Wondering how to buy bitcoin for the first time? It’s not as hard as you think.
Many people tend to be intimidated when even thinking about how to buy bitcoin. After hearing some unfamiliar terms like “crypto wallets” or “crypto exchanges,” they lose interest and give up halfway through.
But the process isn’t all that complicated. Anyone can buy bitcoin and learn how to use bitcoin. Storing bitcoin securely is somewhat trickier, but we’ll touch on that as well later on.
In this crypto blog, you will learn everything you need to make your first bitcoin purchase.
Before Buying Bitcoin
A few things will be required for anyone interested in buying bitcoin. These include:
- An internet connection
- ID documents
- A crypto exchange account
- A payment method
Most exchanges will ask for a form of valid government-issued identification such as a driver’s license or passport. This lets the exchange comply with know-your-customer (KYC) and anti-money laundering (AML) laws and regulations.
The other prerequisites are self-explanatory.
Quick Fix: Bitcoin ATMs
There are some methods of buying bitcoin that do not require anything more than a payment method and a bitcoin wallet.
Bitcoin ATMs, for example, might let users buy BTC with cash and send the coins directly to a user’s personal wallet. Although it has been noted that more and more Bitcoin ATMs have begun requiring identification.
These ATMs can be found at any business that has installed one, most often grocery stores or liquor stores. My hometown of Simi Valley, CA, had a Bitcoin ATM in a local liquor store that I would use to buy BTC back in 2017 and 2018.
There are currently over 21,000 bitcoin ATMs operating in the USA. Here is a list of Bitcoin ATMs: https://coinatmradar.com/countries/
For those looking to make a smaller, one-time Bitcoin purchase, using a Bitcoin ATM might be the simplest method. An individual could simply download a wallet app like BitPay or the Blockchain.com wallet, buy BTC with cash at the Bitcoin ATM, and send the coins to their wallet. Doing so would involve either manually entering the 21-string alphanumeric public key address for the wallet or scanning a QR code on their smartphone (hint: scanning a QR code is the easiest and safest option when it’s available).
For those who want to buy Bitcoin using their personal computers and possibly make larger, regular investments, using a centralized exchange will be the easiest way to learn how to buy bitcoin.
1. Select an Exchange
For U.S.-based users, there are a lot of options for crypto exchanges. This step may require some additional research on the part of the new user.
Fortunately, I’ve written some articles comparing different exchanges for The Balance:
https://www.thebalance.com/kraken-vs-binance-5192002
https://www.thebalance.com/crypto-com-vs-coinbase-5192020
Here I’ll briefly discuss a few of the most popular exchanges. It will be up to the reader to decide which is the best bitcoin exchange for them.
Coinbase
Coinbase is the largest U.S.-based crypto exchange. They were the first crypto exchange to issue stock shares on a public exchange, too.
Coinbase has a lot of educational materials for first-time crypto investors. Everything about the exchange is geared towards newbies.
The big drawback to using Coinbase, however, is the fees. Coinbase has some of the highest fees in the industry.
Kraken
Kraken is another beginner-friendly exchange that hosts a lot of educational materials on its website.
I haven’t used Kraken before, so don’t have as much to say about it. Here’s a tutorial video on how to place an order on Kraken.
Binance.us
Binance, or Binance.us for American users, is also among the largest exchanges in the world. Binance has different graphic user interfaces for everyone – beginner, intermediate, or advanced users.
The “basic” view would be most appropriate for first-timers.
Binance also has its own exchange coin called Binance Coin (BNB). Holding this coin in a user’s account provides a 25% discount on trading fees.
Crypto.com
Crypto.com is one of the fastest-growing mobile phone apps for buying bitcoin. The exchange provides trading pairs for hundreds of coins and is known to have some of the best fees in the industry.
2. Connect a Payment Method
Now that you’ve chosen an exchange and created an account, a form of payment will be required to fund bitcoin purchases.
The best option is often a bank account ACH transfer or a debit card.
Credit cards can also be used, but involve higher fees. Credit card issuers treat crypto purchases as cash advances, which typically involve an upfront fee and comes with a higher interest rate than normal purchases.
3. Place an Order
Finally, the real fun begins. Everything has been leading up to this point – your first real Bitcoin purchase.
Placing an order will look slightly different depending on the exchange.
On Coinbase, select the “buy/sell” button in the upper-right corner. Then choose the cryptocurrency you want, enter the amount, click “buy,” and then confirm on the next page.
On Binance, users can choose between “basic,” “classic,” and “advanced” views. The “basic” option is designed for new users. It involves a simple interface that only requires a few choices: the currencies being exchanged, whether the order is a buy or sell, and the amount of the purchase or sale.
If you run into any problems during this step or the previous one, search for the exchange’s help articles. If that doesn’t do the trick, do another search for articles like this one that go in-depth about one specific exchange.
4. How to Store Crypto Securely
Storing crypto securely is a long and involved subject. Understanding it requires a deeper understanding of the technology.
Fortunately, there are ways to sidestep around spending 100 hours researching how Bitcoin works and figuring out where to go from there (although you should do that too if you’re making a substantial investment).
First, a note on cybersecurity in general. Everything involves a balance between usability and security. To illustrate this point, consider the best way to make your smartphone completely safe and secure. Doing so would involve putting the phone on airplane mode, placing it in a faraday cage, and then placing that inside a locked safe. Of course, now you can’t use the phone!
With crypto, the most secure option involves holding your own private keys in cold storage. But there’s a catch – doing so puts you 100% in control of your keys. A mistake could lead to a total loss of funds. While this is part of what makes Bitcoin so great (the personal sovereignty that comes with responsibility, not the potential loss of funds), it also means new holders could be their own biggest liability.
So, what are the options for people who want to keep their crypto secure without taking possession of their own private keys?
Casa
Casa is a service that helps users set up a multi-signature wallet for their Bitcoin. It requires a hardware wallet, but the wallet is only used as one aspect of a multi-signature system that requires 2 out of 3 keys (or 3 out of 5 for premium users).
Casa Gold, the 3-key multisig plan, costs about $10 per month.
Third-Party Custodial Solutions
Most people who find Bitcoin confusing will likely wind up storing their Bitcoin with a third-party custodial service or exchange such as Coinbase. While Coinbase has received some bad press lately due to customer accounts being hacked, this isn’t actually the company’s fault. Every hack of a Coinbase user to date has been the fault of the individual user.
How do you avoid getting your Coinbase account hacked? Here are a few simple steps to take to make it much more difficult for anyone to get their hands on your Coinbase funds:
- Enable the strongest form of two-factor authentication possible. A physical security key is best, but authenticator apps work well too. Make sure 2FA is required for both log-in and sending transactions.
- Store the majority of crypto in Coinbase “vaults.” These are cold storage multi-signature wallets that are much more difficult to compromise than regular hot wallets. Vaults require signatures from two email addresses and have a 48-hour holding period placed on any withdrawals.
- Use a strong password. At least 14 characters, or as many as 25. Use numbers, special characters, lower-case letters, and upper-case letters.
- Only log in to your account on a network you know to be secure, and use a VPN if possible. Don’t ever log in on public Wi-Fi, e.g. at a coffee shop or airport.
Nothing is perfect, and the bad guys are constantly finding new ways to take advantage of people.
But if you follow these steps, it will make things so difficult for hackers that they are likely to give up and search for an easier target. And if someone does somehow manage to get into one of your vaults, you will be notified 48 hours before a withdrawal occurs, and have ample time to lock your account.
Final Notes on How to Buy Bitcoin
Now that we’ve covered the basics, here are a few extra things to note before getting started:
- Don’t worry about any other coins if this is your first time learning how to buy bitcoin. Altcoins (coins other than bitcoin) are highly speculative and risky. None of them have the features that make bitcoin unique and valuable – namely, decentralization, security, and a fixed supply.
- Start small, but not too small. You don’t want the fees to eat into your initial investment.
- Don’t get caught up in the day-to-day short-term news and price fluctuations. Doing so invites an urge to sell or buy at the wrong times. Bitcoin is best viewed as a long-term savings account.
- Consider using dollar-cost averaging to even out Bitcoin’s notorious volatility. Schedule regular, recurring buys that will occur regardless of what the price does.
And that does it. I hope you’ve found this guide to be helpful. If you’re interested, read about why large corporations have begun adding Bitcoin to their balance sheets here:
https://bdncontent.com/2021/06/02/corporate-bitcoin-investment/
If you have additional questions, email me at Brian@bdncontent.com.