How to Buy Bitcoin (BTC)

How to Buy Bitcoin 

So you want to dip your toes into the crypto market and buy Bitcoin! You are in the right place. In this article, we’ll briefly explain what Bitcoin is, how it works, and where you can purchase the so-called digital gold.

What Is Bitcoin?

If you haven’t been asleep throughout the last decade, chances are you already know about Bitcoin. It is the OG cryptocurrency, the GOAT, the one that started it all. Following its launch in 2009 by a pseudonymous programmer, Bitcoin trickled across the web from one nerd’s basement to another for a few years until, one day, it finally gave way to a huge crypto wave that shook the world economy.  

But Bitcoin isn’t just the first cryptocurrency in the world. Despite thousands of other digital assets that followed it, it remains the most valuable crypto coin that exists.

Bitcoin is valuable for several reasons: it has a limited supply and good liquidity, so you can use it for instant value transfers. Many people consider it a long-term investment since its value has increased from pennies to thousands of dollars since its launch. Since it’s used and mined by a lot of people, it’s relatively safer compared to its counterparts, which are less resistant to hacking attempts.

Of course, there are downsides too. It’s a volatile asset, and some have argued its sky-rocket price increases have been engineered by market manipulators. It’s a slower payment method compared to other traditional and crypto alternatives and can be quite expensive to move BTC around. There is also the fact that Bitcoin mining represents a serious threat to our already fragile climate.

To put it simply, Bitcoin is a bet. Proponents suggest it might be the future’s gold, while others think it will disappear in time. But for now, it is one of the biggest crypto markets in the world. 

Where Can I Buy Bitcoin?

You can buy Bitcoin from several venues and vendors. While cryptocurrency exchanges are the primary markets for Bitcoin, you can also use payment apps like PayPal or financial investment apps like Robinhood or eToro to purchase it. Since Bitcoin is so popular, most mainstream financial apps have started to include BTC in their offerings.

Of course, with so many options, it is hard to know where you should start. Cryptocurrency exchanges usually offer the best prices and fees: You can open a free account at any crypto exchange and buy BTC in exchange for USD, EUR, or any other fiat currency. 

In recent years, most crypto exchanges have implemented easy-buy widgets to ensure a smooth user experience, so you don’t need to learn a bunch of new things to invest in BTC. For example, Coinbase, Binance, Kraken, and Gemini are all crypto exchanges.

If you already use a financial investment app like eToro or Robinhood or your online banking app offers BTC like Revolut, you can also purchase BTC there. However, these providers usually charge higher fees than regular exchanges, sell BTC for higher prices, and offer limited trading opportunities. They can be a good option if you want to buy some BTC and then keep it for years without doing anything with it.

You can also buy Bitcoin on decentralized exchanges. These are marketplaces where you can swap and trade cryptocurrencies. However, they’re not a good starting place, as you can’t buy crypto from these exchanges with fiat money. You’ll need to purchase a cryptocurrency from a centralized exchange first and then trade them for BTC on decentralized apps like SushiSwap or Uniswap.

How to Buy Bitcoin

As we said above, buying Bitcoin has become very easy in the past couple of years. You don’t need to have any technical know-how to get yourself some BTC. It is usually as easy as opening a cryptocurrency exchange account and clicking BUY.

However, it’s still a good idea to at least understand what BTC is and how it basically works before you actually spend a lot of money on BTC and learn how to keep your funds safe.

You must understand that trust and security are everything in the crypto game and that security is a multi-faceted concept in crypto: If you try to buy coins from a non-trustworthy exchange, you may lose your funds. If your wallet isn’t secure, you may have your coins stolen. If you invest in a scam project, you can lose everything.

Well, the good news is, you don’t need to worry about that last one with Bitcoin: at this point, it’s very unlikely that Bitcoin is a scam: If Satoshi Nakamoto (the pseudonymous founder) were planning to execute a rug pull, they probably would have done it by now. 

But the other two warnings stand: You must choose a trustworthy exchange to buy Bitcoin, and then you must decide on a secure storage method.

Let’s look into these steps in more detail.

Deciding on an Exchange

Deciding on an exchange is not easy. There are hundreds of crypto exchanges online, most of which are full of scams. Even the better ones are known to have their troubles: some have high fees, others get hacked and lose your funds, and some others go into bankruptcy, taking your money with them.

So it’s crucial to pick a trustworthy exchange when buying BTC. We recommend you check out our reviews on the best 22 crypto exchanges in the market before deciding. You can also find more detailed reviews and comparisons on our blog.

Beginners, especially if they are based in the US, are often advised to start at Coinbase. It’s a US-based, regulated exchange operating for over a decade. If you are an international, Binance is another popular alternative. Despite the company’s issues with the authorities, you won’t have trouble buying crypto on Binance.

Buying Bitcoin

Have you decided on an exchange? Great! Now, all you need to do is to open an account and decide on a payment method. 

As we said, most exchanges have made it very easy to buy Bitcoin. You can usually simply click “Buy Crypto” to access a simple buy-sell interface. These exchanges partner with third-party payment vendors to allow you to buy BTC and other digital assets with your credit card, bank account, or other options like Apple Pay and Google Pay.

You can also deposit funds to your exchange account through online banking. Once you deposit funds, you also have the option to buy BTC on the exchange’s trade market. There are usually fewer fees involved, and prices are better. You can access our guides on how to buy Bitcoin on different exchanges for more details.

Another critical step is to decide how much you will spend on BTC. Bitcoin is a divisible asset, so although 1 BTC is worth thousands of dollars, you can always buy, for example, 20 USD worth of BTC. Technically, you can also buy BTC for 1 USD, but crypto exchanges usually have a 20 USD minimum limit. 

Where to Store Bitcoin

Storage is perhaps the most important aspect of Bitcoin ownership: If you don’t store your BTC in a secure wallet, you can say goodbye to your funds. 

Of course, wallets and storage are symbolic ways to describe BTC operations. You already know that Bitcoin isn’t a physical asset. It’s a digital asset. 

But unlike what most people imagine, It’s not like a file you send from one computer to another. You don’t actually store BTC in a wallet. Bitcoin is not even stored strictly; it is simply managed.

To put it simply, Bitcoin is a giant, cryptographically-secured ledger. When you create a Bitcoin wallet, you add another account to this ledger. The wallet key (think of it as a password) ensures you control the account, and no one else can adjust the ledger on your behalf. 

So you don’t actually store BTC in the wallet; the wallet is basically software for accessing and managing the Bitcoin ledger. What the wallet keeps safe is your Bitcoin address and key.

That’s why Bitcoin enthusiasts keep repeating “Not your keys, not your coins” on internet messaging boards. If you don’t keep your wallet key secure, anyone with the right key can move funds from your account to someone else’s, and no one can do anything about it.

But keeping your own keys is a burden as well. Who can keep a vital piece of information completely secure in this day and age of internet piracy? So that’s where the different wallet options come in.

BTC Hard Wallets

Hard wallets are arguably the safest way to store your Bitcoin. These are USB-like devices that carry wallet software. Since they are disconnected from the internet, your keys remain safe from hackers’ greedy hands. 

Critics say that hard wallets can be misplaced or stolen. But there are workarounds for these situations: most hard wallets are PIN protected, and you can still access your funds if you create a backup password.

The problem with hard wallets is that they are expensive: Most exchanges offer free wallets, and there are several free software wallet options out there, while these babies may cost anywhere from 60 to 200 USD.

If you are a casual trader or planning to buy 20 USD of BTC just to try, investing in a hard wallet can be overkill. If that’s the case, you are probably better off using an exchange wallet. 

However, if you decide to buy more Bitcoin or invest a couple of hundred dollars in crypto, then it’s worth buying a hard wallet to secure your funds. We suggest you check out Trezor and Ledger hard wallets. Both companies offer basic models for a good entry price.

Exchange Wallet

This is the most common option for a lot of traders out there: Crypto exchanges operate their own wallets where they store your Bitcoin on your behalf. These are also known as custodial wallets.

For example, let’s say you opened a Binance account and bought some Bitcoin. Your BTC will be automatically deposited to your Bitcoin wallet on Binance. Then, you can trade your coins on the Binance marketplace, transfer your funds to another exchange or wallet, or sell and withdraw your earnings. 

It’s very convenient to use an exchange wallet because all you have to do to trade your crypto is to log in to your account and make a few clicks. You don’t have to worry (too much) about security beyond keeping your password to yourself. Most exchanges also enforce two-factor authentication and other precautions to ensure your funds remain safe even if your password gets stolen.

However, the downside with this option is that you don’t have the keys to your wallet. The exchange has the utmost control over the funds: If they go bankrupt, they will take your funds with them since you can’t just use your keys to move your funds elsewhere.

Self-Custody Hot Wallets

So you don’t want to entrust your Bitcoin to an exchange wallet, but you are unsure if you should buy a hard wallet yet. That’s where the self-custody wallets come in.

Self-custody wallets are basically software wallets you can download on your computer or mobile device. They are the original solution to Bitcoin and crypto storage. When BTC was first launched, it also came with a wallet solution that experienced users could run on their computers. When Bitcoin started becoming mainstream, developers started to develop easier storage options that people without technical experience could use.

These wallets are stored in your internet-connected devices: and as such, they store your wallet key in that device as well. The advantage of a self-custody wallet (for example, Exodus) is that it gives you a lot of control over your funds.

But, unfortunately, they can be quite fickle when it comes to security. If your computer or phone gets hacked, hackers can easily access the keys stored on your device. While most exchanges can afford industrial-level security measures, most individuals rely on old-school solutions that are no match for 21st-century pirates. Sadly, that makes self-custody hot wallets the least secure storage option.

That said, if you are a casual trader who wants a little experience, there are a few Bitcoin wallets you can set up and use on your own (of course, with adequate protection). Exodus is a BTC and crypto wallet that allows you to store and transfer crypto. It also has an in-app trading and swapping service, which is very handy. You can learn more about keeping BTC in Exodus in our Exodus review.