Bitcoin is the first and most popular cryptocurrency in the world. In past years, Bitcoin has exploded in its value and has become popular among investors worldwide. If you are new to crypto trading and want to invest in Bitcoin, here is a guide on how to buy bitcoin in 4 steps.
Step 1. Find an Exchange Where You Will Make a Purchase
If you want to know how to buy bitcoin in 4 steps, you first must decide on what exchange you will make a purchase. Picking the right crypto exchange is the first step you need to take in order to buy your very first Bitcoin. A cryptocurrency exchange is a platform that allows buying and selling of cryptocurrencies. Not all exchanges support all coins, but most of them do support BTC. These platforms operate similarly to stock exchanges. All exchanges have different fees, security, and payment methods, so these features should be one of your top priorities when picking the right one for you.
For example, if you are buying a BTC in the US, you will want to find an exchange that allows payments in USD and is regulated by US laws. Coinbase and Binance.US are among the most popular exchanges that allow USD payment. On the other side, if you live in the UK, you can buy Bitcoin on most platforms by using the UK credit or debit card or bank wire. Most exchanges accept payments in many fiat currencies such as GBP, EUR, USD, and others. Here are other exchanges where you can buy your BTC:
- eToro
- Gemini
- US
- Binance
- Coinbase
Things to Consider When Choosing an Exchange
As we have already mentioned, all exchanges charge different fees. And fees should be one of the most important things you look for when picking an exchange. Fees can be charged when buying, selling, and depositing money and currencies. For example, paying with a credit or debit card is usually the most expensive method, so look for an exchange that allows bank wire transfer. But if you don’t want to wait for a bank transfer( it usually takes 1-5 business days depending on the exchange), you can find exchanges that charge low fees when depositing. An exchange that charges the lowest fees for credit card depositing is eToro – you can fund your account with a minimal amount of $10 or £7, and the charged fee for a GBP deposit will be 0.5%. On the other hand, Coinbase will charge you 3.99% if you deposit via card. Here are different fees on the most popular exchanges:
| Type of fee | eToro | Binance | Coinbase |
| Transaction fees | No transaction fees | 0.1% to 0.5% | 0.00% to 0.60% |
| Credit card depositing fees | 0.5%. | 4.5% | 3.99% |
Step 2. Figure Out Where to Store Your Bitcoin
After you decide where you want to buy BTC, the next step would be to open an account on that exchange. Opening the account is pretty simple. Just go to the website of the exchange you have picked and click on the Sign-Up button, and follow the instructions to create your account. You will have to provide your personal information and e-mail and create a password. Most exchanges will provide you with a hosted wallet where you can keep your BTC, but you don’t have to store your BTC on the platform. You can have your own wallet and transfer your coins there. There are two types of wallets: hot and cold ones.
Learn More About Hot Wallets
Hot wallets are online wallets usually provided by the exchange or some other party. This means once you buy a BTC, it will be automatically stored in your wallet. Once you create an online wallet, you will be provided with a password, and you can access this wallet through a web browser or app. Here are the most popular hot wallets you can use:
- Trust Wallet
- MetaMask
- Coinbase Wallet
Cold Wallets Have Better Security
Even though most hot wallets have great security features, they are still connected to the internet and can be hacked. If you wish to store your digital assets in the most secure way, the best course of action would be to use cold wallets. Cold wallets come in the form of devices such as USBs or hard drives. When connected to the computer, cold wallets will have an interface and application you can use to manage your coins.
These wallets are completely offline, meaning thefts would be impossible to occur. However, if you lose your wallet, these assets will be lost forever. Also, these wallets have passwords, and if you lose this password, you will not be able to get to your funds. Here are the most popular cold wallets on the market:
- Ledger
- Trezor
- Ledger Nano S
Step 3. Deposit Money Into Your Account
Once you have created your account on the exchange and installed your wallet, it is time to deposit money into your account. There are many ways you can do this, and which option you have depends on the exchange you pick. The most common ways are deposits through credit or debit cards, bank wires, or ACH transfers.
As we already mentioned, different fees will apply depending on the method you choose and the exchange you pick to make a trade. The fastest and most expensive way is through credit card, while the cheapest way is through bank wire transfer. In order to deposit money, you will have to either link your bank account to the exchange or wallet or make a direct purchase through a credit card. You can also link your credit card to exchange.
Step 4. Buy Your First Bitcoin
The Last step is to buy your bitcoin. At the time of writing this text, the value of Bitcoin was around $30.000, so if you want to buy a whole bitcoin, you will have to make a purchase of that amount. However, most exchanges allow you to buy part of Bitcoin. For example, you can buy as little as $10 worth of Bitcoin on eToro. Most exchanges are pretty simple to use, you just have to type in the amount of money you want to spend, and the exchange will calculate how much Bitcoin you will get. Most exchanges offer two ways to purchase Bitcoin – there is an instant buy and a spot market.
Instant buy is typically done by credit card, and it is pretty straightforward. You type in the amount you want to spend and the asset you want to purchase, and once you check the transaction details, you will have an asset or coin in your wallet. Instant buy usually costs more and has bigger fees.
A spot market is typically under the trade, and here you can choose order types, meaning you type in the desired parameters of your transaction. There is a market order which is similar to instant buy only with lower fees. But before you start trading on the spot market, make sure you understand all the rules and fees you will pay. Also, this kind of trading is for experienced traders, and if you are not sure how to use this option, you should go with instant buy.
Send Bitcoin to a Wallet
Once you make a purchase, the Bitcoin will automatically be stored in your exchange wallet. If you have a hot wallet that is linked to the exchange, the Bitcoin will automatically be stored there. On the other hand, if you have a cold wallet, you will have to transfer your Bitcoin there. You will have to go on the exchange and copy the address of your Bitcoin, then paste this address into your wallet.
Alternative Ways to Buy Bitcoin
Aside from the exchanges, there are other ways you can buy Bitcoin. For example, you can buy Bitcoin directly from other holders of the BTC, but this is a risky thing to do if you don’t trust that person. There are also firms that sell Bitcoin futures, and there are Bitcoin ATMs where you can buy BTC directly.
There are also online Cryptocurrency stockbrokers, firms that act as intermittent between you and the market. Most brokerages are similar to the exchanges, but when you buy Bitcoin through them, you don’t own the coin – the brokerage does. You can sell, trade, or buy Bitcoin, but you can not send it from the platform.
Consider Your Options Carefully Before Making an Investment
As you can see, buying BTC is not that scary and complicated, but it is something you need to approach carefully, especially if you plan to invest a large amount of money. If you are a beginner, better start with an exchange that has low fees and with small investments, at least until you learn how things function.
