Over the last few years, people’s interest in Bitcoin and blockchain technology has skyrocketed, and besides that, the public is finally taking note of the lucrative nature of digital currencies and their ability to disrupt the global financial system.
The most attractive aspect of Bitcoin is the fact that it’s based on open-source technology, which means it cannot be manipulated like legacy currencies. As a result, the blockchain technology it is based on encourages participation and constant innovation from anyone that is willing and able within the network.
How Does Bitcoin Work?
Sending and receiving Bitcoin is a fairly simple process for a regular Bitcoin user. But, for someone that’s new to Bitcoin, it can feel daunting and even confusing. That’s why we’ve written a guide on how to buy Bitcoin and understand how the whole system works.
First, the blockchain public ledger stores Bitcoin transactions simply as User A sending a certain amount of Bitcoin to User B, the user B pays for goods and/or services provided by User C and so on. It’s all available on the public ledger for all to verify and see.
This decentralized setup provides the perfect foundation for a peer-to-peer network where anyone can verify individual transactions automatically and in real time.
Transactions are visible to user computers in the network and can be verified on the spot. This eliminates the need for central banks or any other authority to certify transactions.
It’s worth noting that only the most cutting-edge computer hardware can process Bitcoin transactions so this helps to facilitate Bitcoin mining, a process that involves generating Bitcoins by solving difficult algorithms. Anyone with the right skills can become a Bitcoin miner and help distribute transaction info into the network while adding more Bitcoin to his/her virtual wallet.
However, the creator of Bitcoin designed it in a way that its supply can never exceed 21 million BTC. That’s why algorithms have become difficult to solve and compute with each Bitcoin that’s released into the network. But this is necessary to keep the system growing while keeping the total number of overall coin supply at the same rate.
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Top 4 Ways to Buy Bitcoin
There are many different ways to buy Bitcoin, and we’ve listed a few of them below along with a few details about each option:
1. Start Mining Bitcoin
Like we said, it’s becoming increasingly difficult to mine Bitcoin each year due to the control that Satoshi Nakamoto put in place to prevent crypto inflation.
But, this doesn’t mean that Bitcoin mining isn’t profitable. Large Bitcoin mining companies continue to realize attractive returns from crypto mining. But this may not be the case for small-time home operators though, because what you put in is what you get out of Bitcoin mining.
2. Go to a Bitcoin ATM
A Bitcoin ATM or BATM for short looks like a regular ATM machine with the only difference being that’s it’s designed to facilitate automated Bitcoin transactions. You can use this machine to buy and sell or just sell Bitcoin. To purchase Bitcoin through this machine, simply insert the amount of cash you’d like to buy for or use your credit card and you’ll get a corresponding amount of Bitcoin for the deposit you’ve made. Keep in mind that a BATM cannot connect to a regular bank account and you’ll have to pay a nominal fee for using it. Instead of paying it separately, this fee is automatically deducted from the transaction you make.
As of this writing, there are 1,500 active BATMs and counting. Most of them are located in the US, while the rest are in major Asian and European cities.
3. Buy Bitcoin Offline
You can also purchase Bitcoins in person, through peer-to-peer transactions. All you need to do is find a willing seller and meet in person to exchange their Bitcoin for a commodity of the same value, like cash for example. This is not always recommended because buying Bitcoin offline has been associated with theft and a lot of other dodgy behaviors.
4. Use a Trading Exchange
Alternatively, you may purchase your Bitcoin by participating in a trading exchange. What is a Bitcoin trading exchange? It’s a platform that people use to trade Bitcoin in exchange for fiat currency like USD or EUR. The same platform can be used as storage for your Bitcoin after you’ve purchased them.
Coinbase is by far the most popular trading exchange in the world today and traders, investors and consumers all use it. This platform came into the market in 2012. Over the year it has received about $546 million worth of funding from several foreign banks and venture capital firms.
Thanks to these investments, Coinbase has been able to develop better and stronger infrastructure over the years. That’s why it’s able to support global trading, protect transactions from hackers and develop new applications as well.
Advantages of Coinbase
Coinbase currently has 25 million users across 30 countries around the world. It’s definitely the biggest and most trusted platform around.
Many people prefer it because it offers the following features:
- Superb customer support.
- It’s compliant with Federal and U.S. state regulations.
- It’s associated with established and prestigious institutions such as Digital Currency Group, Bank of Tokyo, Y Combinator and BBVA. Even Reddit co-founder Alexis Ohanian is a vocal supporter of Coinbase.
- Highly transparent operations.
- Offers reliable cryptocurrency storage options like paper wallets and hardware wallets that are kept in safety deposit boxes and vaults.
- Cryptocurrency funds are insured against potential hacking.
- It offers tight security measures like 2-Factor Authentication, time-delayed withdrawals, and new device verification.
- Provides a variety of convenient withdrawal methods including bank account, PayPal account, and credit or debit card withdrawals depending on the country of origin.
- Minimum buying amount is quite low, starting at $25.
- Supports all the popular digital currencies including Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
The best part is that Coinbase is easy to use even for beginners. All you have to do is register an account and you’ll be a verified user in a matter of minutes!
Creating a Coinbase Account
Here are the steps you must follow in order to set up a Coinbase account:
- Go to your browser (preferably Chrome or Firefox) and enter coinbase.com.
- Go to the upper right corner of the home page and select the “Get Started” button.
- Enter your credentials by filling in the provided fields.
- Select the button that says “Create.”
- You’ll get a verification email.
- Click on the link in the verification email.
- Enter your phone number and select the “Send Code” button.
- Check your phone for a text from Coinbase with the seven-digit code.
- Go to the Coinbase website, enter the code and click “Submit.”
- Provide the requested information to verify your identity and upload the requested documents via File Upload, Mobile Camera or Webcam.
- Review the information you’ve supplied to make sure it’s correct and then click “Continue.”
- Choose your preferred payment method and click on it. It might be a debit or credit card, PayPal account or bank account. Keep in mind that Coinbase will charge your card twice for the same transaction and you must enter these amounts into Coinbase.
Buying Bitcoin on Coinbase
Once you’ve created your Coinbase account, you’ll be able to purchase Bitcoin. Just make sure to follow these steps on how to buy Bitcoin safely from your desktop or mobile device.
- Go to the dashboard of the Coinbase website and select the “Buy/Sell” menu.
- Go to the Buy section and click on the Bitcoin button.
- Choose your preferred payment method.
- Enter the amount of Bitcoin you’d like to buy in dollars. The website will automatically show you the Bitcoin equivalent of that amount. If you like, you can also enter the Bitcoin amount in order to see its corresponding dollar value.
- Scroll to the right-hand side of the page to view the purchase details. Verify the information and click on the button that says “Buy Bitcoin Instantly.” The amount you see displayed on the left-hand panel represents the fiat money value.
- You should see a confirmation message. Select “Confirm Buy.”
- You’ll see a check icon showing you that your purchase has been successful. Click the “View Dashboard” button.
- Once you see the dashboard menu, first of all, check your account summary to see your Bitcoin purchase.
Well, there you go! You’ve just learned how to buy Bitcoin and we’re pretty sure your brain doesn’t feel fried or anything like that. It’s a pretty simple process if you know how to do it!