Bitcoin is everywhere.
A few years ago, you could have gone without knowing about cryptocurrency, but over the past few years, it seems that everyone and their Shiba Inu are trading crypto, with Bitcoin being the most popular choice.
Bitcoin was first introduced in 2009 by an anonymous coder, Satoshi Nakamoto, and it has now gripped the world — prompting investors to take notice. The price of Bitcoin has risen from just a few dollars to over $20,000 per coin in just over a decade.
But where’s the best place to buy Bitcoin? And how do you keep it safe?
If you are looking to buy Bitcoin for the first time, this guide will show you exactly where to buy Bitcoin, how to safely exchange cash for crypto, how to place an order (the easy way), and how to safely store your Bitcoin (including the most secure storage solutions).
What’s Ahead:
How To Buy Bitcoin
Buying Bitcoin used to be a very involved process, but crypto exchanges have made it much simpler.
Follow these five steps to buy Bitcoin and keep it secure:
1. Choose a Bitcoin Exchange
Buying Bitcoin requires exchanging your dollars for some of those sweet, sweet golden coins.
Source: Giphy.com
OK, Bitcoin isn’t a physical coin, but you will need to find a reputable crypto exchange that allows you to purchase Bitcoin with U.S. dollars (or other fiat currency). Cryptocurrency exchanges vary wildly on their fees, user experience, and security practices, so it’s important to find a reputable exchange that offers transparent fees and multiple ways to secure your account.
There are several hundred exchanges available to choose from, but not all of them are created equal. Here are are a few of the most reputable exchanges on the market that we recommend:
eToro
If you’re looking for a place to trade Bitcoin and learn as you go, eToro might be your best bet. This crypto exchange and social trading platform requires an initial deposit of just $10 for U.S.-based traders, so it’s really beginner-friendly. And with features like a virtual portfolio where you can practice your trading and CopyTrader™ where you can automatically mirror the moves of traders you trust, this exchange makes it even easier to get started.
FTX.us
FTX has recently become one of the largest exchanges in the world, and the FTX.us exchange offers a low-fee way to purchase Bitcoin. The FTX.us mobile app is slick and makes it easy to purchase Bitcoin and other cryptocurrencies.
Kraken
This aggressive cephalopod-like creature is known for destroying entire ships and dragging sailors to their doom. Wait… I mean, this crypto exchange based in California offers a super-simple mobile app to buy Bitcoin on their ultra-secure platform.
2. Create Your Exchange Account
Once you have selected one of the top crypto exchanges to use for buying Bitcoin, it’s time to create your account.
Crypto exchanges typically require you to create an account and verify your identity before you can make any purchases. Here’s what that process looks like:
- Create your account with an email address and password.
- Provide personal details, such as legal name, address, and Social Security number.
- Provide a picture of a government issued-ID (like a driver’s license).
- Take a selfie picture.
This may seem like a bit much, but this verification helps prevent fraud and protect your account, as well as allows the exchanges to stay compliant with government regulations.
3. Fund Your Exchange Account
Once your account is created and your identity is verified, it is time to fund your account. This can be done one of several ways:
Source: Giphy.com
ACH (Bank Account) Transfer
This is the most common way to fund your account. Most exchanges utilize a third party (such as Plaid) to securely connect to your bank account and allow transfers.
There are typically no fees for ACH transfers.
Wire Transfer
You can do a standard wire transfer from your bank to the exchange, though there may be fees associated
Credit/Debit Card
Most exchanges allow you to fund your account with a credit or debit card, but this is not recommended. Not only are there additional fees for using a card to purchase Bitcoin (up to 4%), but your credit card may classify the transactions as a “cash advance” and charge additional fees.
Google/Apple Pay
Some exchanges allow you to use Apple or Google Pay to purchase Bitcoin, but again, these apps are linked to credit and debit cards and may come with additional fees.
Transferring funds may take a few days to reach the exchange, though some allow you to start trading right away while the transfer is in process.
4. Order Your Bitcoin
Once you have funded your exchange account, you can now purchase Bitcoin.
If you have never purchased cryptocurrency before, it’s important to note that you don’t have to purchase a whole Bitcoin (which can be $20,000 or more), but rather you can purchase a fraction of a coin, for a smaller amount. Most exchanges have a minimum, but typically you can buy as little as $5 or $10 worth of Bitcoin at a time, similar to purchasing fractional shares of a stock.
To place an order, you will need to select Bitcoin as the cryptocurrency you wish to purchase and fill out the order form. You can usually fill in the amount of Bitcoin you want to buy, and press “order.” This will execute a trade at Bitcoin’s current price, and deposit the Bitcoin into your account.
Yup, that’s it!
But while most exchanges offer a simple “buy now” option, some offer more complex order forms with multiple choices. Here’s a quick breakdown of a more advanced order form and how to fill it out:
Coinbase order form | Source: Jacob Wade
Market Order
Market orders purchase Bitcoin at the current market price. This is the default of most exchanges and is the simplest way to order.
Limit Order
Limit orders allow you to set the price you wish to pay for Bitcoin. For example, if you think Bitcoin will drop in price, you can set the limit price at a lower price than Bitcoin is currently at, and place the order. The order will go through if/when Bitcoin drops down to the price you set.
Stop Limit Order (Advanced)
Stop limit orders allow you to set a price to buy or sell Bitcoin with more control. You can set the “stop” price to trigger the order, and the “limit” price to execute the order. This is an advanced strategy for experienced traders.
Price Controls (Advanced)
Some order forms allow you to customize the order you place by selecting which price you are willing to pay between the bid and ask price on the order book.
Amount
This shows you the amount of Bitcoin you will purchase, and is shown as a decimal when purchasing a fraction of a Bitcoin.
Estimated Fee
Most quality exchanges will show a fee estimate before the order is placed, allowing you to see how much it costs to purchase Bitcoin. Keep an eye on this, as some exchanges charge more than others.
Order forms can feel complicated, but essentially you just need to select how much Bitcoin you want to purchase, check the fees, and place your order. Market orders are the simplest option for beginners, and give you the fair market price (fewer fees) for purchasing Bitcoin.
5. Store Your Bitcoin
Owning Bitcoin is not like owning stock. Stocks simply represent ownership in a company, but Bitcoin is a digital currency that is owned by the entity that controls the private keys to access it. While most crypto exchanges are a secure place to hold your coins, this means they technically have ownership of your Bitcoin until you transfer it to your own digital crypto wallet.
A crypto wallet is an app or hardware device used for storing digital assets, such as Bitcoin. These wallets are secured with a password, as well as private keys that are only known to the wallet owner.
Crypto wallets come in two flavors: hot wallets and cold wallets (hardware wallets).
Hot Wallet
A hot wallet is a program or mobile app that allows you to store your Bitcoin securely. These apps make it easy to transfer Bitcoin to or from a crypto exchange, and are protected with a password and private keys.
A few of the most popular Bitcoin hot wallets are Exodus and Mycelium.
The downside to hot wallets is that they are connected to the internet, and may be more vulnerable to attack than a cold wallet.
Cold Wallet
A cold wallet is a hardware device that plugs into a computer via USB, and stores your Bitcoin offline.
Hardware wallets are known as the most secure way to store your Bitcoins, as they are disconnected from the internet, and feature advanced encryption to safely store your Bitcoin private keys.
Some popular crypto wallets are the Ledger Nano X and the Trezor Model T.
The downside to cold wallets is that they require multiple steps to transfer your Bitcoins back to an exchange to sell or trade.
Whichever wallet you choose, it is recommended to take custody over your own Bitcoin, as there are no government protections or regulations for customers if crypto exchanges lose your funds or go out of business.
Related: 6 Best Crypto Wallets to Stash Your Bitcoin
Where To Buy Bitcoin
While cryptocurrency exchanges are the most popular place to buy Bitcoin, there are several other choices as well.
From bitcoin ATMs to popular stock trading apps, Bitcoin can be purchased in a variety of places:
Crypto Exchange
As mentioned earlier, crypto exchanges are designed to make buying Bitcoin simple, offering a safe and secure way to deposit cash and purchase Bitcoin.
Crypto exchanges typically offer some of the best security, storing your Bitcoin in offline vaults until you are ready to transfer it to your own digital wallet.
Bitcoin ATM
If you don’t want to hassle with registering for an account and prefer to purchase Bitcoin and deposit it straight into your own wallet, Bitcoin ATMs may be a good choice.
While still a growing market, there are over 35,000 Bitcoin ATMs worldwide, with a majority of them in major U.S. cities.
But be aware that most charge astronomical fees, with some charging over 15% to buy Bitcoin.
Investing Apps
Robinhood, Webull, and a handful of other popular investing apps offer crypto trading, including the ability to purchase Bitcoin.
While these “no fee” trading apps let you buy Bitcoin, it’s important to note that you cannot take custody of your Bitcoin, as most don’t allow you to transfer your Bitcoin off the platform (though Robinhood will soon).
Peer-to-Peer
There are some peer-to-peer (P2P) Bitcoin exchanges that allow you to purchase Bitcoin directly from another person. These exchanges don’t require verifying your identity and allow you to purchase Bitcoin through CashApp, Paypal, or other money transfer apps. These are a bit more high-risk, as scammers frequent these exchanges.
Whichever medium you choose to buy your Bitcoin, just make sure you are buying from a reputable company, as the risk of scams is high on smaller crypto platforms.
How Much Is Bitcoin Worth?
Though Bitcoin is referred to as a “digital currency,” its price fluctuates a lot more than traditional currencies. As a publicly traded asset, Bitcoin’s market price rises and falls based on supply and demand. Bitcoin was nearly worthless when it first launched in 2009, but as more and more people become interested in buying Bitcoin, the price per coin rose exponentially.
Source: Giphy.com
As of October 2022, one Bitcoin is worth about $19,175.00. Considering Bitcoin was worth about $4,000 just a few years ago, this is a huge increase. But also considering Bitcoin was worth about $68,000 less than a year ago, this price is much lower than its previous all-time high.
As a new asset class, cryptocurrency is inherently volatile. And judging by the 400% increase in price since 2020, followed by a 70% drop over the past few months, Bitcoin continues to be a fickle speculative investment.
Related: What Is the Future of Crypto?
How To Sell Bitcoin
The simplest way to sell your Bitcoin is by doing so on a cryptocurrency exchange. This requires signing up for an account, verifying your identity, and transferring your crypto to the exchange to sell.
Crypto exchanges make it easy, allowing you to place a sell order for your Bitcoin at the current market price, though you should keep an eye on the fees (some charge over 3%). If you wish to control the sale of your Bitcoin a bit more, most exchanges offer limit orders to set your selling price, and the ability to create multiple sell orders.
When selling on an exchange, be aware that there may be daily or monthly withdrawal limits, so depending on the amount of cash your wish to withdraw after selling, it may not be immediately available.
Related: How To Cash Out Your Bitcoin and What You Should Know Before You Do
Alternatives to Bitcoin
While Bitcoin is the original cryptocurrency and holds the top spot on overall market capitalization, there are several other popular cryptocurrencies that you may consider:
Ethereum (ETH)
Ethereum is the second-most popular cryptocurrency in the market and boasts the most crypto applications to date. Thousands of crypto projects are built on the Ethereum network, and an upcoming upgrade to the Ethereum network is making it much more eco-friendly than Bitcoin.
Cardano (ADA)
Cardano is an Ethereum competitor, with a blockchain that offers decentralized applications, NFTs, and more. A much-hyped project with an eccentric founder (Charles Hoskinson), Cardano has been a top cryptocurrency for the past few years.
Solana (SOL)
Solana is an ultra-fast blockchain that offers extremely low fees and slick decentralized applications. As another Ethereum competitor, Solana is making a name for itself in the NFT space, and has seen explosive growth over the past year. Solana’s price has suffered recently due to network outages.
Avalanche (AVAX)
Avalanche is another Ethereum competitor, offering ultra-fast transactions and rock-bottom fees. Avalanche has seen steady growth in applications developed and user adoption, but has seen its price drop along with the broader crypto market.
Related: 8 Alternatives to Bitcoin – Which Crypto Will Be the Next Bitcoin?
Summary
Buying Bitcoin for the first time isn’t as difficult as you might fear. Crypto exchanges offer a fast and simple way to exchange your dollars for BTC and let you become a crypto investor overnight.
But buying Bitcoin also isn’t like buying stocks or other investments, and finding a safe way to store your coins is important. Equally important is knowing how (and where) to sell your Bitcoin should you need to, as the price rollercoaster may require you to more closely manage this investment.
Bitcoin and crypto are in their infancy, and with just a decade of existence under their belt, the road ahead may be a bit bumpy. Crypto as a whole is a speculative investment, and we don’t recommend #YOLO’ing all of your money into Bitcoin as an overall strategy.
Instead, learning more about how Bitcoin fits into your overall financial goals will help you wisely invest over the long term, while enjoying the excitement of crypto investing in the short term.
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