Your step-by-step guide to buying the world’s most popular cryptocurrency.
Bitcoin is the original, biggest and most well known cryptocurrency currently on the market. And while buying Bitcoin can seem like a daunting prospect, it’s really relatively easy when you know where to start. See below for our 6 easy steps on how to buy Bitcoin.
1. Choose an exchange or broker
Choosing an exchange or a broker can require a bit of research, especially if you’re new to crypto.
You can opt for either a centralised (CEX) or a decentralised (DEX) exchange. If you are just starting out on your cryptocurrency journey, opting for a centralised exchange, like Coinbase, Binance, Gemini or CoinSpot might be a preferable option for you. Decentralised exchanges are more suited to buyers and traders with more experience in the cryptocurrency market due to their complex user interfaces.
Different exchanges will charge different fees for their services, so it’s worth comparing the market to find one that’s the best for your circumstances. The price of Bitcoin, because it is a decentralised currency, may also vary somewhat across market platforms.
If you’re looking for the safest and easiest way to buy Bitcoin, brokers like eToro are ASIC regulated, so your purchase is protected. Cryptocurrency brokers can also take the confusion out of buying crypto by organising the purchasing on your behalf. This may be more straightforward than navigating a market exchange for some prospective traders (though many CEXs are often very user-friendly). However, some charge higher fees than exchanges for the privilege.
Some brokers, on the other hand, claim to offer their services for “free”. Of course, if something sounds too good to be true, it usually means that it is. These “free” brokers may not execute your bitcoin purchase at the best market price, or they may sell information about you and what you’re buying to large brokerages or funds.
2. Create an account
Much like buying most things online, you must first create an account with your exchange or broker of choice. This is usually fairly straightforward and only requires a few personal details, such as your name and email address. You’ll also need to add a payment method for purchasing your Bitcoin, and for making withdrawals.
3. Verify the account
Not every exchange or broker will require you to verify your identity in order to buy Bitcoin, but some will. This process is known as “Know Your Client” or “Know Your Customer” (KYC). It essentially usually just requires that you upload a photo of your passport or driver’s license, so that the exchange or broker in question knows that you are who you say you are. The more cautious platforms may also require a selfie or a selfie of you holding the ID.
4. Deposit money to invest in Bitcoin
Whether you choose to do this by linking a bank account, Paypal account, or using a credit or debit card is up to you. However, it’s worth noting that some credit card issuers do not allow you to buy bitcoin using a credit card. The ones that do may also charge additional fees, such as transaction fees, processing fees and higher interest rates, for doing so. There may also be security risks associated with making a credit card purchase.
Other payment methods may also have different fees associated with them, so it’s worth reading the terms of your chosen service provider carefully prior to making a purchase.
5. Place an order
Once you’re set up on your exchange platform or with your broker, you can simply place an order on Bitcoin by selecting BTC as your chosen cryptocurrency.
At the time of writing this article, the price of one Bitcoin (BTC) costs around $56,508 AUD. Luckily, bitcoin can be divided up into fractional shares, and you can usually start purchasing BTC with as little as $10.
6. Safely store your Bitcoin
Because of its decentralised nature, the Financial Conduct Authority (FCA) does not regulate Bitcoin. This means that, unlike the money in your bank account, it is at a high risk of theft or hacking. In order to keep your cryptoassets protected, therefore, you have to store them somewhere safe.
Your options include:
- Keeping it on the exchange. If you purchased your bitcoin via a centralised exchange platform then you can simply leave your bitcoin on the exchange where you bought it. Most exchanges offer “crypto wallets” that are attached to the platform.
- A hot wallet. You can also keep your Bitcoin in or move it to something called a “hot wallet”. You can store, send, and receive Bitcoin tokens using this type of digital wallet. A hot wallet is always connected to the internet or cryptocurrency network. This makes it somewhat more susceptible to hacking than cold storage methods, but it is protected by your private keys.
- A cold wallet. A “cold wallet” is a physical wallet that you can store your cryptocurrency in that is fully offline. The main benefit of this is that it keeps your Bitcoin safely out of reach of hackers. However, a cold wallet poses new risks, in that you could lose it or have it physically stolen. Many cold wallets look similar to USB drives, and could be easily misplaced. Cold wallets are available for purchase online from around $100.
Whatever method you select to buy your Bitcoin, it’s important that you are cautious in your approach. Do your research into the most suitable and safest place to purchase it from for your circumstances, the fees involved, and the best storage methods before spending any money.