How to Buy Bitcoin
Now that you know the bitcoin basics, you might want to jump straight to buying your first bitcoin. Hold on to your horses. Unlike flat currencies that you can buy from the bank, getting a bitcoin can be a bit more complicated.
First, you need to set up a bitcoin wallet. No. This is not your physical designer wallet. Getting your wallet is the first step in transacting using bitcoin and you’ll need whatever purchasing method you would prefer. The wallet could be online, desktop, mobile, or offline (a hardware device). These wallets may offer different services depending on the type. But, all of them are designed to keep your keys and passwords safe.
Bitcoin buying services will support at least one payment method in purchasing bitcoin. Each of these methods will have its own advantages and disadvantages.
Buying with cash
Those who feel insecure with online transactions will be happy to know that they can buy bitcoin with cash. You may need to go to specific locations, but if it makes you feel more secure, do so. There are countries that have ATMs that sell bitcoin. Most of these ATMs are currently located in major cities in the US like New York, Chicago, Philadelphia, Atlanta, Los Angeles, and Miami.
Advantages: No risks of chargeback. More secure compared to other methods, and potentially faster.
Disadvantages: Local liquidity dependent. Due to security, regulatory, and liquidity issues, the transaction size can be limited. Fees in buying bitcoin with cash also tend to be higher because of the operational costs when dealing with cash.
Buying with credit card
You can actually connect your wallet with you credit card. It’s convenient and quick. But, it may depend on the bank who issued your credit card if they will allot it. Some bitcoin sellers will allow some cards like MasterCard and Visa, but will not have an option for American Express, or vice versa. And it’s not even a guarantee. Some major banks like Bank of America, J.P. Morgan Chase, and Citigroup don’t allow the use of their credit cards for bitcoin purchase. So, before you use your credit card, you might want to talk with your bank first so you don’t waste your time and effort.
Advantages: It’s just like buying something online so it should be a familiar process for credit card owners. Transactions are fast and consumer adoption is ubiquitous.
Disadvantages: Credit cards are somewhat insecure so the risk for chargeback is higher than when you use cash. The same chargeback risk also causes the transaction fees to be much higher.
This payment method is widely used by exchanges, OTC traders, and brokerages. It’s more secure than using credit cards since you pay directly from your bank account to the seller.
Advantages: Fast settlement for domestic transfer. It is recommended for large transactions.
Disadvantages: Poor user experience combined with unfamiliarity with the wiring process can prove to be expensive in some special cases. Settlements when done between two or more different countries can take a long time and will incur additional exchange costs and fees.
Where to Buy Bitcoin
Now that you have decided which payment method you’d want to use in purchasing your first ever bitcoin, we need to browse the available channels and markets.
- These are companies that set up live markets