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How To Buy Bitcoin
Even though cryptocurrencies have stirred up discussions globally, not many people are taking the leap of faith and buying cryptocurrencies like Bitcoin. Some worry about losing their capital, while others simply do not know how to buy Bitcoin or other cryptocurrencies.
Tesla’s SEC filing revealed that the Elon Musk-led corporation has purchased a mammoth USD 1.5B worth of Bitcoins. Not just that, the world’s richest person also expressed his plans to accept Bitcoin as a valid payment method for the company’s products. These events induced a sharp surge in the price of Bitcoin, which as of this writing stands at 46,330.60 USD per Bitcoin.
If you are curious about this makeshift settlement technology, now is a good time to wet your feet and learn a thing or two about how to buy Bitcoin stock for yourself.
How to buy Bitcoin?
Step 1: Sign Up For A Hosted Wallet Service
Think of these wallets as your bank account number. Since Bitcoins are not physical coins, the wallets as well are digital and not physical. Essentially, wallets are alpha-numeric codes assigned to you by your wallet service provider where you will be able to store the Bitcoins you purchase.
If you heard your friends talking about Coinbase (a wallet service) which left you wondering how to buy Bitcoins with Coinbase, it is pretty simple. Coinbase assigns you a wallet or a public key, which functions the same way as a bank account number. The public key also gets recorded in the blockchain ledger as your digital signature. When you are done setting up the wallet, you can use the Coinbase app for your Bitcoin transactions and storing your private keys (which are required to buy or sell Bitcoins).
If you are not using a service like Coinbase, you will need to store these private keys yourself and keep them secure. While this gives you total control over your private keys, there is one major con you need to consider. If you store your private keys yourself and you lose them, you will lose your Bitcoins forever. On the contrary, if your private keys are stored on Coinbase (or any other secure wallet), you can always reset your login credentials should you forget or lose them.
Security plays a big role in Bitcoin transactions, so ensure that you avoid using public Wi-Fi or other insecure networks for your transactions. It is also good practice to choose a wallet that has a multi-signature facility.
Step 2: Documentation
All countries have some policy in place to keep money-laundering practices in check. In the US, the SEC mandates identity verification for all users while registering for digital wallets. Before you can trade Bitcoins, you need to submit several documents like your Social Security Number and driver’s license as part of the verification process.
Step 3: Choose A Payment Method
Wondering how to buy Bitcoin with your credit card, debit card, or bank transfer? Well, it’s generally no different than how you would normally use them to make other purchases. But, these options may vary based on your jurisdiction.
If you are using Coinbase, just head over to the “Buy” tab and choose Bitcoin (assuming that is the currency you want to buy). Down below you will see the payment methods you have set up with your Coinbase wallet.
The most cost-effective payment method depends on the Bitcoin Exchange (discussed next) you use. Generally, credit and debit cards are the most preferred payment methods since they are quicker. However, you will end up paying relatively higher fees. On the other hand, bank transfers give you the benefit of lesser fees, but the transaction will take longer to complete.
Step 4: Choose a Bitcoin Exchange
Before we get into our discussion about exchanges, I want to clarify right out of the gate that a wallet and an Exchange are two different things. A cryptocurrency exchange is fundamentally the same as a stock exchange, like NYSE. Instead of stocks, a cryptocurrency exchange is a marketplace where you can buy and sell Bitcoins using the traditional currency.
That being said, it is not uncommon for exchanges to also offer wallets as an ancillary service. But remember, you must choose a secure wallet to store your Bitcoins. So, if you do choose an exchange-offered wallet, ensure that you do not store a lot of Bitcoins on that wallet, or any quantity of Bitcoins for a long duration. Transfer your Bitcoins from your exchange-offered wallet to a more secure wallet to maximize security.
Of course, many reputable exchanges do maintain a high-security standard. Practice diligence, nevertheless, and choose a wallet that keeps your investment safe against theft.
This wraps up the process of buying Bitcoins. Note that there are several other ways to buy Bitcoin as well. For example, Bitcoin ATMs and Peer-to-Peer Exchanges.
Now that you know how to buy Bitcoins, you may have already come up with a new set of questions. How to buy Bitcoins safely, or how to buy Bitcoins anonymously? Well, it is natural to have these questions. So, I am going to address them here for you:
If you want to buy Bitcoins anonymously, your best bet is to use a Bitcoin ATM. You could also buy Bitcoins through a P2P exchange like Bitcoin.com or Localcryptos and set up a cash deal with a seller. Alternatively, you could look for OTC sellers in your region via LinkedIn or other platforms.
Should I buy Bitcoin?
The answer, as always, is not so black and white. It depends on a range of factors if Bitcoin is good for your investment portfolio.
If you do plan on investing in Bitcoin, make sure you have enough knowledge on the subject or seek professional assistance.
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Thanks for reading our article: How to buy Bitcoin.
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