How To Buy Bitcoin

One of the biggest problems that has kept the average person from buying cryptocurrency has been the previous difficulty of the purchasing process. Simply put, people were too intimidated by the process. As a result, many who were interested in crypto would end up declining to take the leap of purchasing cryptocurrency. Whether you want to buy Bitcoin, buy Ethereum, or buy other cryptocurrencies tokens of a different name, we have you covered with 3 different ways to trade cryptocurrencies!

These were valid concerns a few years ago, as the cryptocurrency ecosystem and the tools to enter it were still in early development. The past few years have seen a lot of innovation in the space, providing much easier ways to enter the blockchain community by purchasing cryptocurrency. Confusing applications have been improved, resulting in a much easier crypto purchasing process. The idea that it is difficult for the average person to buy bitcoin has now been turned into a misconception. Each purchasing method varies in ease of use, fees, and identity verification. Here are the top ways to buy bitcoin:

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1. Buy Bitcoin via Online Exchanges

how to buy bitcoin via online exchanges

What are cryptocurrency exchanges?

Crypto exchanges, like a stock market, operate as a network of buyers and sellers. Large institutions buy and sell in substantial volumes, meaning that you can usually find someone to buy from. The past few years have been eventful for cryptocurrency exchanges. They went from navigating uncertain regulations and providing basic, yet confusing, crypto management software to gaining legal accreditation and putting out easier-to-use tools.

How do Crypto Exchanges Work?

These cryptocurrency exchanges function just like any stock trading platform or foreign currency exchange. They use simple market mechanics to facilitate trades. Often, a cryptocurrency trading platform has a very similar interface to online stock trading interfaces. While there are many exchanges that allow you to buy bitcoin, the most popular for new users is Coinbase. Headquartered in San Francisco, the exchange has received the necessary regulatory approval to operate over 100 countries, giving its users extra peace of mind. Coinbase.com offers users the option to use fiat currency to buy various cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Tezos, and many others, already serving over 15 million customers.

Other popular cryptocurrency exchanges include Binance and Gemini. Availability varies by location.

Centralized exchanges vs Decentralized exchanges

Interested in buying a token that isn’t listed on a centralized exchange? Decentralized exchanges, or DEXs, allow for the transfer of cryptocurrencies for other tokens. Centralized exchanges, like Coinbase, process all transactions internally, while DEXs facilitate cryptocurrency transactions peer-to-peer without the need for a third party.

Pros & Cons of buying bitcoin via exchange

Pros

  • Online exchanges allow the purchase of cryptocurrency at any time.
  • Access to many different cryptocurrency options within a global marketplace.

Cons

  • Can be confusing to use cryptocurrency to cryptocurrency exchanges.
  • Transferring money to the exchange is not instant.
  • Some exchanges manage your private key, or crypto master password, which can be compromised if the exchange is hacked. We recommend transferring your cryptocurrency to your own wallet after purchasing on an exchange.

2. Buy Bitcoin at a Cryptocurrency ATM

How to buy bitcoin at a Cryptocurrency ATM

What are Cryptocurrency ATMs?

Cryptocurrency ATMs are a way to buy bitcoin from a physical location. Most are located in public places, convenience stores, and shopping centers, and allow payment with credit cards or cash.

How do Crypto ATMs Work?

These machines function just as normal ATMs would, except they facilitate cash to cryptocurrency exchanges. There are generally two types of cryptocurrency ATMs. One-way ATMs will only allow you to purchase crypto, while two-way ATMs have the additional ability to sell cryptocurrency for fiat.

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Pros & Cons of Buying Bitcoin with ATMs

Pros

  • No payment processor transfer delay, as most crypto ATMs accept cash.
  • Convenient and safe way to buy cryptocurrency.

Cons

  • Difficult to find in some areas.
  • High Fees - While these machines provide a great amount of convenience, they usually take a significant fee. While many online exchanges will take around 5% of your purchase as a fee, some cryptocurrency ATMs take up to an 18% fee.

3. Buy Bitcoin & Ethereum in Direct Private Transaction

How to buy bitcoin, ethereum and other crypto in a direct private transaction Before exchanges gained traction, a popular way to purchase cryptocurrency had been to find someone willing to sell cryptocurrency in your local area.

How do Direct Transactions Work?

Services like localbitcoins.com and internet forums have allowed buyers and sellers to find each other and conduct private sales. These websites and forums allow buyers and sellers to find each other without the use of an online exchange. This direct transfer takes no additional fees, as users aren’t relying on a third party to conduct the transaction.

Pros & Cons to Buy Bitcoin with Direct Transactions

Pros

  • No third parties needed.
  • Allows you to connect with other local cryptocurrency enthusiasts.
  • No fees!

Cons

  • Not always easy to find someone willing to sell the amount and type of cryptocurrency you're looking to purchase.
  • Not available in all areas.
  • Lack of institutional oversight may put you or your cryptocurrency at risk. Make sure to conduct these transactions in a public place.

Learn More

For more information on this topic please visit our Blockchain 101 course.

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