How to Buy Bitcoin? A Complete Guide on Purchasing Bitcoin

How to Choose the Right Exchange

Being aware of the right cryptocurrency exchange is of vital significance to get started with the virtual currency. Not all exchanges are trustworthy and the ones with established reputation also differ from each other in terms of how they carry out their bitcoin trading and other operations.

Doing your homework before you dive into crypto trading is crucial. Since the crypto industry is unregulated, if anything goes wrong you don’t have any channels available to seek recourse. That’s why informing yourself and exercising caution remain important when you ask yourself the question where to buy bitcoin from. Here are a few pointers on selecting the right exchange for buying Bitcoin.

Location of the Exchange

location_icon

It is important to know where the exchange is situated since there could be legislation and regulations in place that can affect day trading of bitcoin. You should try to buy bitcoin in your own country and to find out what exchanges provide services in your country, you can go to this buy bitcoin page and select your country from the dropdown list. The page helps you in finding bitcoin exchanges by country.

Remember to read the terms and conditions thoroughly before you buy bitcoin instantly on the whim.

cryptocurrency_exchanges

Transparency of the Exchange

searching

Transparent exchanges publish audit details or cold storage addresses for verification of their ownership of bitcoin reserves. Bitcoin audits are a way to substantiate that the exchange is solvent and can afford every bitcoin exchange sale.

Reputation of the Exchange

reputation_of_the_exchange

Since there are no regulatory bodies or government institutions that can exercise control over cryptocurrency exchanges, it’s your responsibility to verify whether an exchange is reputable enough or not. Check online forums, Facebook pages, Reddit community’s sentiment and other resources to ensure you’re doing business with the best place to buy bitcoin.

Order Book Volume

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Order book volume is just a list of buy and sell orders present on the bitcoin trading sites. If there are high number of buy and sell orders on the order book, it means the exchange is popular and trusted by many customers. High bitcoin trading volume of order book also suggests high liquidity. However, the lack of order book doesn’t mean an exchange doesn’t have legitimate operations.

Speed of Transaction

speed_of_transaction

Unfortunately, bitcoin buying is not instantaneous and it might take from few hours to a few days before bitcoin show up in your account. Make yourself aware in relation to what exchange’s policy is on lead time. Also ensure that the price being offered is a locked-in price which means that regardless of when you receive your bitcoin, you’ll be charged the price prevalent at the time of order placement.

Anonymity

anoymity

If anonymity is important to you then the best way to buy bitcoin is through cash in a face to face transaction. Exchanges are usually bound by Know Your Customer (KYC) and Anti-Money Laundering (AML) laws which require them to obtain customer’s identity information before making a purchase.

How do I Buy Bitcoin

Once you’ve a wallet, it’s time to buy bitcoins. There are multiple ways to purchase the popular cryptocurrency but caution must be exercised at all times.

Buy Bitcoin through LocalBitcoins.com

local_bitcoin

Local Bitcoins gives you an easy way to instantly buy bitcoins in your country. According to the website, you can trade bitcoins in 248 countries worldwide in more than 16,000 cities. Just ensure that you are buying from a seller with a strong reputation and if something feels fishy, back out instantly.

Buy Bitcoin through Cryptocurrency Exchanges

Cryptocurrency exchange is basically a marketplace where traders buy and sell crypto coins. Some exchanges have a great reputation like Coinbase but some are shady such as CEX.IO. The idea is to sign up on a cryptocurrency exchange website and link your bank account or credit card to the website. There’s a verification process in place that you’ll have to go through. Once that’s done you can easily convert your fiat currency into cryptocurrency.

Again, the easiest and most reputable choice is Coinbase, it’s the best way to buy bitcoins especially for traders who are just getting into the crypto game. Signing up with the website can be a pain since they ask all kinds of personal information like address, phone number, and scanned copy of government issued ID or a passport etc. Exchanges are legally bound to vet every trader through a verification process so there’s no alternative. Once you are verified, you need to tie your credit card or bank account. You can buy bitcoin with credit card but credit card transactions are relatively costlier so linking to a bank account is a better idea. Start small and see how it goes. Patience is key since it can take hours and sometimes even days for the transactions to get processed.

Different exchanges have different features and purchase process also differs in terms of currencies you can buy, modes of payment, service fees, and time to process.

Buy Bitcoin with Altcoins

There is a protocol or system called ShapeShift which allows you to buy a coin with other coins. So, if you are an owner of altcoins, you can use them to buy bitcoins and save quite a bit in the way of service charges. Many wallets, for example Exodus, have ShapeShift built into the system so you can buy bitcoins right from your wallet.

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Common Scams and How to Avoid Them

Being unregulated and highly complex play into the hands of scammers and fraudsters. John Oliver of Last Week Tonight defined bitcoin as everything you don’t understand about computers combined with everything you don’t understand about money. As funny as it is, it’s absolutely true in the case of bitcoin and cryptocurrency in general. That’s why you need to be cautious and be vigilant to the scams. Here are some common scams that plague the cryptocurrency space:

Fake Initial Coin Offerings (ICOs)

It’s like the IPO where companies offer shares to public but for cryptocurrencies. Instead of the shares, investors are given token coins by cryptocurrency startups. This is the reason why Securities and Exchange Commission (SEC) has been wary of ICOs. If you are a beginner, it’s recommended that you stay away from participating in new coin offerings as there’s no way to find out if an operation is legit even for seasoned traders. ICOs tend to overestimate their worth which results in a loss or are outright pump and dump schemes.

Dubious Exchanges

Last year, cryptocurrencies saw a massive rise in popularity which gave birth to a huge number of online cryptocurrency exchanges but unfortunately, very few of them have proven to be reputable and trustworthy. There have been instances where exchanges have disappeared over night or have had their bitcoin reserves stolen through hacking attempts. Mt.Gox which used to be the exchange carrying out over 70% of bitcoin transactions globally went out of business in matter of weeks as 850,000 coins worth $450 million at the time were stolen. Some of the highly trustworthy exchanges include Coinbase, Kraken, Bitstamp and Bittrex.

Ponzi, Pyramid and Get Rich Quick Schemes

These are easier to spot since they offer guaranteed high returns through cryptocurrency trading. As soon as you see an ad or a website that claims to earn you 400% profit in 2 weeks for your $1000, an alarm bell should automatically go off inside your head. If it’s too good to be true, it’s a scam. There are no guarantees in the crypto world. OneCoin and Bitconnect are good examples of fraud schemes.

Apart from these, there are other common scams that rely on target’s technology illiteracy to con him out of his money. There are pump and dump schemes that drive up the price of a coin artificially by creating a hype and when people invest in the digital currency due to fear of missing out (FOMO), the conspirators dump the coins making huge profits themselves while leaving other investors in troubled waters. Similarly, one should also be wary of phishing scams and malicious emails and messages.

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Bitcoin Exchange Fee / Service Charges & Payment Modes

Invest what you can afford to lose

Many people start trading just because it is cool or everybody is doing it. That means more often than not, such traders end up losing money. Have a plan and avoid the following mistakes at all costs:

 

Exchange

Crypto

Money

Verification

Exchange Free

FIAT Deposit Free

Coinfloor

BTC

Wire Transfer

10 days

0.00%

0.38%

Bitcoin.co.id

8 coins

Wire Transfer

12 hours

0.00%

0.30%

Bitit

BTC

Credit Card, Western Union, Money Gram, Perfect Money, OKpay, Payeer

0.00%

8.90%

Indacoin

BTC, LTC, ETH

Credit Cart

Not required

0.00%

9.00%

Binance

All coins

-

3 days

0.10%

-

Tidex

74 coins

-

Not required

0.10%

bitFlyer

All coins

Credit Card, Wire Transfer

3 days

0.15%

1.00%

LiveCoin

All coins

Credit Card, Wire Transfer, Perfect Money, OKpay, Payeer

3 days

0.18%

5.00%

CEX.IO

BTC

Credit Card, Wire Transfer

1 day

0.20%

3.50%

Bitfinex

19 coins

Wire Transfer

4 Weeks

0.20%

0.10%

LakeBTC.com

BTC

Credit Card, Wire Transfer, PayPal, Western Union, Money Gram, Payza, Perfect Money, Neteller, OKpay

1 week

0.20%

0.00%

OKCoin

4 coins

Wire Transfer

1 day

0.20%

0.10%

itBit

BTC

Wire Transfer

10 days

0.00%

0.38%

HitBTC

17 coins

Wire Transfer

1 day

0.20%

2.00%

EXMO

12 coins

Credit Card, Wire Transfer, PayPal, Western Union, Money Gram, Payza, Perfect Money, Newller, OKpay

5 days

0.20%

3.00%

THEROCK

5 coins

Wire Transfer, OKpay

5 days

0.20%

2.00%

Cryptopia

All coins

-

Not required

0.20%

5.50%

SpectroCoin

3 coins

Credit Card, Wire Transfer, Perfect Money, Neteller, OKpay, Payeer

1 hour

0.20%

5.50%

Bittrex

All coins

Wire Transfer

3 days

0.25%

8.00%

Poloniex

All coins

-

1 week

0.25%

-

Bitstamp

BTC

Credit Card, Wire Transfer

3 days

0.25%

8.00%

Quoinex

BTC,ETH,BCC

Wire Transfer

2 days

0.25%

0.00%

Gemini

BTC, ETH

Wire Transfer

2 days

0.25%

0.00%

Coinroom

10 coins

Wire Transfer

3 days

0.25%

1.00%

ShapeShift

All coins

-

Not required

0.25%

-

Kraken

17 coins

Wire Transfer

3 days

0.26%

0.00%

Gatecoin

BTC, ETH

Wire Transfer

2 days

0.35%

0.00%

Quadriga CX

BTC, LTC, ETH

Wire Transfer

3 days

0.50%

2.00%

247 Exchange

4 coins

Credit Card, Wire Transfer, OKpay

8 hours

0.50%

1.50%

FlowBTC

BTC

Wire Transfer

1 day

0.50%

0.00%

Changelly

All coins

Credit Card

Not required

0.50%

5.00%

Bleutrade

46 coins

-

Not required

0.50%

-

BTC Markets

5 coins

Wire Transfer

3 days

0.85%

0.00%

BISQ

All coins

Wire Transfer, Perfect Money, OKpay

Not required

1.00%

0.00%

Remitano

BTC

Wire Transfer

Optional

1.00%

0.00%

Paxful

BTC

Credit Card, Wire Transfer, PayPal, Western Union, Money Gram, Payza, Perfect Money, Neteller, OKpay, Payeer

Optional

1.00%

2.00%

Local Bitcoins

BTC

Credit Card, Wire Transfer, PayPal, Western Union, Money Gram, Payza, Perfect Money, Neteller, OKpay, Payeer

Optional

1.00%

0.50%

Coincorner

BTC

Credit Card, Wire Transfer, Neteller

4 hours

1.00%

5.00%

Anycoin

7 coins

Credit Card, Wire Transfer, PayPal

1 days

1.00%

0.00%

Uphold

5 coins

Credit Card, Wire Transfer

4 days

1.05%

1.80%

Coinbase

All coins

Credit Card, Wire Transfer, PayPal

1 days

1.49%

3.99%

Alfa Cashier

All coins

Credit Card, Wire Transfer

2 days

2.00%

0.00%

BitQuick

BTC

Wire Transfer, Western Union, Money Gram

2 days

2.00%

0.00%

XMLGOLD

BTC

Credit Card, Wire Transfer, PayPal, Perfect Money, OKpay, Payeer

3 days

2.00%

0.50%

CoinMotion

BTC

Wire Transfer

3 days

2.00%

0.00%

Cryptex24

BTC

Western Union, Money Gram, Perfect Money, Payeer

3 days

3.00%

0.00%

BitPanda

4 coins

Credit Card, Wire Transfer, Neteller

10 minutes

5.00%

0.00%

CoinMama

BTC, ETH

Credit Card, Western Union, Perfect Money

1 day

5.50%

5.00%

Bittylicious

BTC

Credit Card, Wire Transfer

2 hours

7.00%

0.00%

UniChange.me

BTC

Credit Card, Wire Transfer, PayPal, Perfect Money

3 days

7.90%

0.00%

Why Do I Need to Buy BItcoins Before Buying Most Altcoins?

Apart from a couple of popular altcoins such as Ether, an overwhelming majority of altcoins are not available for direct purchase through fiat money. You are first required to buy bitcoin and then you can exchange them for the altcoin you want.

Exchanges compel their customers to buy altcoins through this method because they want to maintain liquidity. Most altcoins aren’t traded in high enough volumes to keep the solvency intact in multiple currencies and exchanges don’t want the hassle of converting every currency into dollars. That’s why they require customers to buy altcoins only through bitcoin or in some cases ether.

Can I Use Multiple Exchanges

Using multiple crypto exchanges at a time is perfectly doable but requires immense caution and deliberation from the trader. When you’re on more than one exchange, statistically you are at a greater risk of being a target of malicious cyber-attack. You can use multiple exchanges simultaneously to your advantage by being vigilant and ensuring you don’t use similar credentials for all crypto exchanges you’re using.

Why you Should or Shouldn't Trade Bitcoin?

There are various reasons that drive your investment. Listed are the most important ones:

Inflation – Degradation of dollar’s or any currency’s value over a period of time doesn’t have any effect on cryptocurrency investment. Whole system of bitcoin works in a different spectrum and government has no control over it.

Volatility – Bitcoin has barely completed a decade and is in its infancy when compared to other currencies. Its value is highly volatile, you could either become a millionaire in few months or you could lose it all.

Political Impact – Since government or any third party doesn’t dictate terms when it comes to Bitcoin, it is highly resistant to any type of political shift.

Risk & Reward – Bitcoin’s volatility makes it a high risk investment but you can also make thousands of dollars in a span of few weeks. With higher risk is attached a higher reward.

Short Term InvestmentBitcoin price fluctuates in a matter of seconds, if you can read and learn about the market, there are more chances to get in when the market is down and make a profitable exit.

Liquidity – You can sell bitcoin and other cryptocurrencies on the internet in 10 minutes and draw cash out of the ATM in next hour.

Security – It’s next to impossible to steal a bitcoin as information needed to acquire a Bitcoin is saved on different computers all around the world. You can also carry out anonymous transactions with Bitcoin.

One of the reasons that doesn’t get talked about enough is investing because of your faith in blockchain technology. Most of the bitcoin boom millionaires aren’t the ones who jumped the hype bandwagon but the early adopters who believed in the technology when no one did.

Short Review of Cryptocurrency Broker Supporting Bitcoin

Binance: Apart from BTC, Binance allows you to trade more than 80 altcoins and you can trade on the platform anonymously. Transactions carry low fee and you can cash out as well. Downsides include foreign traders facing verification issues and it’s a Chinese brokerage so reliability might be an issue.
>>To read more about Binance click here

Coinbase: Coinbase is probably the best bitcoin trading platform with high repute. It only allows BTC and ETH trading. This is a platform with high liquidity, competitive service charges and high trading volume. However, Coinbase doesn’t offer brokerage services or margin trading like eToro.
>>To read more about Coinbase click here.

coinbase_icon

eToro.com: eToro.com is the emerging forex brokers that offers bitcoin and other cryptocurrency trading. eToro allows traders to copy seasoned investors and enables CFD trading. The broker website doesn’t provide services globally but has recently raised $100 million to expand its operations.
>>To read more about etoro click here.

Markets.com – Based in Cyprus, Markets.com is one of the most renowned brokers in the forex industry. It allows users to trade popular cryptocurrencies including bitcoin through Contracts for Difference (CFDs). Other cryptos include bitcoin cash, ether, ether classic, dash and litecoin. There are other value added features for traders such as stop loss and take profits. 
>>To read more about Markets.com click here. 

markets.com_icon
avatrade_icon

AvaTrade – AvaTrade is an old player in the brokerage game which enables trade of bitcoin, bitcoin cash, ether, litecoin, dash and ripple. AvaTrade doesn’t charge any commission on crypto trading and there isn’t any bank fee for transactions either. It’s one of the recommended brokers of dailyforex.com.

Plus500 – Based in Israel, Plus500 is regulated by CySEC, Financial Conduct Authority (FCA) and ASIC. The platform allows trade in bitcoin, ether, bitcoin cash and ripple through CFDs. There are other value added tools that help traders in decision making such as traders’ sentiment tool.
>>To read more about Plus500 click here

plus500_icon

24Option – This platform offers a wide range of assets to trade including many cryptocurrencies such as bitcoin, litecoin, ether and bitcoin cash. The website also provides comprehensive educational material for cryptocurrency trading so newbie traders can improve their investment strategy. Deposits can be made in multiple currencies including USD, EUR and GBP.
>>To read more about 24Option click here

Trade.com – Another trustworthy name in cryptocurrency brokers space which provides MT4, WebTrader and mobile apps to facilitate crypto trading. You can trade bitcoin, ether, ethereum classic, bitcoin cash, litecoin and dash on the platform. Only downside is traders.com doesn’t accept PayPal.

trade.com_icon
pepperstone_icon

Pepperstone – Pepperstone is an Australian brokerage company that allows trading bitcoin, litecoin, ether and dash. There isn’t any commission fee and traders can hedge on a single account. It also gives access to institutional grade spreads and trade execution.
>>To read more about Pepperstone click here. 

Bitfinex: Bitfinex is one of the few exchanges with reasonably good reputation. It allows BTC and major altcoins trading and offers advanced offer types along with bitcoin margin trading. The website was once hacked in 2016 and fiat transfers are limited.

bitfinex_icon

CEX.IO: This exchange has gotten mixed reviews in last few months, however, the exchange allows BTC as well as few altcoins trading with top security, unlimited withdrawals and high trading volume. Disadvantages of CEX.IO include high service charges and slow support.
>>To read more about CEX.IO click here.

FXOpen: This is one of the most experienced brokers on the internet with clean and user friendly trading interface with many payment methods. It allows you to trade BTC with few altcoins.

fxopen_icon
bittrex_icon

Bittrex: The exchange features good customer support, impeccable security features and fast sign up and verification process. Apart from BTC you can trade a large number altcoins on Bittrex.

Kraken: Kraken has earned the reputation of being a good exchange with flawed customer side issues such as site is prone to bugs and advanced orders are no longer supported. On the other hand, it enables traders to enjoy margin trading and has low service charges with high liquidity.
>>To read more about Kraken click here.

kraken_icon

GDAX: Besides some technical issues and slow to respond customer service, GDAX does the job quite well. You can trade BTC and few altcoins on this exchange.

Crypto Trading Related Terms

Exchange – Website where you buy and sell cryptocurrencies.

FIAT – Government issues and regulated currency or legal tender.

Whale – An individual or a company that owns massive amounts of cryptocurrency

Limit order/buy/sell – Orders placed by cryptocurrency traders to sell or buy a virtual currency when the price meets a certain amount. These orders are bought and sold against when crypto traders place market orders.

Margin Trading – Amplifying the intensity of your trades by risking the coins you own. It’s very risky and should only be attempted by experienced traders on certain exchanges.

Going Long/Going Short – Margin trade that earns profit on price increase is going long, profit on price decrease is going short.

Bullish/Bearish – When market is expected to go up in price, it’s said to be bullish. The expectation of price falling is termed bearish.

Altcoin – Any cryptocurrency other than bitcoin.

ICO – Initial Coin Offering where startups issue their currency token in exchange for investment which is usually made in ether coin.

FOMO – When prices start rising and you start to feel you have to join otherwise you’ll miss out. Fear of missing out.

FUD – Fear, uncertainty and doubt. Negative rumors disseminated to discourage people.

Market Cap – Total market value of a cryptocurrency.

ROI – Return on investment.

HODL – Means holding on to your investment in a cryptocurrency. The term caught up after a frustrated trader misspelled the word hold while venting out.

Build a Build Trading Plan

Many people start trading just because it is cool or everybody is doing it. That means more often than not, such traders end up losing money. Have a plan and avoid the following mistakes at all costs:

Invest what you can afford to lose

bitcoin_investment

Many traders, especially new ones, get carried away and put exorbitant amounts of money into the coins to make a quick buck. That’s not a wise investment strategy for anything, let alone bitcoin. There’s no guarantee that you’d make a profit so only invest the amount you can afford to lose.

Don’t let your emotions dictate your decisions

investment_decisions

When you’re in cryptocurrency space, emotions like fear, panic and greed can play a huge role in dictating your buying and selling decisions. That’s not a sound strategy and would often result in a loss. Instead, look at what experienced traders are doing and try to follow.

Don’t leave large amounts on exchanges

large_amounts_of_bitcoin

There’s nothing more dangerous than leaving a large number of your coins on online exchanges. Read up on what happened to Mt. Gox, once the largest cryptocurrency exchange in the world, and bring your currency offline.

Happy bitcoin trading!

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