There's a Bitcoin rally and you are starting to feel some FOMO — let's walk you through buying your first Bitcoin.
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Getting a Bitcoin Wallet
Each Bitcoin wallet has both a private and a public key. The public key is used by anyone, anywhere, to send Bitcoin to your wallet address. Your private key is only for you, and you need it to access your funds — so it's best to write it on a piece of paper and keep it safe from the prying eyes of the world.
There are a number of simple ways you can obtain or buy Bitcoin. First, depending on your employer, you can request to get paid in Bitcoin. However, if that is not an option, then you’ll need to get acquainted with various cryptocurrency exchanges and financial service providers that can sell you Bitcoin.
The easiest way to buy Bitcoin is to buy Bitcoin online. In fact, unless you live near a Bitcoin ATM, you’ll most likely be purchasing all your Bitcoin through the internet.
You can buy Bitcoin on any of the various P2P, centralized and decentralized crypto exchanges. In addition to these exchange services, there are also several financial providers and financial institutions that offer easy ways to purchase Bitcoin. To pay for your Bitcoin, you can use Paypal, credit cards, cash (sometimes), bank transfers or debit cards.
Buying Bitcoin on Cryptocurrency Exchanges
If you choose to buy Bitcoin on a cryptocurrency exchange, you may also have to go though Anti-Money-Laundering and Know-Your-Customer measures like submitting a government ID with a selfie, which can sometimes take several days to be authenticated.
Buying Bitcoin P2P or on Decentralized Exchanges
Buying Bitcoin on a peer-to-peer network like LocalBitcoins or decentralized exchanges can be similar to buying Bitcoin on a centralized Bitcoin exchange — but there are key differences.
On LocalBitcoins, for example, you yourself are in charge of finding a seller with a price that’s acceptable to you. LocalBitcoins sellers may have different restrictions, like only accepting a certain type of bank transfer, or only wanting to sell a certain amount of Bitcoin. The benefits of using a peer-to-peer service like LocalBitcoins is that the transfers are usually instantaneous — once you put your fiat currency into escrow, the seller has a certain window of time, usually 80 minutes, to send you your Bitcoin. If they don’t follow through, your money is released back to you, and you can try again.
Buying Bitcoin With a BTC ATM
While some BTC ATMs allow you to insert your cash to buy Bitcoin, some allow you to do the opposite, and sell your digital assets for cash, like USD — but we are talking only about buying Bitcoin right now!
Some Bitcoin ATMs require you to follow AML/KYC procedures like entering your phone number or showing an ID, while others don’t — it just depends on the provider.
Buying Bitcoin With PayPal
PayPal announced in October 2020 that they will allow their customers to buy and sell cryptocurrencies, including Bitcoin, from their PayPal account. While this method of buying the oldest crypto might not sit well with those old-school cypherpunks that live and breathe decentralization, buying Bitcoin through PayPal for a first-time crypto user is a pretty user-friendly way to be introduced to the world of cryptocurrencies.
How to Buy Bitcoin With a Credit Card
Depending on your credit card issuer and crypto exchange platform, you can buy BTC with your credit card with ease. There are even a few crypto exchange platforms like Gemini and BlockFi that have issued their own credit cards, and offer rewards to their customers in crypto. However, before you buy Bitcoins with a credit card, make sure to research whether your credit card allows crypto purchases and whether your exchange of choice takes CC payments. For example, in the U.S, Coinbase does not allow its users to pay with credit cards.
While buying Bitcoin with a credit card can be convenient if you don’t have cash on hand, there are several issues you should be aware of. Certain exchange service and credit card companies may charge high transaction fees for Bitcoin purchases. You’ll also have to consider the interest rates your CC could charge you. Many credit card companies see crypto purchases as a cash advance, which means that these sorts of transactions can be subject to higher rates.