The world of cryptocurrency is ever-changing and evolving. This article will provide you with a step-by-step guide on how to buy Bitcoin in 2021.
The how to invest in bitcoin and make money is a guide that covers the basics of buying Bitcoin. It includes steps on how to buy, store, and sell Bitcoin.
Bitcoin is one asset type that has seen above-average growth year after year in recent years.
This highly speculative digital currency rose from $5,000 in March 2020 to more than $50,000 in February 2021, a 52-week high. Bitcoin’s value has increased by more than 400% in the past year alone.
This step-by-step tutorial will teach you all you need to know about buying Bitcoin if you want to invest in crypto-assets. If you’re new to investing, be sure to read our guide on how to get started.
Not only do we go through the many methods to purchase Bitcoin, but we also go over what you should think about when selecting an exchange, making payments, storing your Bitcoin, and more.
How to Purchase Bitcoin
If you want to purchase Bitcoin but aren’t sure where to begin, try following the route that most investors take. Decide where you want to purchase Bitcoin first. After that, make a payment and save the money in a private wallet.
Make sure you have a government-issued ID on hand if you intend to pay for your Bitcoin using a bank account or debit/credit card, as required by KYC and anti-money laundering regulations.
Note: Regardless of how you choose to purchase Bitcoin, it’s important to keep in mind that cryptocurrencies are not protected by the Securities Investor Protection Corporation (SIPC).
Step 1: Choose a Bitcoin exchange.
Buying Bitcoin was once a period when the procedure was very time consuming. Fast forward to 2021, and obtaining this cutting-edge digital asset has never been simpler.
This part of our guide on how to buy Bitcoin will go through the many methods you can acquire bitcoin to lead you in the correct path.
Exchanges for Cryptocurrencies (Recommended Option)
Using a cryptocurrency exchange is perhaps one of the most popular methods to purchase Bitcoin. These are online marketplaces where you may buy, sell, and exchange a wide range of digital currencies.
Because the bitcoin exchange market is mainly controlled by unregulated companies, you should exercise care in many instances. This is problematic from the standpoint of risk management, since you can never be completely certain that your money are secure.
However, there are a few major participants in the Bitcoin exchange market.
Coinbase is in the forefront, serving as both an exchange and a broker. This popular US-based site makes it simple to purchase Bitcoin using a debit card or bank transfer, making it ideal for beginners.
Coinbase’s fees, on the other hand, are on the high side. You’ll pay a 1.49 percent trade fee, for example. When purchasing Bitcoin using a direct debit card, the fee rises to 3.99 percent.
Binance is an alternative option worth considering, since it costs just 0.10 percent in trading fees. Binance, on the other hand, will charge you 4.5 percent if you want to purchase Bitcoin using a debit card. Because ACH transfers are free, they are undoubtedly the superior choice.
Other popular cryptocurrency exchanges for purchasing Bitcoin include:
- Gemini is a great sign for rules, security, and liquidity.
- If you want to purchase Bitcoin fast using a debit card, Coinmama is a good choice.
- Swan Bitcoin: Requires just a $10 minimum Bitcoin purchase, making it ideal for modest investments.
- Kraken is a cryptocurrency exchange that is now one of the most liquid.
Check out the following to see how the Bitcoin investing process works when utilizing a cryptocurrency exchange:
- Create an account with the cryptocurrency exchange of your choice;
- Deposit money in US dollars to avoid having to submit a copy of your government-issued ID to prove your identity;
- Make a deposit by ACH, bank transfer, or debit card after you’ve been confirmed; and
- Proceed to a Bitcoin exchange and purchase Bitcoin.
In most instances, you’ll be able to withdraw your Bitcoin to a private wallet via your bitcoin exchange of choice. Later, we’ll talk about Bitcoin storage.
ATMs that accept bitcoin
If you’re wondering how to purchase Bitcoin via a cryptocurrency ATM, it’s a simple procedure. There are hundreds of ATMs spread throughout the United States, so you should be able to find one within driving distance.
You may purchase Bitcoin from a crypto ATM in the following way:
- Visit locate a Bitcoin ATM near you, go to CoinAtmRadar.com.
- Follow the on-screen directions to begin the procedure after you’ve arrived at the closest one.
- You’ll be prompted to enter the quantity of Bitcoin you’d want to buy.
- The ATM will inform you how much Bitcoin you’ll receive in exchange for your cash, including any costs.
- If the rates and fees are acceptable, put the precise amount of money you want to spend into the ATM; and
- The ATM will subsequently issue a receipt with instructions on how to claim your freshly bought Bitcoin in most instances.
Although Bitcoin ATMs seem to be handy, they have a significant disadvantage. When commissions and mark-ups are taken into account, terminals often charge well over 10% in fees.
Online Brokerage of the Past
The conventional internet brokers are the next choice available to you. You can now purchase Bitcoin with a single click on platforms like Robinhood, SoFi Invest, and Tradestation.
This shows that the demand for cryptocurrencies in the United States is only increasing. However, there are advantages and disadvantages to utilizing an online broker.
Here are a few advantages:
- In the United States, several conventional brokers provide commission-free Bitcoin purchases.
- A bank account and, in many cases, a debit card may be used to deposit money.
- In the United States, traditional internet brokers are highly regulated.
- Because the broker maintains custody of your money, you do not need to withdraw your coins to a private wallet.
Here are a few disadvantages:
- Traditional brokers seldom offer you the option of moving your Bitcoin out to a private wallet, which may be helpful for newcomers.
- This implies you have no control over your Bitcoin.
- Instead, you’re just betting on Bitcoin’s value rising.
A P2P (Peer-to-Peer) exchange is another method to purchase Bitcoin online. As the name suggests, you’ll be purchasing Bitcoin directly from other people, eliminating the need for a third-party intermediary.
The following is how it works:
- You sign up for a peer-to-peer (P2P) exchange such as LocalBitcoins or Bisq;
- You specify your needs in terms of buying price and payment method (for example, you may wish to acquire $500 worth of Bitcoin through ACH);
- You choose a vendor that can fulfill your needs;
- The vendor must deposit $500 in Bitcoin into the peer-to-peer exchange.
- Then, make a $500 bank transfer to the seller’s account, being sure to include the reference number given.
- The transmission is then marked as complete; and
- The seller will then verify that the payments have arrived before releasing the Bitcoin from the P2P escrow.
The Bitcoin will subsequently be accessible in your P2P exchange account as described previously. The money may then be transferred to a private wallet for further security.
Keep in mind that P2P exchanges operate in an uncontrolled environment. Despite the fact that the escrow mechanism protects you, unskilled users have been known to be defrauded.
Finally, if you do decide to participate in a P2P exchange, avoid face-to-face meetings and untraceable payment methods like as Western Union and MoneyGram.
Note: P2P Exchanges may be inexpensive, private, secure, and resistant to transaction censorship; but, since many of these exchanges are unregulated, stick to the ones you’re familiar with and have a solid reputation.
Connect Your Selected Exchange to a Payment Method in Step 2
Although we have covered various methods for purchasing Bitcoin, we recommend using an exchange. Not only will this be the simplest and most cost-effective manner of accomplishing things, but you’ll also be able to utilize a common payment method.
As previously mentioned, several exchanges, including Coinbase, Kraken, Gemini, and others, let you to fund your account by ACH or bank transfer.
To do so, you’ll need to first create an account and complete the verification procedure. Coinbase’s in-house finance system can usually verify your papers automatically.
This means you can make a deposit in a matter of minutes. In any case, the account information you need to deposit the money into will be provided by your selected bitcoin exchange.
The most essential element is to provide the exchange’s reference number, which ensures that the supplier can match the deposit to your account.
The time it takes for a bank transfer to be credited by your preferred exchange varies depending on the supplier. ACH deposits, for example, may take three to five days to settle, according to Coinbase.
With this in mind, you may want to use a debit card instead. You may purchase Bitcoin immediately this way. Coinbase and Binance, on the other hand, will charge you 3.99 percent and 4.5 percent, respectively, for the pleasure.
Credit cards and even e-wallets like Paypal are other options that some bitcoin exchanges allow. In terms of the former, it’s better to avoid it for two reasons:
- To begin with, credit card companies often classify bitcoin exchange/broker deposits as a “cash advance.” Not only will you be charged a cash advance fee (typically 3-5%), but interest will begin accruing immediately.
- Second, purchasing Bitcoin using a credit card may result in debt. After all, Bitcoin may go in the other way at any time. If it does, you’ll still have to pay the credit card company the entire amount, perhaps with interest.
Step 3: Make a Bitcoin purchase order.
Depending on your preferred payment method, exchanges execute Bitcoin purchase orders in one of two ways.
If you choose to utilize Coinbase or Binance and pay with a debit card, your transaction will be handled as a straight purchase. This means you’ll be purchasing Bitcoin at the current market rate, which means you’ll pay less fees.
If you want to deposit money by ACH or bank wire, you will often have to wait for the exchange to complete the transaction. Only when the exchange has processed your transaction will you be allowed to make an order.
The following are the most common fields that need to be filled in:
Limit or Market Order
Choose a market order if you wish to purchase Bitcoin right now at the current market pricing. Your position will be executed immediately at the best available price by the exchange.
You may pick the price at which your Bitcoin buy is completed if you use a limit order. For example, Bitcoin may be worth $33,000 right now, but you don’t want to buy it until it falls below $32,000. Your limit order will only be filled if Bitcoin falls to the price you choose. That’s $32,000 in this case. Until this occurs, or you manually cancel the limit order, it will remain pending.
You must indicate the quantity of Bitcoin you want to purchase from your selected exchange.
The good news is that you can just input your amount in US dollars, and the exchange will calculate how much Bitcoin you will get based on current market values.
In certain instances, the exchange may impose a minimum investment amount, so be sure to verify.
Management of Risk
If you intend to purchase Bitcoin for a short period of time, you may want to put up a few risk-management orders.
Binance, for example, enables you to place a stop-loss order. If the value of your Bitcoin transaction decreases by a particular level, you may cash out. If Bitcoin falls 10%, for example, you may wish to sell your investment.
It’s also a good idea to use a take-profit order if you want to automatically lock in your profits. For instance, if Bitcoin rises 20%, you may wish to cash in your gains.
If you want to purchase Bitcoin as a long-term investment, though, you don’t need to be concerned about these risk-management instructions. After all, to keep the money safe and secure, you should withdraw them to a private wallet.
Step 4: Store Your Bitcoins Safely
It’s time to consider about storage once you’ve purchased Bitcoin using your preferred exchange – whether directly with your debit card or through a manual bank transfer.
Your Bitcoin money will be stored in your exchange online wallet in the overwhelming majority of instances. Although you have access to this wallet, the private keys are held by the bitcoin exchange.
This implies they have complete control of your money. If the worst happens and the exchange is hacked, the culprits have a good chance of stealing your Bitcoin.
With this in mind, withdrawing your Bitcoin to a secret wallet is the best option. You will have complete control over your Bitcoin if you do so.
Before we get into detail about your choices, there are a few things you should know:
- Bitcoin is stored in a digital wallet that gives you direct access to the blockchain, unlike conventional money.
- A public address, similar to a bank account number, is assigned to each wallet.
- You must provide your public address when sending Bitcoin to your private wallet.
- Private keys are included with all Bitcoin wallets; they’re similar to the password you use to access your online bank account.
- Your Bitcoin wallet may be accessed if someone has your private keys.
- This is why your private keys and wallet passwords must be kept safe and secure.
In general, there are two ways for storing Bitcoin in a private wallet, which we go over in greater depth below.
Note: It is not a good idea to keep your Bitcoin on a cryptocurrency exchange since they are more susceptible to hacking. Make sure your Bitcoin is safely transferred to a private wallet that you control.
Wallet on Fire
The most convenient method to store Bitcoin is in a hot wallet. They are available as a mobile application, desktop software, or an online wallet. We recommend ignoring the web wallet option. This is due to the fact that you will no longer have control over your private keys.
If you use a desktop wallet, you will have a number of extra protections to keep your Bitcoin safe. You will, however, need access to your desktop device in order to access your wallet.
Wasabi and Electrum are two of the finest choices on the market right now.
Wasabi is a non-custodial wallet, meaning you have complete control over your private keys. The wallet is available for Mac, Windows, and Linux and is compatible with TOR.
Electrum is a good option if you’re searching for a more user-friendly desktop wallet. The wallet is simple to use and enables you to track the performance of your Bitcoin investment in dollars and cents.
If convenience is your primary concern, a mobile wallet may be the preferable option. They’re available as an iOS or Android app that allows you to access your Bitcoin wallet at any time.
Users of mobile wallets may use their phone’s camera to scan a Bitcoin wallet code. This reduces the likelihood of money being sent to the incorrect address.
When it comes to security, BlueWallet is an excellent choice. Multisig vaults, real-time alerts of incoming and outgoing transactions, and complete control over your private keys are among the protections.
Blockstream Green is another excellent choice, especially for beginners. You’ll need to authenticate key account transactions with a separate device since it comes with mandated two-factor authentication (2FA).
a chilly wallet
If you want to purchase a large quantity of Bitcoin, we recommend using a cold wallet. They’re hardware devices, and they’re by far the safest method to keep your money protected.
Cold wallets, on the other hand, are never linked to live servers until you want to send money. It is almost difficult for someone to remotely hack the wallet as a result of this.
The Ledger Nano X/S and Trezor Model T are the two most popular cold wallets. To transfer money, you must physically input a PIN in each of these wallets.
There’s also a unique ‘time lock’ function that protects you if your smartphone is lost or stolen. When a customer enters an erroneous PIN, this function increases the length of time they have to wait. As a result, you’ll have ample time to remotely retrieve your wallet using the passcode you put down when you set up the device.
Coldcard Wallet is another excellent choice to consider, since it provides an air-gap safety net. You may choose to keep the wallet offline at all times, thus eliminating any virus and hacker risks.
How to Buy Bitcoin: Frequently Asked Questions
Here are some of the most common inquiries we get regarding how to purchase Bitcoin.
Is it Legal to Use Bitcoin Exchanges?
Bitcoin exchanges are allowed in the United States, but regulation is still a work in progress. However, while providing fiat-based cryptocurrency purchases, exchanges must still adhere to anti-money laundering laws. This implies that before you can purchase Bitcoin using a bank account or debit/credit card, the exchange must verify your identity.
Is it Safe to Buy Bitcoin?
Purchasing Bitcoin on the internet is risk-free as long as you choose a reputable exchange or broker. Bitcoin is available on hundreds of platforms, many of which are unregulated. As a result, proceed with care.
What’s the Difference Between a Wallet and an Exchange for Bitcoin?
Your digital currencies will be stored in a Bitcoin wallet. Mobile, desktop, online, and hardware wallets are just some of the options. An exchange is a place where you can purchase Bitcoin using your bank account or a debit or credit card.
Is it Possible for Me to Keep My Bitcoin on an Exchange?
Yes, cryptocurrency exchanges (with the exception of Coinmama) enable you to retain your Bitcoin on the platform. This is not advised, since your Bitcoin will be at danger if the exchange is hacked by a third party.
It’s never been simpler to buy Bitcoin from the comfort of your own home.
All you have to do to use a trustworthy exchange that conforms with all applicable laws is create an account, upload some kind of identification, and deposit money using a debit/credit card or bank account.
Then it’s a simple matter of purchasing Bitcoin and transferring the money to a private wallet of your choice.
Finally, make sure you’re aware of the dangers associated with purchasing Bitcoin before proceeding.
The how to buy bitcoins with cash is a step-by-step guide that will help you purchase Bitcoin in 2021.
Frequently Asked Questions
What are the 7 steps to buying Bitcoins?
A: 1. Create a Bitcoin account 2. Get an address for your Bitcoin wallet 3. Deposit money into your Bitcoin wallet 4. Buy Bitcoins with your bank account or credit card 5. Wait for the Bitcoins to be delivered to your wallet and then withdraw them 6. Store your Bitcoins in a secure place 7. Enjoy spending and earning on Bitcoin
How to invest in Bitcoin for beginners?
There are many ways to invest in Bitcoin. You can buy it on an exchange, or you can mine it by using your computers processing power.
How do you get bitcoins in 2021?
Bitcoin is the most common form of cryptocurrency. It is not possible to buy bitcoins in 2021, but you can buy them on an exchange like Coinbase or Gemini.
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