It’s Simple To Buy Bitcoins. Here’s How
You have seen the news about Bitcoin hitting the all-time high of $10,000 per Bitcoin. And now you’re interested in buying some. You should since its still early in the ball-game for the growth of the Bitcoin and other cryptocurrencies.
But you get back to the 1st question – how do I buy it? With a market cap of almost $180 billion (end of the year 2017) and all the institutional investors ready to get involved, its the right time.
Buying and selling Bitcoin is easier then you may have thought. You just need to go thru these simple steps.
Step 1: Sign up for a Wallet
A wallet is where you will store your Bitcoin and other cryptocurrencies. You can’t do anything without one.A wallet is basically the Bitcoin equal to a bank account. It allows you to store you Bitcoin, buy more and sell them to other people.
There are several types of wallets but the best one for beginners is the software wallets. A software wallet is the one you install on your computer or your mobile device. This gives you complete control of your coins and provides the security you need.
The most popular Bitcoin wallet is the one that Coinbase offers. Coinbase is the leader in Bitcoin wallets and also allows you to buy and store Etherum and Litecoin as well. There are other wallets available but we like Coinbase for their ease of use.
You can sign up on the website or via the mobile device. Do note that Coinbase takes security very seriously and asks for photo ID (i.e. Drivers license or photo license) to upload onto your account. This process can be tedious since they may reject some photos due to clarity issues.
Step 2: Add a Payment
After you have your wallet all set up now you need to add a payment method to fund your buying. You would usually sync up with your bank account since this allows access to take out funds as well as put back funds from your Coinbase account.
Besides using a bank account you have the option of using Paypal or a credit card as well. But these do come with drawbacks including lower purchasing limits, transaction fees from Paypal or the credit card and the worst case – longer verification process to get your funds in.
Once you have your payment all synced up with your account you are now ready to purchase Bitcoins.
Step 3: Now Buy Some Coins
The way you are purchasing Bitcoins via Coinbase is thru an exchange. An exchange is the active trading platform where you can buy and sell Bitcoins at set prices.
Coinbase has their own exchange called GDAX. Your Coinbase account will be linked to GDAX automatically if you sign up for GDAX!
Other established exchanges are Bittrex, Kraken, and Poloniex. You would like to sign up to one of these established exchanges which are more reputable, popular and more liquid with cryptocurrencies.
You would have to link your wallet to one of these exchanges when you sign up – the exchange account will not accept cash but only Bitcoins. So you need a wallet to fund the exchanges. Makes sense? The wallet again is where you can transfer in and out Bitcoins from these exchanges.
The beauty of Coinbase is that you can buy Bitcoins using their partner-exchange GDAX. You can buy a Bitcoin in your Coinbase wallet and that will be fulfilled by GDAX. Your account on Coinbase will also be the same for GDAX, so you can see your Bitcoins inside the GDAX system.
Some exchanges are better than others. The differences will be based on transaction fees, accessibility, liquidity conditions, reputation, transparency and even the country where the exchange is located.
After you create a wallet, then fund your wallet – you can then link your wallet to an exchange to buy/sell Bitcoins. It’s that simple. Note that based on how you fund your wallet you will have some verification time to transfer the funds to your wallet.
The beauty of Coinbase is that once you sync your bank account to your wallet, you can purchase Bitcoins within the Coinbase system. They will make the purchase for you via their exchange GDAX. While it takes a few days for the process to go thru the 1st time, note that Coinbase will honor the price you bought the Bitcoin at.
Coinbase itself is not an exchange, and you will not be able to sell the Bitcoin right away after you bought it. So if you plan on day trading Bitcoin, you must do it on the exchange (i.e. GDAX or Kraken) which is a platform to allow quick buy and sell orders.
To get started on your wallet click here.