptocurrencies via centralized exchanges, which provide a familiar and comfortable environment.
- Preventing market manipulation: Decentralized cryptocurrency exchanges avert market manipulation by allowing users to exchange cryptocurrencies peer-to-peer, protecting them from fake trading and wash trading.
Disadvantages of Cryptocurrency Exchange
- Hacking Risk: Companies run centralized exchanges and are in charge of their customers' holdings. Large exchanges typically house billions of dollars of bitcoin, making them a target for hackers and theft.
- Transaction Fee: Various cryptocurrency exchanges frequently demand significant transaction fees for their services and convenience, which can be incredibly exorbitant when trading massive amounts.
Bitcoin ATMs
Another alternative is to buy bitcoins straight from a Bitcoin ATM. A crypto ATM is a standalone electronic kiosk that allows people to purchase and sell cryptocurrencies for cash. There are over 35,000 Bitcoin ATMs globally.
Advantages of Bitcoin ATMs
- Speed/Convenience: You can purchase and sell rapidly for small quantities without having to authenticate your identity. A Bitcoin ATM allows you to get cash in minutes. Other solutions often require 1-3 days to receive money in your bank account.
- Using Cash: Aside from face-to-face transactions, Bitcoin ATMs are the only means to purchase and sell Bitcoin with actual currency notes.
Disadvantages of Bitcoin ATMs:
- Fee: Bitcoin ATMs typically have more significant fees than other methods. Fees range from 5 to 15% of the buy or selling price.
- Limits. Bitcoin ATMs often have lower transaction limits.
Step-by-Step Guide to Buying Bitcoin (BTC) and Other Crypto Assets
Buying and selling Bitcoin or any crypto assets online is relatively easy. To buy Bitcoin, you need a smartphone, an internet connection, and a means of payment, either with fiat or other financial assets.
Follow the guidelines below to learn how to buy Bitcoin or any other cryptocurrencies.
Choose a Crypto Exchange Site
The first step to buying a crypto asset is choosing a reputed crypto exchange site from the earlier list. This step is vital because each crypto exchange offers various services that may not suit your needs. \
For instance, some Crypto exchanges do not accept credit cards. There is also the issue of region, as various crypto exchanges have restrictions on geographical locations.
Creating an Account
Now that you have chosen a crypto exchange site, the next method is Creating a trading account with a crypto exchange or broker, which is typically straightforward and takes only a few minutes.
To create an account, first fill out the registration form with your information, including your complete name, email address, and password. Make sure you use a strong password with the right characters.
You'll need to confirm your email address to proceed.
Complete Identity Verification
After you validate your email, the KYC procedure begins. KYC stands for "Know Your Customer" and refers to how clients validate their identification before utilizing a financial service.
KYC is a legal obligation for financial institutions to avoid fraud, money laundering, and terrorism financing. Purchasing bitcoins in CEX necessitates confirmation of your entire name, date of birth, address, and a valid identity document. However, you can avoid this process by buying from a DEX.
Fund your Account
To purchase Bitcoin (BTC), you will require either fiat money or another cryptocurrency. So, before you can begin trading on an exchange, you must deposit a currency into your trading account.
The cryptocurrency exchange with which you have opened an account will offer a bank account and payment instructions when depositing fiat currency such as Euros or Dollars.
To deposit cryptocurrency, first create an address for the associated wallet. Some exchanges and brokers also allow you to buy cryptocurrencies with a credit card, PayPal, or other payment methods, simplifying and speeding up the transaction.
Alternatively, you can join exchanges like Binance and Kucoin and use their P2P services, where you can buy directly from other buyers on the platform; this method is cheaper as you will evade the processing fees charged for card payments on crypto exchanges.
Place an Order
An order specifies how you purchase or sell a coin. Crypto exchanges offer various order types; below are some of the most common.
A market order is a request to purchase or sell a cryptocurrency at its current market price. It is executed immediately and is typically used to enter or exit a position swiftly.
A limit order is a request to purchase or sell cryptocurrencies at a specific price or higher. It is handy for buying or selling at a lower cost. If you are a beginner in the world of trading, you can learn more about trading here.
Confirm your Order
Confirming an order after it is placed is very important because several factors determine when and if it will be completed.
A market order will be executed instantly if the crypto has sufficient liquidity; this implies that enough individuals must be willing to purchase or sell this coin. A cryptocurrency like Bitcoin, exchanged several hundred thousand times daily, is highly liquid. In this case, the execution of the market orders is instant.
Secure your Account
Congratulations, you have officially purchased your Bitcoin! Next, you should start thinking about how to protect your cryptocurrency.
Due to cryptocurrencies' decentralized nature, you are your bank, which means you are responsible for maintaining and preserving your crypto assets.
It would help if you did so via a cryptocurrency wallet to keep your Bitcoin safe. Wallets are classified into several varieties, each with its own set of pros and cons.
Tips for Selecting Reputable Crypto Exchange
Before you can begin trading or investing, you'll need a platform for purchasing, selling, and storing digital assets: a cryptocurrency exchange.
Given the multiple options available, which cryptocurrency exchange is best for you and your needs? Here are some tips to consider:
- Security Measure:
Undoubtedly, the most crucial factor should be the security measures that an exchange provides. With noteworthy hacks in the past, an exchange's resistance to potential attacks is critical. Look for platforms that use two-factor authentication (2FA), cold storage, encryption methods, and other advanced security features.
- User Interface:
Beginners want a simple and understandable user interface. Platforms that could be clearer or more complicated can turn off new users.
- Fee & Charges:
While most exchanges have straightforward cost systems, some may have hidden fees. Exchanges charge fees for various services, including deposits, withdrawals, and trading transactions. Compare the fee structures of multiple exchanges to find the one that best suits your trading preferences and budget.
- Regulation & Compliance:
Ensure that the exchange adheres to the regulatory requirements in your jurisdiction. Compliance with regulations such as Know Your Customer (KYC) and Anti-Money Laundering (AML) gives users more trust and protection. Check whether the exchange has the necessary licenses or registrations with regulatory authorities.
- Training Tools & Features:
Advanced traders frequently demand access to various trading tools and features, including charting, order types, stop-loss orders, and margin trading. If you have unique trading requirements, ensure the exchange has the tools you need to execute your strategy.
- Liquidity:
Liquidity refers to the ease with which a crypto asset can be bought or sold without significantly affecting its price. Higher liquidity leads to smoother transactions and reduces the chance of slippage. Select an exchange with high liquidity to ensure that your orders are completed quickly and at fair prices.
Securing your Bitcoin (BTC) Holding
Even though the cryptocurrency sector has gained popularity, it has already developed an almost cliché-like narrative. A harmful hack on individual holdings or a digital currency exchange is rampant.
The hackers usually evaporate into the emptiness of online anonymity, carrying digital assets that are impossible to identify or retrieve.
Regarding Bitcoin security, a Bitcoin wallet is a must-have tool for each cryptocurrency user. A Bitcoin wallet is required because it is the only way to access and transact with Bitcoins.
There are a variety of Bitcoin wallets on the market, each with pros and cons. While some wallets are made for novice users, others are made for more experienced users. It's critical to consider security, usability, and device compatibility before selecting a wallet.
Another way to protect your Bitcoin holdings is with 2FA (Two-Factor Authentication). It's a sophisticated security technique requiring two different forms of identity beyond simple passwords. Your identity is authenticated more consistently due to the dual-layer security, which significantly strengthens protection against unwanted access.
Conclusion
Bitcoin's transition from a whitepaper to a global phenomenon has been distinguished by a convergence of variables, including its position as a store of value, institutional adoption, technological breakthroughs, and international economic dynamics.
While there are challenges, Bitcoin's popularity is expanding, and its integration into the larger financial ecosystem is expected to progress further.
Your journey with digital assets starts with selecting the correct cryptocurrency exchange. You can locate an exchange that satisfies your requirements and preferences by considering security, regulation, liquidity, and user experience.
If this is your first time buying Bitcoin, the process may appear complex but easy. You only need a secure means to keep your purchases and an account at a service or exchange.
To purchase Bitcoin, you must decide on a reliable source or location, establish a payment method, submit an order, and guarantee that the cryptocurrency will be stored securely.