Posted on

Buying Bitcoin And Other Cryptocurrencies: Step-By-Step Guide

248 Views
0 Total shares
KYC is the cornerstone of your cryptocurrency enjoyment.

Bitcoin (BTC) and other cryptocurrencies are the most recent financial instruments in the investing world. From Bitcoin, Ethereum (ETH), Monero (XMR), Litecoin (LTC) to Zcash (ZEC), there is an endless number of digital assets which have flooded the cryptocurrency market. Such digital assets have a decentralized transactional structure, high speed of transfer, and usability on a global scale. Owing to their various benefits, many businesses and individuals are trying their hand at this payment system. But for many, the first step, the acquisition of digital assets, turns out to be a challenging task. In this guide, the focus is on helping you to buy bitcoins. However, similar steps can be followed for the first-time acquisition of other digital assets as well. You can consider KYC (Know Your Customer) to be the cornerstone of the entire process.

Let’s Buy Bitcoin!

Before proceeding further, consider all the different platforms and means from which you can quickly and comfortably buy Bitcoin. Which among them would be most apt for you depends on many factors. Some of these include:

  • The country of your domicile.
  • The payment method you prefer.
  • The extent to which you are ready to disclose your private information.
The Grade Of KYC

Like any other financial instrument, the buying and selling of Bitcoin is subjected to the rules of Know Your Customer. It is imperative to decide beforehand the extent of information you wish to disclose. This is essential because the Bitcoin transactions on a blockchain are visible to others and can be traced back to you. Therefore, choose the platform carefully, based on the level of KYC you require, as shown below:

  • No KYC: Applicable in P2P-marketplaces such as LocalBitcoins, Gift Cards, and Bitcoin ATMs. These platforms don’t always demand you to enter your private information or show an identity card before buying bitcoins. You can pay privately using platforms like Western-Union, Moneygram or CashHere.
  • KYC Light: Applicable in some direct exchange platforms for buying a limited number of bitcoins. Many such platforms would use the information provided in your payment channel (PayPal account, bank account, credit card) for your identification. In certain instances, you may even need to provide your phone number.
  • Full KYC: During transactions of huge amounts of money, some platforms may ask you to submit additional verification details. These would include a passport, driver’s license, or other photo-identity cards along with a phone number and bank details.
The Payment Mode For Buying Bitcoins

Depending on the price and speed of transaction, you should decide the payment mode for buying the bitcoins. A slow and high-priced channel, especially one that sends fiat-money to the Bitcoin seller, should be avoided. These channels make the acquisition of bitcoins expensive and very slow. Therefore, for fluid transactions, use a faster channel. The table below throws light on the pros and cons of some of the payment modes:

 

Type ProsCons
Bank Transfers
  • Carried out easily online.
  • Most of the exchange platforms use it.
  • Takes time for transaction completion, from 1-3 days.
Credit card payment
  • Very easy for buying bitcoins.
  • Faster than bank transactions.
  • Many direct commercial vendors don’t accept it due to their feature of transaction reversal.
  • Reduced authenticity due to the chance of using stolen credit cards for buying bitcoins.
Paypal
  • Very easy for buying bitcoins.
  • Faster than bank transactions.
  • Many direct commercial vendors don’t accept it because of their feature of undoing transactions.
Private Payment Channels (Cash, Paysafecard, Western Union)
  • Requires no KYC or just KYC light for transactions.
  • Allow private transactions on P2P platforms.
  •  Very few commercial platforms use it.
  •  Direct exchange platforms don’t use it.
How to Buy Bitcoins from These Platforms?

After considering the extent of private information you wish to share, and the mode of payment you are most comfortable with, comes the main step to buying bitcoins. This includes selecting the platform from where you would like to make your purchase.

  • ATM: These constitute one of the easiest and the most private methods of Bitcoin acquisition. Similar to the way that fiat money is taken out, many ATM-Bitcoin machines allow you to buy bitcoins using cash. You can find the location of many such ATMs using the global map from Coin-ATM-Radar.com. One point to remember before using ATMs is their high fee, which can reach up to 3-6% of the transaction cost.
  • Gift Cards/Voucher: All you need to do is buy these cards/vouchers from a shop or any other kiosk; go to the exchange website and use the card code to buy bitcoins. In spite of having a high fee, they are popular in many countries, like Austria and South Korea, for buying small amounts of Bitcoin.
Markets & Exchanges
  • P2P-Markets: These markets enable the Bitcoin buyers and sellers to meet and trade bitcoins with each other. The fee is relatively low, i.e. 0-1%. These platforms not only offer you the chance to buy bitcoins, but allow making an offer so that you buy bitcoins at the price you set. Some P2P markets to try out are:
    • LocalBitcoins -Used globally; lots of currencies can be exchanged; many payment modes allow anonymous exchanges of currencies.
    • Bitcoin.de – Biggest P2P-market present within the Eurozone; allows easy exchange of Euro (EUR) to Bitcoin.
    • Bitsquare–  It’s an open-source, decentralized desktop application which allows to sell & buy bitcoins in exchange for national currencies or other cryptocurrencies.
  • Exchange Platforms: These platforms allow for the regular buying of huge quantities of bitcoins at reasonable prices. These exchanges function as escrow for their clients and secure both fiat money and bitcoins on the behalf of their clients. Their advantage is that they allow you to make your own offer to sell & buy the coins. However, for a first time user, the process of registering on these exchanges can be complicated since it can take up weeks. Furthermore, they will require you to disclose private information and trust them with your money.
  • Direct Commercial Exchanges: These platforms function in a similar way as the exchange offices in an airport. For using these exchanges, first go to their website and choose the mode of payment. Then, provide the appropriate payment and buy Bitcoin at the cost set by the site. They are one of the easiest and fastest ways to sell & buy. This is thanks to their feature of allowing a large variety of payment modes; including bank transfers, Paypal, and credit cards. The best part, they charge a much lesser fee of 1-5% than their counterparts.
How To Buy Bitcoins Based On Country

Wherever you are, chances are that you would be able to use Bitsquare, local Bitcoins or the Bitcoin ATMs in your country. Apart from those, there would be direct exchanges, P2P markets, and major exchange platforms that would be popular in your country. Below are some of the major Bitcoin-using countries and the popular platforms within them:

  • US: Coinbase, Kraken, Bitstamp, Gemini, Bitfinex
  • Canada:  Coinbase, Kraken, Local Bitcoin, Paxful
  • Europe: Coinbase, Circle, Local Bitcoin, Bitcoin.de, BitPanda, BitIT, Kraken
  • China: OKCoin, BTC China, and Huobi
  • India: unocoin.com, coinsecure.in
Need For A Crypto Wallet

Many of the above sites offer their own wallets, something akin to a bank account. Here you can store your bitcoins and the private keys needed for accessing the wallets. For instance, Circle and Coinbase provide their own wallet for saving and spending your bitcoins.

However, irrespective of whether they are provided or not, it is best you create your own wallet before buying cryptocurrencies. While you visit different cryptocurrency websites, many of them will offer you an online or desktop wallet. Since these wallets don’t have third party protection, it is important that you take certain precautions. For instance, in the case of desktop wallets, you should make many backups of them on different devices. Similarly, you should store only a limited amount of bitcoins in your online wallets.

The most important step is keeping your ‘recovery phrase’ safe and secure. This is a key that is generated when your wallet is launched. It is paramount to understand that losing it would be like losing the keys to your bank’s locker.

Conclusion

Buying bitcoins can be easy or tough, based on how carefully you go through all the steps. Everyone faces one or more hurdles when starting on their cryptocurrency journey. Therefore, it’s normal if you face them too. If you are really interested in dealing with cryptocurrencies, just be sure to keep on learning and experimenting. Since it’s your first experience, remember to invest only a small amount in the beginning.

 

It would be ideal if you counsel your financial, investment, and tax advisers before making any cryptocurrency related investments. All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by Crypto Block Wire constitutes an investment recommendation, nor should any data or content published by Crypto Block Wire be relied upon for any investment activities.

 

Join our Telegram Group To Stay Up To Date With Crypto News

 

Daily updates








LATEST CRYPTOCURRENCY NEWS FROM CRYPTOBLOCKWIRE

We are your go-to news source for everything cryptocurrency and blockchain in the U.S. and internationally.

CryptoBlockWire is your home for the latest cryptocurrency and blockchain news. It’s our job to provide you with access to the latest breaking news regarding Bitcoin, altcoins, and blockchain technology. There is nothing more exciting than being at the forefront of the cryptocurrency movement and financial consumer technology. CBW’s extremely knowledgeable writing staff use their experience and enthusiasm to publish the most current, accurate, and helpful stories in the entire crypto-sphere.