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How to Buy Bitcoin

As the concept of cryptocurrency continues to build widespread acceptance among ordinary consumers, the number of people looking to purchase Bitcoin for the first time grows in kind.

But whereas most small towns and big cities around the world are home to precious metals dealers where gold and silver can be purchased for cash or credit, obtaining Bitcoin involves more than a drive down the road.

As a purely virtual currency, you won’t find any physical Bitcoins for sale in a brick and mortar establishment. For this reason, many individuals who are interesting in adding Bitcoin to their financial portfolio become turned off, seeking tangible goods over an intangible construct.

While you won’t be able to get your hands on Bitcoin, acquiring cryptocurrency is actually much easier than meets the eye. Consumers have two primary methods of procuring Bitcoin in today’s market: accept a Bitcoin payment for goods or services rendered; or trade standard currency and credit for Bitcoin via cryptocurrency exchange platforms.

In reality, these processes are quite straightforward, involving no more technological know-how than you need to send funds through PayPal or purchase items on eBay.

This page provides beginners with a road map to buying, or otherwise obtaining, their first allotment of Bitcoin.

Accepting Bitcoin Payments

When Benjamin Franklin famously opined “a penny saved is a penny earned,” he could have never conceived of the modern cryptocurrency market.

But that age-old maxim holds true today, as the most basic way to “buy” Bitcoin is actually to sell something and accept Bitcoin as payment.

By taking advantage of any reputable Bitcoin payment processor, you can use your small business or entrepreneurial enterprise as an engine for generating Bitcoin.

In the case of online payment processor BitPay, you can conduct up to 30 transactions, with a $1,000 daily limit, all without paying a Satoshi (the smallest Bitcoin denomination) in fees. This “Starter” plan is perfect for casual Bitcoin users, but BitPay also offers a Business plan which assesses a one-percent fee on all transactions.

Whichever way you choose to use a payment processor like BitPay – accepting Bitcoin in exchange for sundry items at a yard sale, bartering professional services for Bitcoin, or integrating cryptocurrency payments into a business model – transactions of this nature offer a tremendously simple way of obtaining Bitcoin.

Establishing a Bitcoin Wallet

For the most part, payment processors like BitPay are set up to provide “settlements,” or convert your newly acquired Bitcoin back to traditional currencies (usually the dollar or Euro).

This model is a hedge against Bitcoin’s inherently fluid value, which can fluctuate by the day, or even the hour. By using a daily settlement plan, you can “withdraw” your Bitcoin by converting it into your standard currency of choice, which ensures that all payments you accept maintain their true value relative to the goods or services sold.

Settlement is a worthwhile practice to be sure, but not everybody looking for Bitcoin is running a business, and in fact, many converts to cryptocurrency are actually in the speculation and investment market. These users are simply looking to buy Bitcoin now at its current value ($635 for one Bitcoin at the time this was written), in the hope that the price will climb over time.

Of course, the value of Bitcoin has fluctuated wildly over the last few years – ranging from an approximate low of $200 to a peak of nearly $1,200 – so this approach to Bitcoin investment certainly offers a blend of merits and drawbacks.

Another common motivation for adding Bitcoin to your financial toolbox is the need for greater flexibility in the digital age. Certain purchases, including international shipments and online gambling deposits, trigger fraud detection alerts with a regular bank. Despite being completely by the board, these transactions are typically held up until the bank can confirm their veracity.

This is simply due diligence on the bank’s part, but it’s a hassle for consumers nonetheless. Transferring a certain sum of hard currency into Bitcoin, and using the privacy-centric cryptocurrency platform specifically for these purchases, is the most effective way to ensure that the banks stay out of your business.

In order to store Bitcoin for these or other purposes, rather than accept it as payment for later conversion to standard currency, users must utilize a Bitcoin wallet. The term “wallet” in this case is obviously just colloquialism. In reality, Bitcoin wallets are simply computer programs capable of interpreting the seemingly indecipherable chain of encoded numbers and letters known as a Bitcoin Uniform Resource Identifier (URI).

Remember, there are no physical Bitcoins in existence. Instead, when you receive a Bitcoin, you’re really receiving the address to a digital file, one which signifies an utterly unique block within the overall blockchain – or the continuous ledger of all recorded Bitcoin transactions.

So in order to put Bitcoin away for safe keeping, you’ll need a wallet to store the “private keys” needed to gain access to your particular link in the blockchain.

Bitcoin wallets come in two main types suitable for the typical consumer.

Software wallets are downloadable directly to your computer or mobile device. They function like any other app, aside from the usual debugging that occurs with any developing technology, and are generally considered the more secure option because private key passwords are required to send or receive Bitcoin.

Web wallets – also known as hosted wallets – are operated by third-party providers and accessed through a web browser. They function more like a PayPal or Venmo account, and accordingly, users must place their trust in internal security and integrity controls to ensure the safety of their Bitcoin holdings.

Once you’ve chosen a Bitcoin wallet to suit your particular needs, cryptocurrency exchanges are the most commonly used platform for purchasing Bitcoin with standard currency systems.

Buying Bitcoin Through an Exchange

The concept of a Bitcoin exchange is essentially modeled on the traditional currency exchange markets which have been in place throughout global economies for centuries.

Every exchange platform offers a particular array of features, but the basic premise of each involves connecting buyers and sellers interested in exchanging certain currencies.

Before taking a trip abroad, American travelers use standard currency exchanges to turn dollars into British pounds, Euros, or the appropriate banknotes and coinage for their destinations. This can be accomplished in several different ways, each with their own exchange rates and fees, including placing an order with your bank, purchasing cashier’s checks, or finding the Travelex counter at your local airport.

In each case though, the premise remains the same: converting one form of currency into another.

This holds true for Bitcoin exchanges as well. You’ll find several different formats and platforms to choose from, each offering their own range of pros and cons, but the common thread throughout is that they all allow consumers to convert traditional currencies into Bitcoin.

Credit cards, cash, personal checks, and money orders can all be used as the physical medium to transfer dollars – and most major currency systems – into Bitcoin.

The list below showcases several established Bitcoin exchanges, along with their primary medium of currency conversion, and other relevant notes:

EXCHANGEMEDIUMS(S)
Asia NexgenBank transfer, physical
BelgacoinSEPA transfer
Bit4CoinBank transfer
BitaloBank transfer
BitBrothersCash, money order, cashier's check, MoneyGram, physical
Bitcoin MagnetBank account
BitCoin OTCDirect seller
BitQuickCash, bank transfer
BittyliciousBank transfer
BitXoinCash
CoinbaseBank transfer
CoinMamaCredit card
CubitsCredit card
ExpressCoinCash, personal check, money order, bank transfer
Gift Card DrainerGift card
KrakenBank transfer
Local BitcoinsCash, wire transfer, Skrill
VirWoxCredit card

By visiting any of these recognized Bitcoin exchanges, and exploring the various options and features on offer, you can find the optimal platform for your personal cryptocurrency conversion needs. Just be sure to read through user-generated reviews and compare multiple exchanges to make sure you’re getting the most bang for your virtual buck in terms of privacy, security, exchange rates, and fees.