How to Buy Bitcoin
Bitcoin (BTC) is not only the original & first cryptocurrency, it was also the first ever blockchain project. It’s arguably the most popular form of cryptocurrency on the market, with the number of investors interested in this lucrative coin clearly not set to slow down any time soon.
Bitcoin’s aim was to completely decentralize the monetary system, meaning middle-men such as banks would no longer control the process of transferring money. The idea was to create a system where the people were incentivize to upkeep the accounting as a group, and no one person was a failure point. After blockchain’s conception, Bitcoin was born.
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Buy Bitcoin in 5 Quick Steps
- Register free with eToro to open a trading account.
- Try a demo account before you hit the Deposit button.
- Choose a payment method (Paypal, credit card etc) & deposit into your account.
- In the ‘Trade Markets‘ section on the left, select Crypto and then Bitcoin.
- Hit trade, a ticket will open, choose your risk preferences and then click ‘Open Trade‘.
Where to Buy Bitcoin
Buy Bitcoin with eToro
eToro is the leading CFD provider when it comes to cryptocurrencies and buying Bitcoin. They were one of the first to launch Bitcoin on their trading platform and continue to be a market leader in the cryptocurrency space. If you’re looking to buy Bitcoin, then look no further than eToro, see below our 3 step process to getting started!
Step 1: Registration
Step 2: Deposit
Step 3: Buy Bitcoin
Buy with Investous
Highly rated and new CFD provider, Investous, has burst onto the market and established itself with a solid reputation. It’s smooth and streamlined platform makes trading easy for any beginner looking to take the dive into the world of cryptocurrencies. It offers over 270 different assets and a great range of coins.
Step 1: Registration
Step 2: Deposit
Step 3: Buy Your Cryptocurrency Now
Buy with 24 Option
Well known CFD provider, 24 Option, has extended its cryptocurrency offering, with the additions of Bitcoin Gold and Monero plus the standard collective of bitcoin, ethereum etc. The platform is suited for beginners because it simplifies the process of finding your cryptocurrency and in turn purchasing it.
Step 1: Registration
Step 2: Deposit
Step 3: Buy Cryptocurrency
Buy with Binance
Binance is one of the largest cryptocurrency exchanges on the planet. It grew quickly after its launch in 2017 and now even has it’s own token, Binance Coin. It is one of the best places to buy and trade some of the more obscure altcoins, they have a huge range that is always changing with new coins being added and old ones being removed. For security reasons, we would always prefer to buy using a CFD provider like eToro.
Step 1: Registration
Step 2: Deposit
Step 3: Buy Your Coins
Why Should You Buy Bitcoin?
Even if you’re not actively involved in the cryptocurrency markets, it’s likely you’ve heard of Bitcoin. As the original cryptocurrency, Bitcoin boasts the highest trading value of the whole cryptocurrency market, and overall, it is used as the benchmark for all other cryptocurrency pricing.
Many other cryptocurrencies can’t even be purchased through traditional fiat currencies, and Bitcoin is the go-to currency of choice for most exchanges out there. This means that Bitcoin isn’t going anywhere any time soon, with its value being the one thing that really swings the whole cryptocurrency market.
Although being first to market has some serious advantages, it also has some serious drawbacks as well. Bitcoin first launched back in 2009, when blockchain technology was not even in existence. Since then, there have been huge improvements to the blockchain methodology, and now Bitcoin’s method for processing payments has been left to look a bit sluggish in comparison to more modern blockchains (such as Ethereum and Ripple).
However, this isn’t to discourage a purchase, Bitcoin is still the most used cryptocurrency in the world. Whether buying plane tickets or purchasing clothing from a virtual retail outlet, the possibilities for crypto are continuing to expand. This is also one of the reasons why Bitcoin has grown in such prevalence and popularity since its introduction in 2009.
While the coin is purely based within the digital community, it is still considered a tangible asset. It can therefore be used for both short- and long-term investment strategies, and can even be used as a ‘hedge’ against open-market volatility (for example, when the signs of a global recession begin to appear). In other words, Bitcoin profits can offset another holding that suddenly loses value, which makes it similar to a commodities or Forex trade decision.
As a liquid form of investment, Bitcoin can be bought and sold relatively easily – unless you need to buy/sell a very, very large quantity. It is therefore an excellent addition to portfolios that might otherwise be focused upon long-term holds. Indeed, savvy investors have turned sizeable profits within a short amount of time due to the anonymity and quick trade times associated with blockchain-based cryptocurrencies.
Additionally, thanks to real-time trading capabilities and a growing number of dedicated smartphone applications, Bitcoin may very well be poised for an impressive amount of further growth in the future. While many new cryptocurrencies are entering into the marketplace, Bitcoin is by far the most well-known trading instrument. It will therefore likely continue to serve as a benchmark indicator and, as a result, other investment possibilities such as futures contracts are now being offered.
What are the Pros and Cons of Buying Bitcoin?
Transparency is always important when considering any form of investment and the same holds true in terms of those who are looking to buy Bitcoin. Like any form of investment, there are both benefits and possible drawbacks to examine;
- Relative stability: The overall global supply of Bitcoin is low when compared to other traditional forms of currency. This is important, as it signifies that its value will not be subject to sudden and unpredictable changes. Bitcoin is not directly tied to traditional financial markets, meaning other assets could fall because of external circumstances, whereas Bitcoin is less likely to.
- Decentralisation: Bitcoin is not governed by any type of central bank, so if a national institution (i.e. the Bank of England) decides to raise interest rates, there will be no direct impact on the value of Bitcoin. As noted in the previous point, values may rise and fall, but due to decentralisation, Bitcoin’s value fluctuations are at least one-step removed.
- Position: Bitcoin is considered to be the benchmark cryptocurrency, which is why other holdings often trade against it. You can think of this in the same way as how the fiat world values other assets (such as gold and oil) based against the value of the USD.
- Anonymity: Much like other cryptocurrencies, Bitcoin’s stored within a secure cryptocurrency wallet. These wallets have no personal data attached and can’t be tracked back to the individual that set them up. This was one of the original appealing aspects of Bitcoin, as well as cryptocurrencies as a whole.
- Ease of trade: If you need to buy Bitcoin as a means to offset losses within long-term sectors such as precious metals or blue-chip stocks, the ease of trade is vital. Happily, a growing number of online investment platforms recognise Bitcoin as a valid form of investment. Bitcoin can also be traded against fiat currency (BTC to USD, for example).
- Short term volatility: The volatility associated with the Bitcoin sector can be unpredictable on occasion. This may cause novice investors to incur substantial losses within a short period of time. This is also why only the most modern trading platforms should be employed in order to remain one step ahead of the curve.
- Lack of regulation: Bitcoin is not overseen by well-known governing bodies such as national trading commissions. This opens up the possibility that speculators or those investing on margin might drive the price up or down, causing deliberate volatility that other investors will not be able to predict or offset. In these circumstances, the value of Bitcoin could suddenly plummet.
- Relative youth: As it has only existed since 2009, Bitcoin is a relatively new form of investment. As the underlying mechanics are still being developed, it is always wise to perform a significant amount of research before making any move towards investment.
What are the Best Payment Methods to Buy Bitcoin
As Bitcoin was both the original cryptocurrency and has been around the longest, it also has the most payment options available to purchase. There are multiple different ways to buy bitcoin with varying payments methods;
- Paypal: Buying Bitcoin with PayPal is slightly complicated, but it is actually possible to purchase Bitcoin with PayPal. Some exchanges offer a way to purchase directly via PayPal, whereas others have a more convoluted system that has multiple steps to eventually finalise a purchase.
You can find our full guide on how to Buy Bitcoin with PayPal by clicking here.
- Cash: For obvious reasons, this is probably the most risky way to purchase Bitcoin and for good reason – You need to withdraw your hard earned money in cash, find a seller of Bitcoin, meet them and pass over your cash. Obviously, this is heavily reliant on trust but there are websites out there such as LocalBitcoins that aim to facilitate and regulate this process.
- Credit/Debit Card: Many exchanges and brokerages support credit and debit cards, but not all of them do. This is mainly down to the difficulty of directly purchasing cryptocurrency with fiat currency, as there aren’t any real systems that enable a smooth transfer from one to the other. Larger exchanges and brokerages offer a way to purchase via Credit/Debit card by holding your funds in escrow whilst it finds a seller.
You can find our full guide on how to Buy Bitcoin with Credit and Debit Card by clicking here.
- Bank Transfer: Surprisingly, this is the most common form of payment method for cryptocurrency purchase. This is due to the strict KYC processes of most exchanges and brokerages, and also how easy it is to transfer funds from one bank account to another. This works in a similar way to other payment methods by holding your funds in escrow until you find a buyer, unless you purchase with a brokerage.
There are some other alternative methods for buying Bitcoin including ATM purchases, e-wallets, specific debit cards and even CFD and trading derivatives.
Buying Bitcoin in Your Country
As Bitcoin is a globally based cryptocurrency, there are literally hundreds of different trading platforms to choose from. It is nonetheless prudent to become involved with an exchange or broker that offers both content and functionality in the language you speak.
Also, some countries have either restricted or completely banned the purchase of cryptocurrency, so you may not actually be able to buy any Bitcoin if that’s the case. For example, New York still has very strict rules around the purchase of Bitcoin and there are other countries around the world that just flat out ban the buying or selling of the cryptocurrency.
Is There a Difference Between Buying and Trading Bitcoin?
Yes. Buying Bitcoin normally means the exchange of fiat currency for that of cryptocurrency, and in this case for Bitcoin. Trading Bitcoin is slightly different, and you may not own the digital currency, but instead you’ll have a contract that’ll trade on its value.
Most people that are looking to buy Bitcoin are either investing in a very long term asset, or they are more likely looking to support the Bitcoin blockchain, and to use the coin to purchase things online. As the industry is completely unregulated, purchasing Bitcoin and owning the asset is not covered by any regulatory body, so if the cryptocurrency was lost, or stolen then you would not have any of your funds covered at all.
People that are looking to trade are looking for quicker gains and want to gain on the market valuations. Really, people that want to earn a profit off of the increase (or shorted decrease) of the price of Bitcoin find it much easier to trade the coin rather than deal with the difficult buying process. Fortunately, an added benefit of trading the coin is
There are some other nuanced differences, but there are both advantages & disadvantages to each method of obtaining Bitcoin.
What are the Fees Involved When Buying Bitcoin?
Much like any other form of underlying asset and trading vehicle, those who wish to buy Bitcoin will need to take into account the associated transaction fees. These can generally be broken down into a handful of primary categories:
Transaction fees can be common on some exchanges. Market makers (those who create a new Bitcoin order that cannot be immediately matched by another seller or buyer) will normally incur lower fees than a “taker” (those who place instant orders that can be immediately fulfilled). Transaction fees can likewise be offered at a flat rate per execution or they might lower as the amount of the trade increases.
These are another way for exchanges and trading platforms to earn a slight income off of account holders. The good news is that these will vary between different providers. It is worth mentioning that hubs which do not charge any type of deposit fee could very well hike up their withdrawal charges or the fees associated with each transaction.
Many traders are likely to encounter some type of withdrawal fee if they wish to sell a Bitcoin holding. For example, some providers will charge a variable rate (normally between 2% and 4%). Others might have fees which are capped at a specific amount regardless of the size of the trade. A handful of cryptocurrency exchanges are not associated with any type of withdrawal fee. Still, keep in mind that third-party charges such as those implemented by e-wallets such as PayPal may still apply.
Commissions and Spreads
There may be times when spreads or commissions are attached to a Bitcoin transaction. Spreads are often encountered by those who are enacting CFD (contract for difference) trades in order to speculate on a rising or falling market. The spreads themselves can vary depending upon the provider. Average spreads of 80 pips are generally considered amenable for most transactions.
Those who are involved with leveraged positions should keep a close eye on the spread, as small movements can often have a considerable impact upon profit and loss margins. Commissions might also be charged on a per-trade basis although a growing number of providers are offering commission-free positions in order to keep abreast of the growing competition.
Brokerages Versus Exchanges
Exchanges essentially act as the middlemen between a trade, so they are likely to charge moderate to high fees (depending upon the amount as well as the applicable terms and conditions). Brokerage houses tend to deal with larger positions through a dealer marketplace. In other words, they pair similar buyers and sellers with one another, merely acting as the host. Fees tend to be lower and there can be a greater degree of flexibility. However, the trade-off here is that individual investors who might hold only small amounts of Bitcoin may not be able to leverage such mechanics.
These various fees and transactions are important to address by anyone who is looking to buy Bitcoin for short- or long-term requirements. The good news is that many third-party comparison sites will provide a breakdown of such details in order to obtain the clarity and insight needed to make a firm decision.
Frequently Asked Questions
How easy is it to buy Bitcoin and how quickly will the transaction take place?
In terms of ease and clarity, the quickest way to buy Bitcoin is to use regular money from a standard account such as PayPal or a bank. Once the purchase has been made, the holdings can be transferred to your e-wallet for subsequent use. Speed and efficiency will also depend upon other variables such as the software utilised by the exchange platform as well as the strength of your Internet connection. This is why it is a good idea to ensure that you have high-speed access and that 4G connectivity is available if you happen to be using a mobile device.
Should I be concerned about privacy?
Many users are wondering whether it is possible to buy Bitcoin completely anonymously. Keep in mind that the majority of platforms will ask you to provide various forms of identification such as a photo ID, a physical address, a valid email, and your full name. Utilising private transactions to buy Bitcoin in cash is one possible option. The only potential issue is that dealing directly with a seller can be dubious if their reputation is not verified. Try to find a service which provides a trust score for each seller in order to avoid any issues.
How do I sell my Bitcoins?
The selling process is very straightforward. Simply log into your account and select the amount of BTC you want to sell. Selling through the exchange that you bought them from is recommended for new traders as you’ll understand the specific processes involved. Alternatively, sell them through any exchange or trading platform that supports them.
How do I buy in bulk?
The process for bulk buying is different from your ‘standard’ purchase as the methods used by most investors aren’t always suitable for high volume trades. To ensure the best price, look for OTC (Over The Counter) exchanges. These refer to companies or individuals willing to sell directly rather than through a potentially costly (but regulated) trading platform.
Can I Buy Bitcoin with Credit Card?
If you are looking to buy with a credit card, both Coinbase and eToro offer similar procedures to buying Bitcoin. Again there is one advantage eToro has over Coinbase, it’s verification process is considerably quicker.
If you do not have an account but want to buy Bitcoins quickly, Coinbases verification process is very long. It can take a few weeks before you are verified and able to buy Bitcoin, unlike eToro where you can almost buy immediately. In fact, you can deposit a small amount of funds with no verification to quicken up the process. Larger amounts do require more thorough checks.
Can I buy Bitcoin with PayPal?
If you are looking to buy Bitcoin with Paypal it is very easy when using providers like eToro, however, if you wanted to actually buy the asset, it is a bit more difficult.
Coinbase only allows you to buy Bitcoin with Paypal if you are a US citizen, which obviously is not ideal if you do not live in the US. They do intend to roll out this across all countries but currently, it is not available.
Find more information here: Buying BTC with PayPal.
What Are the Tax Implications of Buying a Bitcoin?
The tax implications of buying a Bitcoin vary, depending on where in the world you live. But usually you don’t pay taxes for buying a Bitcoin; instead, you’ll pay taxes for trading or selling Bitcoin you already own. Bitcoin value exchanges of many types are taxed. Consult local Bitcoin value tax law, or talk to a Bitcoin value professional/tax consultant.
How Can I Buy Bitcoin Instantly?
Fast exchanges like Shapeshifter and Changelly are perhaps the best way to buy Bitcoin instantly.