How to Buy Bitcoins? (4 different methods reviewed)

Hey guys and gals, I'm Nate from 99Bitcoins and welcome to Bitcoin Whiteboard Tuesday! Every few weeks, we'll send you a new and interesting video, like this one, that explains some basics of Bitcoin. You can use them to learn more about Bitcoin yourself or forward them to friends or family who have questions. Today's topic is how to buy your first Bitcoin. If you've followed our previous lessons, you're probably already a Bitcoin expert. However, nothing will teach you more about Bitcoin and how it works than having a first-hand experience with a live Bitcoin transaction. By purchasing even a small amount of Bitcoins, you will probably learn more than by watching this entire video series.

Then let's get started! Before you can buy Bitcoins, you will need a wallet to store them. If you watched our previous episode on wallets, then you're ready. However, if you're completely new to Bitcoin, or if you don't quite remember what we talked about in the video, here's a quick refresher: Bitcoin wallets are programs that help you send and receive Bitcoin. They generate your Bitcoin address, which serves as your personal address to receive Bitcoins. If you buy small amounts of Bitcoin, you can use any reliable wallet software. It could be a mobile wallet or a desktop wallet, it doesn't really matter.

However, for large amounts of Bitcoin, you will want to only use hardware or paper wallets. These wallets are not connected to the internet, so they eliminate the possibility of someone stealing your funds unless they actually have your physical wallet. To make it easier for you, we have listed some recommended wallets, depending on your device and operating system, at the end of this video. Once you choose your wallet, open it and copy your Bitcoin address. You'll need it later. Do you have your address? Well, now you have to ask yourself a very important question: How much money do you plan to invest in Bitcoin?

Bitcoin is a VERY risky asset. This means that you should never buy any amount that you cannot afford to lose. It is important to think about this. If this is your first time buying Bitcoin, choose an amount that won't affect you financially if Bitcoin were to drop to zero. In general, we tend to be overly optimistic when investing and forget about the very real possibility of a downside. Our personal rule of thumb is to never invest more than 5% of your disposable income or total wealth. Keep in mind that you can always buy less than 1 Bitcoin. A bitcoin can be divided up to 8 decimal places.

This means you can buy half a bitcoin, a quarter of a bitcoin, or even a hundredth of a bitcoin. Of course, the amount you are going to spend on Bitcoins will lead you to the next step: choosing an exchange. Choosing an exchange is hard work. Each exchange has

different

rules, accepted payment

methods

, and fees, along with other factors to consider. If you want to avoid the hassle, you can use our "Buy Bitcoin" page, which matches you with the best exchange based on your location. There is also a link to that page at the end of this video.

This, of course, is a very difficult match, but it will give you the best result 95% of the time. However, if you want to do your own due diligence, here's what you need to keep in mind. The first thing you'll want to check is that the exchange accepts users from your country. Not all exchanges accept clients from all over the world. The second thing you'll want to check is what payment

methods

the exchange accepts. Some exchanges accept a wide variety of payment methods and others only accept bank transfers. Payment methods that allow the buyer to request their money back, such as credit cards or Paypal, are often accompanied by higher fees.

This is because the seller runs the risk of you canceling payment after receiving your coins. On the other hand, payment methods that cannot be reversed, such as bank transfers, are usually cheaper. The third thing you will want to check is how much you will have to pay in fees for your transactions. There are three types of fees: deposit fees, transaction fees, and withdrawal fees. Each one is

different

and can affect the total amount of money you will receive in the end. The fourth thing you should take into account is the exchange rate. Some exchanges have low fees, but their exchange rates are higher relative to the competition.

This means that the fees are “hidden” in the exchange rate. Fifth, you'll want to know your purchasing limit. Your purchase limit will depend on your payment method and your level of identity verification. If you want to buy a large amount of Bitcoins, some exchanges will not allow it due to their low limits. Finally, you will want to check the reputation of the exchange. Is he well known in the community? How good is the support in case you get lost in the process? Have there been a large number of complaints against the exchange? Keep in mind that no exchange is free of negative reviews, but it is important to consider the volume and content of those reviews.

An important distinction to make is the difference between trading platforms and brokers. Trading platforms are sites that automatically connect buyers and sellers. This means that you buy from people who have placed sales orders on the site without contacting them directly. The platform usually charges a small fee for the service. Trading on trading platforms like Bitstamp or Kraken is usually the cheapest way to get

bitcoins

, but it's often not very user-friendly. Trading platforms have options such as limit orders and stop losses that can confuse inexperienced users. Additionally, when you place an order, it may not be fulfilled immediately due to a lack of sellers at the price you wish to purchase at.

To avoid discomfort, you can use a runner. Brokers are sites that simplify the process by allowing you to purchase coins through them at a predetermined price. When you buy from broker sites, the process is usually much simpler, but also more expensive. In the end, it doesn't really matter if you are buying your coins on a trading platform or a broker. What matters is that the company is reliable and that you are happy with the price you pay. Sometimes it's worth spending a little more money to finish the process smoothly. As a side note, if you are looking to purchase large amounts of Bitcoin, say over $10,000, there are specific exchanges and brokers that deal with these types of transactions.

If this is your case, check out the resources section at the end of this video. Now that you know how much you want to spend and have chosen your exchange, it's time to make the transaction. Register on the site you have chosen and complete the registration process. Most exchanges today will have a Know Your Customer, also known as KYC, process that you will need to follow. This means that you will need to provide the exchange with additional information such as your ID, proof of residency, and in some cases even proof of income. As Bitcoin has become increasingly common, exchanges have become subject to stricter regulations by governments and, in many cases, are involuntarily forced to ask you for this information.

Once you finish registration and your identity is verified, you will finally be able to purchase your

bitcoins

. I hate to break it to you, but the process doesn't end there. Once the transaction is complete, it is highly recommended that you transfer your bitcoins from the exchange to your personal wallet. If the history of Bitcoin has taught us anything it is that if you keep your money on an exchange, you don't actually own that money, you own the exchange. If the exchange becomes insolvent or is hacked, you risk losing that money forever. This has happened in the past with MT.Gox and more recently with exchanges like BTC-e and Bitfinex.

Once the coins are in your account, be sure to withdraw them to the Bitcoin address you copied from your wallet. Once the coins arrive safely in your wallet, you will be able to proudly say that you have purchased your first Bitcoin. Other options for purchasing Bitcoins include Bitcoin ATMs. Bitcoin ATMs are machines that accept cash, also known as fiat money, and send you Bitcoins in exchange. Some ATMs only allow you to buy Bitcoins and others will also allow you to sell your Bitcoins by giving you cash in exchange. Many people love using ATMs because of the relative anonymity throughout the purchasing process.

There is no need to wait for lengthy identity verification processes to complete. Simply enter your money and get your coins instantly. Bitcoin ATMs are run by companies that usually charge a specific fee for their service, so make sure you know the fees before making the transaction. If you would like to find a Bitcoin ATM near you, use the link in our resources section below. Before finishing this lesson, I want to touch on another topic. Some people will prefer to buy bitcoins from an individual and not on an exchange. In this case, there are a few things to keep in mind: First, try to see if you can verify the seller's identity.

Some people will want to remain anonymous, and that's fine, but verifying someone's identity will dramatically reduce the risk of being scammed. Second, try to use some type of escrow service that holds your money until the seller sends you the coins. If that's not possible, keep the cash and meet the person face to face. In any case, never use irreversible payment methods such as bank transfers before receiving your coins. Finally, you'll want to wait for the Bitcoin transaction to have at least 2 or 3 confirmations before considering the deal complete. Of course, this depends on the amount of money you are exchanging.

Smaller amounts can work with a single confirmation. Keep in mind that buying from an individual usually involves a lot of uncertainty and sometimes just isn't worth the few dollars you'll save in the process. That's all for today's video. All that's left for you to do now is go and get your first Bitcoin. Remember, if you ever get stuck, use the resources section at the end of this video or just send us an email. Good luck and we'll see you... in a moment.