How to Buy Bitcoin?
How To Buy Bitcoins Online ?
There are many ways you can do this and they all depend on where you are located. With the growing worldwide market and demand for Bitcoin it's becoming easier everyday to find reliable sources to purchase Bitcoin. The first thing you want to do is set up a Bitcoin wallet. If you can find one that offers an ATM network in your local area that is usually the fastest way to get Bitcoin. You will purchase Bitcoin at the market price being offered and you may want to load your account all at once so that you minimize your fees. (for instance if you plan to purchase mining pool shares then it's a good idea to get enough Bitcoin to make all purchases).
A few good resources include...
- LocalBitcoins.com - You can meet someone face to face or use another form of payment to exchange for Bitcoin
- Romit - A large network of ATM's worldwide (also search any local Bitcoin ATM's)
- Coins.ph - This is a great option for Philippines
- Bitpesa - Easy way to buy in Africa
- Or any exchange located in your country... There are now hundreds of them, just search locally
*IMPORTANT: You want to make sure you select an exchange or a wallet that will allow you to convert easily back to your local currency.
Once you find a Bitcoin exchange in your country, compare the exchange rate on your local exchange to a bitcoin price index
. You can buy bitcoins from either exchanges, or directly from other people via marketplaces.
You can pay for them in a variety of ways, ranging from hard cash to credit and debit cards to wire transfers, or even with other cryptocurrencies, depending on who you are buying them from and where you live.
Surprisingly, it's still not easy to buy bitcoins with your credit card or PayPal, depending on your jurisdiction.
This is because such transactions can easily be reversed with a phone call to the card company (ie 'chargebacks'). Since it's hard to prove any goods changed hands in a transfer of bitcoins, exchanges avoid this payment method and so do most private sellers.
However, the options have recently grown for consumers in some countries.
In the US, Coinbase, and Circle offer purchases with credit cards. Bittylicious, CoinCorner
and Coinbase offer this service in the UK, accepting 3D Secure-enabled credit and debit cards on the Visa and MasterCard networks.
Underbanked consumers in the US can turn to expresscoin, which recently launched to serve this market, accepting money orders, personal checks and wire transfers.
How Do I Set Up a Bitcoin Account / Wallet?
There are many different options available for you to set up your own wallet. This is like deciding which bank you want to use, most wallets offer the same services and they are free to use so you just need to pick one that you like and feel comfortable with. There are also options to have wallets stored on your computer or even offline in the form of paper wallets. Security is the most important thing when choosing a wallet and here are some popular 3rd party wallets.
Xapo - Solid security, a global solution and provides a vault
Circle - Best for using Credit or Debit Cards to buy Bitcoin
Coinbase - The biggest wallet and great for US bank wires
BitStamp - Best for EU bank wires and EU customers
Coins.ph - Very cutting edge wallet with ATM network (Philippines)
Do a search locally for a good wallet, something that gives you liquidity to buy and sell easily.
Here is another good resource for choosing a wallet - Bitcoin.org
Next, you will need a place to store your new bitcoins. In the bitcoin world, they're called a 'wallet' but it might be best to think of them as a kind of bank account.
Depending on the security levels you want, different wallets will provide different levels of security. Some act like everyday spending accounts and are comparable to a traditional leather wallet, while others tout military-grade protections.
The main options are: (1) a software wallet stored on the hard drive of your computer, (2) an online, web-based service or (3) a 'vault' service that keeps your bitcoins protected offline or multisig wallet that uses a number of keys to protect the account.
Most have their vulnerabilities: if you store bitcoins locally on your computer, make sure you back up your wallet regularly in case the drive becomes corrupted; and online web wallets employ varying degrees of security against hackers, from quite good (multi-factor authentication) to quite poor (ID and password).
Exchanges and Online Wallets
Bitcoin newcomers will find a variety of exchanges and wallets competing for their business.
Some are full-blown exchanges for institutional traders, while others are simpler wallet services with a more limited buying and selling capabilities.
Most exchanges and wallets will store amounts of digital and/or fiat currency for you, much like a regular bank account.
Exchanges and wallets are the best option if you want to engage in regular trading and speculation, don't need total anonymity and don't mind lengthy bureaucratic setup procedures that usually involve proof of identity and supplying detailed contact information.
This is the law in most countries and no regulated exchange can get around it, as any company interfacing with the current financial system must meet 'know your customer' (KYC) and anti-money laundering (AML) requirements.
The best exchange option also depends where you're located.
For more information, you can check out major bitcoin exchanges/wallets around the world, and the payment options they allow.
Coinbase is a popular wallet and exchange service that will also trade US dollars and euros for bitcoins. The company has web and mobile apps. Originally a US-only service, Coinbase has recently opened up to a large number of European countries.
Circle offers users worldwide the chance to store, send, receive and exchange bitcoins. Currently only US citizens are able to link bank accounts to deposit funds, but credit and debit cards are also an option. Apps for iOS and Android are now available.
Wallet and bitcoin debit card provider Xapo has also recently entered the fray, offering deposits in fiat currency that are converted to bitcoin in your account.
Coinjar, an exchange and wallet provider, is the market leader in Australia. The Melbourne-based startup raised $500k AUD in venture funding and won an award at Finovate Europe 2015 for their user experience. The company released a debit card service, 'Coinjar Swipe' in February 2015.
Warnings about exchanges, wallets and banks
Despite the proof of identity requirements, remember exchanges and wallets don't provide the same protections banks do.
For example, there is often no or limited insurance for your account if the exchange goes out of business or is robbed by hackers, such as was the case with the infamous failed exchange Mt Gox.
Bitcoin does not have legal status as a currency in most of the world, and authorities usually do not know how best to approach thefts. Some larger exchanges have replaced customer funds after a theft from the exchange itself, but at this stage they are not legally obliged to do so.
Further, if a theft from your personal wallet occurs due to a security or password lapse on your part, you do not have any guaranteed way to recover your funds.
Some existing banks see digital currency refuse to work with funds that were the result of digital currency transactions, citing regulatory uncertainty.
Check the list below first to see if your bank may have taken action against users in the past, and for your protection, open an account with a bank known to be more bitcoin-friendly.
Here are some banks known to discriminate against bitcoin.
Personal Hardware Wallets to Store Your Bitcoin Offline
Face-to-face, or 'over-the-counter' (OTC) trades
If you live in a city, prefer anonymity or don't want bank hassles, the easiest option to acquire bitcoin is to make a face-to-face trade with a local seller.
LocalBitcoins is the primary site where such transactions are arranged and prices negotiated. The site also provides an escrow service as an added layer of protection for both parties.
There are security considerations for both buyers and sellers, especially if the trade is a sizeable one. Always meet in a busy public place, don't meet in private homes and take all the precautions you'd usually taken when walking around with large amounts of cash.
Remember, if you're meeting face-to-face somewhere, you'll need to have access to your bitcoin wallet. Whether it's a smartphone, tablet or laptop, you'll also need live Internet access to confirm the transaction.
If one-on-one trades aren't your thing, check out Meetup.com to see if your area has a bitcoin meetup group, where you can do it all in a group setting and learn a lot from the other members in the process.
An investment trust
This trust invests exclusively in bitcoins and uses a state-of-the-art protocol to store them safely on behalf of its shareholders. So far, the fund has been exclusively for serious (i.e.: very rich) investors, but is to open to all, hopefully by the fourth quarter of 2014.
The Bitcoin Superfund is a new option soon to launch in the UK.
Though a relatively new concept, bitcoin ATMs are growing in number.
Like a face-to-face exchange but with a machine, you insert your cash and either scan your mobile wallet QR code or receive a paper receipt with the codes necessary to load the bitcoins onto your wallet.
Exchange rates vary, and may be anything from 3% to 8% on top of a standard exchange price.
Buying bitcoins is not always as easy as newcomers expect. The good news is the number of options is increasing, and it is getting easier all the time.
Some may not even necessarily require a wallet or Internet access. Other ideas have included bitcoin debit cards, physical bitcoin 'coins' with a wallet value pre-loaded, and stored-value cards.