What can I buy using my Bitcoin?
The process of buying Bitcoin has evolved over the years. In the early years of the coin, the only way to acquire it was to buy it directly from other Bitcoin users or to mine for it. As the popularity of Bitcoin grew, other options for purchasing the coin began to emerge.
Today, there are multiple legitimate ways to purchase Bitcoin without resorting to costly mining. Today, we will go over how to buy Bitcoin, along with offering some alternative methods for acquiring it.
How to Buy Bitcoin: Step By Step
Many people avoid getting into Bitcoin because they think the process will be complicated. The reality is that it is easier than ever to buy Bitcoin. Today, we will give you a simple four-step process to buying Bitcoin. We will walk you through everything from setting up your Bitcoin wallet to making your first purchase.
Step 1: Picking a Bitcoin Wallet
A Bitcoin wallet is similar to a physical wallet but with extra features. A wallet is used to store your digital currency, but it can also be used to send and receive Bitcoin.
There are multiple versions of Bitcoin wallets available, and in this section, we will break down the most common wallets available.
This is the simplest form of a Bitcoin wallet. It is merely a piece of paper with both your Bitcoin address and your private keys printed out. These wallets are generally printed out as QR-codes so that they can be easily scanned into a digital wallet.
Paper wallets are referred to as cold storage because they are not physically connected to the internet. If you plan to HODL your Bitcoin for long periods and don’t need immediate access to your crypto, this is a reliable option.
Mobile wallets are easily the most popular form of Bitcoin wallet as they can easily be used on almost any mobile device. These are for people who are trading Bitcoin or using Bitcoin for purchases regularly. Airbitz, Blockchain.info, and Mycelium are popular mobile wallets.
Desktop wallets are Bitcoin wallets that are stored on your desktop or laptop. Desktop wallets give you more control over your wallet, including the ability to backup your wallet to an external drive. Electrum is one of the most popular desktop wallets with other options, including Atomic and Exodus.
The most secure wallet out there is a hardware wallet. They are small devices that you use to store your Bitcoin and conduct any transactions. Except for when you connect to the web to make transactions, your Bitcoin stays offline. Hardware wallets secure your private keys and are consider unhackable. The major downside to hardware wallets is that they are costly and can be difficult to setup. Nano Ledger and Trezor are two of the elite hardware wallet providers.
Step 2: Setting Up Your Wallet
Setting up a Bitcoin wallet is not very difficult. The majority of the process is done automatically. There are two things you need to pay careful attention to. The first is your wallet’s seed. Most wallets will generate a 12-word passphrase that you will need to keep. Write this down and keep it secure. This will help you recover your wallet should you forget your password or if you experience computer failure.
Next, you will need to create a secure password for your wallet. Don’t use a password that’s used anywhere else. Just as you wouldn’t want someone to know your ATM pin, you don’t want someone to know the password to your wallet.
After your verified your seed and set up your password, the rest of your wallet’s setup should complete automatically. Your wallet will create an address that is used to send and receive Bitcoin. This is also known as a public key. You can find this address under the receive section of your wallet. To send Bitcoin, go under the send section to enter the address you wish to send crypto.
Lastly, let’s talk about your wallet’s private keys. Private keys are how your wallet physically conducts transactions. Think of your public key as your bank account address. Your private key is your pin that’s needed to get cash out of an ATM.
Note that your private key is the most crucial piece of the puzzle. If someone gets hold of your private key, they can take control of your wallet. Like your seed, never give the private keys of your wallet to anyone. Now that you’ve set up your wallet, it’s time to learn how to buy Bitcoin.
Step 3: Picking a Bitcoin Exchange
Bitcoin exchanges work similarly to stock exchange platforms. The exchange sets a price for Bitcoin or other cryptocurrencies, and you can place an order. Like stock exchanges, you can place a market, limit, or stop-loss orders.
Once you have purchased your Bitcoin, you can then opt to either keep your crypto on the exchange or send it to your Bitcoin wallet. It is generally a good idea to send your Bitcoin directly to your wallet. This way, you are not subject to any delays should the exchange experience technical glitches or get hacked.
There are numerous exchanges out there, but some of the best include Binance, Coinbase, and eToro. Stay away from newer crypto exchanges or ones that seem suspicious.
Also, most cryptocurrency exchanges require that you complete client verification procedures. This is due to governments beginning to crack down on crypto transactions. Some exchanges are beginning to block certain countries, such as the United States. Check with the exchange to ensure that transactions from your country are permitted.
Step 4: How to Buy Bitcoin on an Exchange
Once you have selected an exchange and registered for an account, it is time to buy some Bitcoin. First, you need to fund your exchange account. For most of you, this means funding your account. Some will allow you to buy Bitcoin with credit cards. Others will require that you deposit funds from either a credit card or a checking account. Your exchange may accept other payment options.
After you’ve funded your account, you can now purchase Bitcoin. For the fastest purchases, you can select a Market order which will buy Bitcoin at a price established when the order executes. If you want to buy Bitcoin at a specific price, then you will need to run a Limit order.
Once you have selected your order type and how much you wish to purchase, execute the order. Once the order is completed, your Bitcoin will be transferred directly to your account. You can then transfer your Bitcoin to your Bitcoin wallet.
Other Ways to Buy Bitcoin
There are alternatives to buying Bitcoin at online exchanges. Let’s take a look at how to buy Bitcoin at some of the most popular alternatives.
One of the most popular alternatives to online exchanges is Bitcoin ATM machines. These machines are located in convenience stores and other locations and work similarly to bank ATMs. You deposit money into the machine, and it is exchanged into Bitcoin. Your crypto can either be sent to your Bitcoin wallet or printed out as a QR code.
Several companies, including GetCoins, ByteFederal, NetCoins, and others offer Bitcoin ATMs. The main downside to using a Bitcoin ATM is that you generally will pay a higher price for your crypto than at an online exchange. Several websites online list where to buy Bitcoin using ATMs.
Another alternative is to buy directly from other Bitcoin owners. LocalBitcoins.com is a popular peer-to-peer website that allows you to buy Bitcoin directly from other owners. You can see how much they want for each coin and their general terms of sale. When you ready to buy, you can contact the owner directly to make the sale.
Buy Bitcoin With Paypal
If you’re looking to buy Bitcoin with Paypal, your options will be limited. The only exchange that uses Paypal is eToro. LocalBitcoins is an option, but you are purchasing directly from other users rather than from the exchange directly. Paypal should be viewed as a “last resort” option for buying Bitcoin.