How to Buy Cryptocurrency
Cryptocurrency has been around for quite some time, but it’s safe to say that they made headlines in 2017 with their unprecedented rally. Here’s a guide trying to purchase Bitcoin or any other popular cryptocurrency.
Leading the march was Bitcoin (BTC) 00, the world’s largest digital currency by means of market capitalization. It went on to reach a price upwards of $20,000 at the beginning of January 2018, from just about $750 the same time last year.
Bitcoin and Ether, as a matter of fact, were the two top cryptocurrencies, as the latter reached a price of about $1,400 in January 2018, marking an even larger absolute price increase in terms of percentage compared to BTC, as it started the year at about $10.
And while the market has decreased substantially ever since, digital currencies like Bitcoin and Bitcoin Cash remain an interesting field for many retail and institutional investors, as well as buyers and sellers.
Below we take a look at the most common reasons people invest in digital currency and cryptocurrency, buy Bitcoin, as well as how you can start buying bitcoin and other digital currencies.
Why Invest in Cryptocurrencies?
It goes without saying that different people invest for their own reasons and, most of them, have to do with the simple desire to make a profit.
However, there are several other reasons for which buyers and sellers, as well as investors, get involved in the cryptocurrency market. Some of the most common reasons include:
Portfolio Diversification
“Never put all of your eggs in one basket” is a saying that fits the investment world perfectly. When it comes to diversification, there are quite a lot of different approaches you can go about.
Adding cryptocurrencies to your investment portfolio is one of the ways that you can balance it. It’s also worth noting that the industry is particularly different from traditional ones and it could substantially increase the potential of maximizing your portfolio’s overall growth.
While the cryptocurrency market has currently entered a bear market and the prices are depreciating, the high volatility and the chance of massive gains upwards of 100% are still why a lot of investors are buying cryptocurrency in the first place.
In fact, Bitcoinist recently compared the performance of Bitcoin to three traditional stock market companies – Amazon, JD.com, and iQiyi. It turns out that Bitcoin dwarfs all of them in terms of financial growth, outperforming even the most popular FAANG stocks over the years. Another great reason for buying cryptocurrency.
Buying Cryptocurrency is Easier than Ever Before
Regardless of whether you want to start buying Bitcoin and Ether, or any other cryptocurrency, it is now easier than ever.
Naturally, as the prices increased and cryptocurrencies became a lot more popular and in demand, companies started to offer a range of different services which provide quick and easy access to the market.
Hence, you can now buy bitcoin and ether using your credit card, debit card, gift cards or you can even purchase bitcoin with cash through physical Bitcoin ATMs or e-money kiosks. However, one must keep an eye out for cryptocurrency exchanges that take commission and transaction fees, which can vary greatly, especially when using a credit card or debit cards.
Increasing Adoption
It goes without saying that the cryptocurrency market as a whole is still at a very early stage. The abovementioned Bitcoin ATMs, now numbering over 4,000 across the globe, are still hard to come by compared traditional ATMs.
However, it’s also worth noting that cryptocurrencies have been around for a relatively short amount of time and their popularity exploded only recently.
Furthermore, numerous banks, institutions, countries and even governments have expressed interest in one of Bitcoin’s key component technologies, the blockchain, which suggests that cryptocurrencies are here to stay providing even more reason to purchase bitcoin.
The Most Popular Cryptocurrencies
What is the most popular cryptocurrency besides Bitcoin? Well, there are over 2,000 cryptocurrencies currently in existence and their market cap rankings can change day to day. There are also plenty of ways you can buy or sell them.
However, in terms of popular cryptocurrency that have shown staying power, it’s safe to say that the top digital currencies by market capitalization are also those which people are most aware of. These include, but are not limited to Bitcoin, Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH), Stellar (XLM), EOS (EOS), Bitcoin SV (BSV), Litecoin (LTC), TRON (TRX), Cardano (ADA), Monero (XRM), Ethereum Classic (ETC), and others.
How to Buy Cryptocurrency on Coinbase
Coinbase is currently the largest US-based cryptocurrency exchange on the market. It is headquartered in San Francisco.
Buying cryptocurrency on the platform is fairly simple. The first thing you’d have to do is to sign up for a Coinbase account. This will provide you with a place to store your bitcoin as well as fairly easy payment methods to convert your local currency such as USD or EUR in a bank account into or out of Bitcoin or any other of the supported cryptocurrencies. You can even incorporate a debit card or a credit card into this process for credit or debit.
Once you have created and verified your account, you will have to connect your bank account and then a credit card, debit card or debit cards. There are certain verification steps that you would have to go through in order to be able to fully utilize your account using a credit card.
Coinbase allows you to connect your bank account through your credit or debit card, which is quite convenient if you want to buy or sell with credit or debit. This allows you to purchase digital currencies seamlessly with your bank account and use them with a credit card or debit card, for example.
Once all of the above is done and you’ve gone through all the boring administrative work of the bank account, credit card, debit cards, gift cards, hardware wallets, wallet address, your private key, gift cards, you can buy or sell cryptocurrency without any issues. The platform will also display real-time currency exchange rates of Bitcoin, USD, and EUR, depending on the currency you prefer.
How to Buy Cryptocurrency on Binance
Binance is a cryptocurrency exchange. In fact, it’s the largest one in the world by means of traded volume and it has been dominating the market for the time being.
To trade cryptocurrency on Binance, you must first deposit it in your designated cryptocurrency wallet like one of the many hardware wallets with a private key. The exchange supports a broad range of different digital assets, so you don’t have to worry about compatibility.
While the exchange supports predominantly digital assets, it also allows fiat-to-crypto trading in selected regions. Bitcoinist reported in October that Binance opened its first fiat-to-crypto exchange in Uganda. The company has also partnered up with a Southeastern Asian venture capital giant Vertex Ventures to open a fiat-to-crypto exchange in Singapore.
If Binance does not support fiat-to-crypto trading in your region, you can withdraw bitcoin, Litecoin, Ethereum etc. from your Coinbase account and then deposit into your Binance account. Once you’ve done this, you can begin exchanging them for different types of cryptocurrencies.
The way it works is fairly simple. First, you would have to choose the cryptocurrency you want to trade and then see the available trading pairs (e.g. BTC/ETH).
For instance, if you want to buy Ethereum, you would be able to do so with Bitcoin, Litecoin, and an array of different digital assets as well. The platform will show you the current exchange rates for the selected cryptocurrency pair and will execute your transaction when your price target is reached.
Binance also issued its very own in-platform token called Binance Coin with the BNB ticker 00. Users are incentivized to buy ad use it to pay for any fees on the platform at a certain discount. For example, in the first year after the coin was issued, users received 50% discount on transaction fees if paid in BNB.
How to Buy Cryptocurrency on Kraken
Kraken is another cryptocurrency exchange used to buy or sell cryptocurrency. Unlike Binance however, it does allow funding of your account via fiat currencies. So, the first thing you’d have to do is to open an account.
Once you are done, you need to navigate to the Funding page of Kraken and select the deposit option and go to the USD (or EUR for Europeans) page. If you haven’t already, you should accept the domestic USD deposit Terms of Service.
After that, you should select the option to do a US domestic wire bank transfer in order to copy your domestic USD deposit wire transfer details.
The next step would depend on the bank that you are using for the bank transfer. But essentially you would have to provide the displayed information on your Kraken deposit to your bank regarding the wire transfer. The bank transfer will then transfer credit to a credit card or the funds directly from your bank transfer account to your USD account on Kraken.
Once the bank transfers are complete, you will be able to buy or sell cryptocurrency, buy bitcoin, and trade on the platform. It’s a cryptocurrency exchange just like Binance and you would have to select the trading pair of buyers and sellers you want to engage with.
The exchange rates are updated in real-time based on the current market conditions while displaying the order book volume with buyers and sellers, as well as bank transfers and their fees.
Note: Cryptocurrency and fiat withdrawals typically depend on the level of identity verification you provide to the exchange. The more documents you submit, the larger the amount will be that you can withdraw on a daily basis. Binance, for example, allows withdrawals of up to 3 BTC daily for the most basic ID verification level.
How to Buy Cryptocurrency with Cash
Buying bitcoin with cash has a few distinct advantages compared to purchasing them on a cryptocurrency exchange or bank transfers.
For once, cash purchases are obviously a lot more private. Unlike using a regular cryptocurrency exchange for buying bitcoin or learning how to buy cryptocurrencies using a bank transfer, you won’t necessarily have to reveal personal information and submitting a wide range of documents for that matter.
Furthermore, cash purchases are faster for those of you who are first-time buyers learning to buy cryptocurrencies — or have not set up a crypto wallet address or other payment methods like a bank transfer.
A wire bank transfer could take up to 3 business days, to say the least. What is more, the verification of your account, assuming nothing goes wrong, can take up to 3 weeks on different platforms to transfer credit. A bank transfer could cause you to lose a substantial amount of money, especially at times when the market is volatile and you want to transfer credit using these payment methods.
Peer-to-peer cash transactions or OTC (over-the-counter) trades, where cryptocurrency isn’t sold on a public exchange (and thus, have little to no impact on price), are payment methods that can be carried out in various ways.
For one, you might have a trusted friend or a peer of yours who has experience with how to buy cryptocurrencies and is willing to sell them. Since digital assets are becoming increasingly popular, you can attend different meetups and crypto conferences where you can meet local people who are interested in buying and selling cryptocurrencies.
All you need to do is pay the person the agreed upon amount of money (or send it to him through your bank account) and receive the cryptocurrency on your selected crypto wallet address with a private key or through other payment methods. If you meet in person, he can scan the QR code on your crypto wallet and send the digital assets there directly as a payment method.
Another popular payment method for OTC trading with cash is through the LocalBitcoins website. The P2P trading platform has gained a reputation over the years, connecting buyers and sellers while providing escrow services and other payment methods.
All you have to do is visit the website, select your region, as well as the designated amount you want to transact with, and wait for a seller to pop up if there isn’t one already. Then, you can arrange all the further details through messaging and discussion of payment methods in order to buy bitcoin.
Buying Cryptocurrency via a Bitcoin ATM
Using a Bitcoin ATM is another option to buy Bitcoin with cash (2-way machines allow selling as well), provided there is such a machine in the region you reside at. In fact, there are now over 4,000 machines worldwide.
They are most commonly pretty straightforward – you’d have to put in the money and provide the QR code for the device to scan, after which it would send the amount automatically in your chosen payment method. This is especially easy for those learning how to buy cryptocurrency.
People in Switzerland, for instance, can buy Bitcoin from almost all of the railway stations in the country. Another sign of how increasingly easy it is to purchase Bitcoin with cash is the thousands of French brick-n-mortar tobacco shops that will soon sell Bitcoin coupons starting January 1st, 2019.
How to Buy Cryptocurrency with Skrill
Skrill is a well-known international payment processor and payment method. There are a few different platforms which allow you to use Skrill in order to deposit money and buy cryptocurrency. One of them is BitPanda. The main benefit of the trading platform is that it has fairly low transaction fees and it does accept Skrill. Virwox is another popular trading platform that accepts Skrill.
How to Buy Cryptocurrency with PayPal
There are a few different ways to buy crypto with PayPal’s payment method. In any case, you’d have to find a platform which supports this payment processor.
One platform you can use is LocalBitcoins. However, it is essentially the same thing as if you are buying with cash, just that you’d be depositing your money through your PayPal account. Another platform for payment methods that you can use is Paxful, which is basically the smaller version of LocalBitcoins.
Non-US users can use the trading platform eToro. There are a few important things to consider when we consider how eToro is different from normal cryptocurrency exchanges, which allow you to buy crypto. eToro won’t let you convert your Bitcoin to any other cryptocurrency or to send them to someone else – you would only be able to change them back to fiat currencies. In other words, this is more for investment and portfolio building, rather than trading.
How to Buy Cryptocurrency with Hodl Hodl
Hodl Hodl is a peer-to-peer (P2P) cryptocurrency exchange, which allows buyers or sellers to trade directly. It doesn’t hold user’s funds but locks it in a multisig escrow account which is supposed to minimize the risks associated with cryptocurrency theft.
What’s more, since the platform doesn’t hold any funds, you don’t have to go through complex KYC/AML compliance procedures.
In order to buy bitcoin, all you’d have to do is enter your location, as well as the amount that you want to purchase. You can also choose between paying with cash, bank wire, cryptocurrency, or online.
The exchange keeps a profile of the users so you can see the history of trades the person you want to transact with has done in the past.
How to Buy Cryptocurrency with Square Cash App
Using the Square Cash App is perhaps one of the most popular and convenient payment methods to buy bitcoin in the US. You would need to make sure that you have some money deposited in advance. You can do so by adding it directly to your account or you can have someone send it to you.
Once you have this handled, you should open the Cash app and select the Cash Card. Swipe to the left and you should be able to see the Bitcoin symbol. You will see the “buy” button immediately and all you’d have to do is specify the amount and confirm the transaction with your password.
How to Buy Cryptocurrency Anonymously
There are a few different ways you can buy cryptocurrency without having to use any type of identification document in the process.
- LocalBitcoins
This is likely to be the most popular way to buy Bitcoin and learn how to buy cryptocurrencies and buy crypto in cash and in person. As we explained above, you can use the platform to find someone in your area who is willing to sell bitcoin to you after meeting at a physical location. (Naturally, this involves the usual risks of physical, non-contractual dealings and you need to make sure that you trust the seller.)
At the same time, though, while using the platform when learning how to buy cryptocurrency, you can use an alias email address to completely conceal your identity. However, most of the people wouldn’t want to do business with anonymous buyers and unless you are willing to pay in cash in person, you might have certain difficulties, especially when learning how to buy cryptocurrency.
- Bitcoin ATM
Buying cryptocurrency or buying bitcoin through a Bitcoin ATM is another way of staying completely anonymous. You wouldn’t have to provide any type of identification documents for any payment methods. Keep in mind, though, that some ATMs have certain limits, above which they might require you to enter your telephone number.
- Use a Prepaid Card
Another of the ways to buy cryptocurrency without having to display your identity is to buy basic prepaid cards from any supermarket or convenience store. There are certain platforms such as Virwox, which would accept them and you can use them to buy bitcoin or buy crypto in another form.
Conclusion
Buying cryptocurrency has become easier than ever. However, there are factors that you’d have to consider when selecting the best payment method for you.
One of the most important things that you would have to consider when investing in cryptocurrency or buying Bitcoin is the platform you have chosen. There are different considerations to think of, such as transaction fees, credit and debit card support, privacy, bank or exchange transfers, payment methods to buy digital assets, support of popular cryptocurrency, and others alike.
After buying cryptocurrency, you must then find a secure storage solution just as you would with large amounts of fiat currencies.
There are plenty of different cryptocurrency wallet solutions that you can take advantage of with a wallet address and a private key. Based on whether you want to keep your digital assets for a longer period of time or you want to transact with them daily using various payment methods, you can choose between offline hardware wallets (where you control your own private keys) and/or online web-based cryptocurrency wallets that can be either custodial or non-custodial.
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by Georgi Georgiev via Bitcoinist.com