How to Buy Bitcoin
Pros and cons of the most popular gateways into crypto
When it comes to accessing Bitcoin there are basically 2 ways to acquire it - you can mine it or buy it.
Most people don’t mine Bitcoin because of the obvious technical skill and energy costs required. But we’re grateful to those who do, because those miners are the ones supporting the blockchain network so that the rest of us can use it.
There are a number of different options for buying Bitcoin out there and each method has its pros and cons. The keyword here is trade-offs because there is no perfect way to buy Bitcoin. It comes down to your personal situation and the factors that matter most to you.
Consider the trade-offs
Some methods will have cheaper transaction fees, but require personal information such as your social security number. While other methods will charge steep fees, but allow you to buy Bitcoin more anonymously. How important is your privacy to you? This is just one of many questions to consider when deciding how to purchase your first Bitcoin.
Here are some factors to consider:
Ease of use
How easy is the platform to use or navigate?
Do you have the time to learn a new skill? Or would you rather keep it simple?
How secure and reputable is the exchange or company?
Is it safe to share your private information or credit card number?
How much personal information is required (such as social security number)
How much of your personal info are you comfortable sharing?
How expensive are the transaction fees compared to other available methods?
Understandably, most people opt for the easiest method for buying Bitcoin even if it means paying higher fees. Weigh the factors to decide which are most important to you. If you’re willing to invest more time and energy into learning a new platform, you’ll be able to access Bitcoin with cheaper transaction fees.
When it comes right down to it there are 3 general ways to purchase Bitcoin:
To help you decide which of these gateways into Bitcoin best suit your needs, let’s cover each of these in more detail. If you’d like to learn more, check out our video “The Best Ways to Buy Bitcoin” and grab your free copy of the How to Buy Bitcoin: Pros & Cons Guide.
Online exchanges are the easiest and most secure way to buy bitcoin and other cryptos online. The two most popular US online exchanges are:
Coinbase is easy to use and that’s why we would recommend starting there if you’re brand new to crypto. The user interface is simple to navigate, and they offer several cryptocurrencies besides just Bitcoin for sale. Coinbase is the industry leader for cryptocurrency purchases in the United States, so you can rest assured that you are buying crypto from an accredited exchange and that you’ll get what you pay for.
Because of the convenience that Coinbase provides, you’ll be paying higher fees than an exchange such as Gemini which is geared towards traders and is slightly less user friendly but does have cheaper transaction fees.
It’s worth noting that both Coinbase and Gemini have to comply with the same “know-your-customer” laws as any other US bank or financial institution. To set up your account, you’ll have to enter your personal information such as your social security number and verify your identity.
Now, if that’s not your cup of tea you might be interested in the next 2 ways to buy Bitcoin.
Another way to acquire Bitcoin is directly form another person who is selling it. In some areas with restrictive regulations, peer-to-peer transactions may be the best, or only, way to buy Bitcoin.
Unless you know the person that you are buying Bitcoin from be cautious, as this approach does not have the built-in security precautions provided by an online exchange.
But, if peer-to-peer is your jam, the most secure way to buy and sell Bitcoin peer-to-peer is Localbitcoins.com which makes this type of transaction more secure by acting as a liaison between the buyer and seller, holding the Bitcoin in escrow during the transaction. Localbitcoins also has a rating system for buyers and sellers (similar to Uber or Airbnb) to encourage transparency and good behavior. With peer-to-peer transactions expect to pay a premium above market price (especially if it’s the only way to access crypto in your area.)
To ensure that you receive the Bitcoin you are purchasing, always make sure that the transaction is confirmed by the network before walking away or closing the deal. In order to receive the Bitcoin you’re purchasing you must also have a Bitcoin wallet (continue reading for recommended phone wallets).
Aside from Localbitcoins, another way to acquire Bitcoin peer-to-peer would be to sell something and accept payment in Bitcoin on Craigslist. When you post something for sale on Craigslist you have the option to accept cryptocurrency as payment.
Lastly, the third way to buy Bitcoin, and one of our personal favorites, is the Bitcoin ATM.
Bitcoin ATMs look like a regular ATM machine, except they allow you to buy Bitcoin with cash.
There are 2 kinds of ATMs:
Those that allow you to buy crypto
Those that allow you to buy AND sell your crypto for cash
The benefit of Bitcoin ATMs is that they allow cryptocurrencies to be purchased easily, securely, and more anonymously than a typical cryptocurrency exchange. So you will pay a premium for the privacy and convenience.
There are over 4,000 Bitcoin ATMs in operation. The Las Vegas area alone has over 70 Bitcoin ATMs offering a variety of cryptocurrencies besides Bitcoin. Check out CoinATMradar to search for a Bitcoin ATM near you.
Once again you will need a wallet to receive the Bitcoin that you are purchasing.
There are countless crypto wallets available, so many that its hard to choose one! After researching over a dozen options, here are our top 2 phone wallets - both are available in the app store.
It’s worth noting that because they are connected to the internet, phone wallets are less secure than a designated hardware wallet such as a Ledger Nano S. Please don’t store the entirety of your funds here long-term. For long-term storage invest in a hardware wallet such as the Ledger Nano S.
There’s no perfect way to buy Bitcoin, each method has its pros and cons.
Factors to consider are ease of use, security, anonymity, and fees
Online exchanges are the easiest and most secure way to purchase Bitcoin
If you choose to purchase peer-to-peer, consider the security of a service such as Localbitcoins
There are over 4K Bitcoin ATMs globally that allow access to cryptos with cash
Download a phone wallet if you purchase peer-to-peer or through a Bitcoin ATM so you have a way to “receive” the crypto you are purchasing