As the Bitcoin price continues to take many people by surprise, now is a good time to contemplate making a small investment. Buying Bitcoin for the first time may seem daunting, but it doesn’t necessarily have to be. Acquiring your first and future batches of cryptocurrency is a very straightforward process.
Table of contents
- The Quick And Easy Option
- Finding The Right Provider
- Build Your Trading Strategy
- Opening Your Account
- Depositing Funds
- Buying Bitcoin With An Order
- Going Beyond Exchanges And Brokers
- Closing Thoughts
The Quick And Easy Option
Acquiring Bitcoin can be done indifferent ways, yet most people opt for using a regulated broker or cryptocurrency exchange. Numerous companies can serve a purpose in this regard, yet it is crucial to distinguish between buying Bitcoin itself and gaining exposure to its price. Not all providers will let users own their BTC purchase or send it to a different wallet. Instead, they open positions on the Bitcoin price and benefit – or suffer – from price fluctuations.
Finding the right broker or exchange can be a bit more complicated. Hundreds of companies claim to provide access to Bitcoin and other cryptocurrencies these days. It is pertinent to find one that operates in your region or accepts your local fiat currency.
Once a platform has been chosen, you need to open an account and verify your identity, taking up to a few days. Then, it is time to deposit funds through supported payment methods. As soon as funds have been cleared, buy Bitcoin from the broker or exchange and see your balance update in real-time. To control your funds, it is advised to send the BTC balance to a personal wallet, but we’ll talk more about that later on.
Finding The Right Provider
With hundreds of cryptocurrency exchanges, brokers, and trading desks accessible globally, it can become challenging to find a good platform. Different users may have different needs and requirements, and no platform is suited to handle everything. It is often worth comparing the various exchanges, evaluating their trading fees, and taking a closer look at their reputation in the industry.
One golden rule to keep in mind is to buy only from reputable exchanges. Even though cryptocurrency has become a lot more “open” over the years, you cannot trust all exchanges blindly. Sadly, there are still reports of suers buying Bitcoin on a malicious website and losing money. It is paramount to conduct some research before making any financial commitments.
Thankfully, there are dozens of legitimate businesses out there that will be able to accommodate users who are buying Bitcoin. As you are researching to find a fair exchange or broker, it may also be valuable to look at their current trading markets. Being able to acquire Bitcoin, or exchange it for gold or silver, can often help create a diversified portfolio.
Confirming The Regulated Nature Of The Company
Many Bitcoin enthusiasts see no merit in having exchanges and brokers adhere to traditional regulations. Unfortunately for these providers, it is a necessary “evil” to contend with. As these firms handle deposits and withdrawals on behalf of customers, every trading platform must adhere to stringent guidelines.
If an exchange is unregulated, it is often best to look for an alternative solution. Adhering to regulatory guidelines creates a “safety net” for customers if anything goes wrong with their purchase or the service provider. Unregulated platforms have no safety net and may not even be a legal operation either.
Several providers adhere to regulatory guidelines across different countries and continents. To do so, they often have to obtain an official – and expensive – license in these jurisdictions. All of this information can be publicly verified by looking up a company’s data. Any lack of regulation can prove problematic in the long run.
Supported Payment Methods
There is no point in creating an account for an exchange that doesn’t support a favorable payment method. Those who are new to buying Bitcoin often expect to use payment options like PayPal, Skrill, and others. That is not always possible, as exchanges and brokers often rely on direct payment card transactions and bank wires.
The process of depositing funds through these payment methods has become faster, yet it can still take a few days for funds to clear. Buying Bitcoin requires some patience as a new user on an exchange or broker but becomes gradually faster over time. Exchanges and brokers often limit how much new users can spend on buying Bitcoin to prevent fraudulent transactions and money laundering activities.
Should you face a delay in funds clearing through a bank transfer, the price of Bitcoin may have changed drastically. In some cases, you may be able to acquire more BTC for the same amount. However, if the market turns bullish, you will end up with a smaller amount of Bitcoin for that money.
Evaluate The Fee Structure
Every cryptocurrency trading platform maintains a specific fee structure to allow companies to make money. Some platforms will have higher or lower fees and commissions than others. Always evaluate how much an exchange or broker charges on top of the current market price when buying Bitcoin.
It is important to note that fees do not just apply to buying Bitcoin either. When you sell Bitcoin for fiat currency or trade it against other crypto-assets, you will pay a fee as well. Depending on your trading activity, those fees can add up quickly.
Depending on the payment method used to purchase Bitcoin or other crypto-assets, the fees may prove rather steep. Using a credit or debit card will always be more expensive than bank wires, for example. It is not uncommon for customers to pay a total fee of roughly 7-8% on buying Bitcoin, trading, and selling for a profit later on.
Some platforms offer low or no fees at all. However, some of these companies – like Robinhood – will not allow you to withdraw BTC to your private wallet. Always conduct thorough research of what the broker or exchange will allow you to do.
Build Your Trading Strategy
Those who buy bitcoin will need to come up with a viable trading strategy or investment plan. Some buyers will explore short-term profits, whereas others consider BTC a long-term investment with a significant return on investment potential. Others will slowly keep accumulating Bitcoin in search of earnings while dollar-cost averaging their previous entries.
Speaking of DCA, it is an excellent way for newcomers to accumulate Bitcoin passively without worrying about making regular manual purchases. Various exchanges and brokers will allow for recurring purchases on a specific date and for a fixed amount. Those who consider Bitcoin a long-term investment
All of these approaches are viable, yet it is pertinent to determine your course of action in advance. Entering a financial market without any plan or strategy is ill-advised. This is particularly true when dealing with volatile assets, such as Bitcoin. Being prepared for wide price swings is mandatory in this industry, after all.
Setting a Bitcoin price target for when to cash out or a target of how much BTC you want to accumulate over time is often an excellent first step.
Opening Your Account
When all of the above has been taken care of, the time has come to open an account with the broker or exchange you have selected. Signing up for an account is easy, as it usually requires sharing your address, email, creating a password, and so forth.
However, users need to be aware of the identity verification procedures. Regardless of where the exchange or broker is located, they will need to verify your identity sooner or later. It may not always be necessary for a one-time or smaller purchase, but you will need to submit a scan of your ID or passport and proof of your address when spending large amounts.
As regulated companies have to adhere to stringent laws, user identity verification becomes a mandatory part of Know-Your-Customer and Anti-Money Laundering procedures. Completing this process can take anywhere from a few hours to several days, depending on the broker or exchange. Patience is a virtue when buying Bitcoin for the first time.
Depending on which payment methods the exchange or broker accepts, funding your account will either be instant or take a few days. Credit and debit card purchases and ACH and SEPA deposits are usually the faster options. However, they may carry a relatively steep fee, which is something to keep an eye on.
For new users, the initial deposit – depending on how much money it entails – may take a day longer as a verification measure. Some companies try to keep new users “in check” a bit at first to ensure everything is completely legitimate. Once you become a regular user, the limits and deposit delays will gradually improve.
Buying Bitcoin With An Order
All that is left is to use the funds in your exchange or broker account to buy Bitcoin. This is done through a trading order, which traders will fill either immediately or within a few minutes. The purchasing aspect is often the quickest of them, whereas the initial verification and account funding can take a little while.
As you can read in our dedicated article, traders can use a plethora of different orders to buy, sell, or trade Bitcoin. Experimenting with these tools to find what suits your needs best is crucial. A buy order is just one tool, but limit and market orders can serve a crucial purpose as well.
Going Beyond Exchanges And Brokers
In this modern era, it is equally possible to purchase Bitcoin without relying on exchanges or brokers. Several alternative options exist, although not all of them will be available in your region. Knowing these options exist is always worthwhile, as you never know if and when you might be able to use them.
Buying Bitcoin From Bitcoin ATMs
One of the more straightforward ways of buying BTC is through a Bitcoin ATM. Thousands of these machines exist around the world, although some regions prove more popular than others. The main reason why these machines are popular is that they accept cash deposits and will sell you Bitcoin on the spot. Most teller machines have no minimum buying threshold either, allowing customers to buy BTC at any given moment.
One aspect to consider is how these ATMs will require users to verify their identity for specific purchase amounts. This often includes holding up your ID in front of the ATM’s camera to complete the Know-Your-Customer process. More often than not, this verification procedure takes a minute or two to complete, allowing much quicker access to the world’s leading cryptocurrency.
Get Bitcoin Cashbacks
Although this is not a way of buying BTC directly, the rewards will be paid out in Bitcoin. One can use specific referral links or browser plugins to earn money back on every purchase when shopping online. This can include a cashback of up to 7% to be paid out in Bitcoin, depending on whom you buy from.
A similar option exists with a specific type of Bitcoin debit card. Some cards will let users fund their balance with bank wires or credit cards yet provide a direct cashback in Bitcoin on every online and offline purchase. Such a card replaces traditional rewards with small amounts of Bitcoin, allowing customers to build up their portfolio slowly.
For those buying Bitcoin for the first time, there is a minor learning curve to contend with. Moreover, the process is a bit time-consuming, but it will always be worth it in the long run. Once your purchase is complete, you are officially a part of the ever-growing Bitcoin community.
Whether you view BTC as a way to make quick money or long-term investment is a personal preference. Either approach is valid, but it is evident that Bitcoiin looks better as more time progresses. It is not uncommon to see the value of one’s BTC portfolio go up by 100% over 1-2 years. Patience is a virtue in this industry, but it’s not a trait everyone has either.