You can buy bitcoins in lots of different ways – there are bitcoin exchanges that allow you to transfer money to them and change them into Bitcoin.
Or alternatively you can go to a Bitcoin meetup and exchange directly with a person by swiping QR codes on your phone.
You do need a wallet – and in fact some exchanges act like wallets on your behalf. There are two types of wallet – a third party wallet such as an exchange, for example Coinbase – who also allow you to trade fiat currencies to Bitcoin and do so by scouring all the different exchanges for the best price – or a personal computer wallet that is stored on your hard drive.
Once you have either downloaded wallet software to your computer or registered with a third party provider you are ready to trade. With most exchanges there are laborious and time consuming protection measures that they have to fulfil to comply with government regulation, such as KYC – know your client, or AML – Anti money laundering.
There are also issues with actually transferring fiat money into your account. For example after dealing with compliance some exchanges can take days to receive the transfer – which your bank will charge a fee on as well as potentially refusing to transfer the cash.
However there are a number of inroads and positives as the Bitcoin and Crypto currency space moves forward. Some wallets, such as coinbase and circle, are now accepting debit cards for cash transfers and Apple reversing its ban on mobile Bitcoin wallets.
There are risks with holding currency on third party websites as Governments in general don’t guarantee the funds and the insurance market rates are too high for fledgling companies to pay. There have been cases of hackers infiltrating exchanges and running off with the funds – for example at mintpal and mt Gox.
With your personal computer make sure you back up your wallet on a piece of paper and store it safely. If it breaks beyond repair and you haven’t done so your wallet and Bitcoins, or whichever crypto currency is stored on it will be lost forever.
You can see our list of Bitcoin and crypto currency exchanges here and depending on your location and local currency choose the best way to buy some Bitcoin. We show you the liquidity of the exchange, the security and its ease of use. This is always a trade off between security functionality and best price but in general the better the security the better the Bitcoin exchange and therefore the more liquidity as more people are prepared to trade their Bitcoin there.
- How to Trade Bitcoin?
- What is Bitcoin Transaction malleability – MT GOX?
- How to sell Bitcoins?
- What is the Blockchain?
- What will happen to the Bitcoin Price when the Block Reward Halves in 2016?
- How to trade Bitcoin and other Crypto Currencies Using an SMA?
- How to trade Bitcoin with the Relative Strength Index?