New users interested in bitcoin or other cryptocurrencies often struggle with figuring out how to buy their first bitcoins, but it isn’t as difficult as people make it seem. The actual buying process is quite simple, you just need to figure out a reliable solution that fits your personal situation.
Sign-up for an exchange that suits your needs. All you need is an email address and password.
To buy bitcoin with fiat money you’ll need to upload a photo of your ID. Exchanges are required to do this by law.
Send money to your exchange account with a bank transfer or pay by debit or credit card.
Choose the amount you want to buy and you’ll receive a quote. Hit the “Buy” button. That’s it.
There is no such thing as the perfect crypto exchange, they all have their own sets of tradeoffs. Perhaps they have rigid requirements, or they block users from your jurisdiction or they cater more towards professional traders and have an intimidating user experience.
As a general rule, the more regulated the exchange is, the more protections are in place to protect users. On the flip side, it also means they have more rigid verification and compliance measures in place, meaning you will have to identify yourself and in some cases even upload your tax-ID. There are exchanges that have less verification requirements and offer more freedom, but naturally, they also have less regulatory protections in place for traders.
We’ll be explaining all you need to know to buy your first bitcoins and find the perfect exchange for you.
Use our exchange rate calculator to find the best bitcoin price in real-time.
Bitcoin is traded on thousands of exchanges. The price of bitcoin varies from one exchange to another and from country to country. In some countries, traders pay much more for a bitcoin than in others. We’ll show you how to find the best exchange rate in your country.
Sometimes users hear about a hack in the cryptocurrency space and infer that bitcoin is insecure. In fact, it’s never bitcoin the network that is hacked but individual wallets whose private key was obtained by a hacker. These hacks can be particularly painful when they affect a cryptocurrency exchange holding a large number of user funds.
One of the big breakthroughs of bitcoin is that users can self-custody their wealth in a private bitcoin wallet. Unlike a bank that can go bankrupt or seize your funds, bitcoins in your wallet can not be moved by anyone but yourself. If this aspect is important to you, you should withdraw your funds from the cryptocurrency exchange to a bitcoin wallet after you bought them.
This is a crucial detail to verify. Not every crypto exchange is available to every user. Coinbase for instance, one of the most popular crypto exchanges, is only available to a select number of countries.
You need to make sure you’re eligible to trade on the exchange. Most exchanges have a customer verification process where you need to state which country you are from. If you state that you are from a country whose citizens are not eligible to trade at the exchange, the exchange won’t even let you sign up for an account. Most typically, countries that are blocked include countries on US sanctions list such as Iran, Venezuela etc. or countries who have crypto bans in place and the exchange doesn’t want to risk offending the country. Exchanges enforce these blocks in different ways by either geo-blocking IP addresses from a certain country or by rejecting users in the ID verification process. This is all done to prevent excessive regulatory and compliance requirements, costs, or legal headaches.
This is all to say that you should look for a cryptocurrency exchange that caters explicitly to users from your jurisdiction.
Another important consideration is whether the bitcoin exchange supports your payment method of choice. Some exchanges do not accept any deposit with “fiat currencies”, because they don’t have adequate banking relationships. This means that you have to fund your account with cryptocurrency, to be able to trade on the exchange. Naturally, this is not an option if you don’t already own any crypto so these exchanges are not the best place to get started. We only list exchanges that allow users to fund their accounts with fiat currency per bank transfer, debit card, PayPal or other means of payment.
The reason why some exchanges don’t have banking relationships is that doing so increases the regulatory burden for them. To obtain a bank partner they must deal with an array of banking, financial, and tax compliance issues, which they can avoid when only accepting cryptocurrencies. Only large exchanges who have the resources to comply with all these regulatory tasks can offer banking services.
If you’re unbanked, unable, or unwilling to provide the extensive level of personal information some exchanges require for verification, then your best bet is to use a peer-to-peer exchange where you can buy crypto from other users like on eBay.
Bitcoin is volatile: Because this is a new asset class, there is a lot of price speculation going on. Historically, markets have moved very drastically. If you have decided to buy bitcoin it is best not to look too much at the bitcoin price as long as you believe in the fundamentals.
Bitcoin is not anonymous: There’s a widespread belief that bitcoin transactions are private. This is not the case as all transactions can be traced back on the public ledger and tied back to a real world identity that users have to submit when using a regulated exchange.
Self-custody is important: One of the breakthroughs of bitcoin is that users can hold their funds in non-custodial wallets, that only they can control using their private key. It’s important to understand the differences between holding your funds on an exchange like Coinbase or a private wallet.
Bitcoin is not slow: Sometimes people praise new cryptocurrencies on the grounds that they can process transactions faster than Bitcoin. It’s important to understand that Bitcoin’s block size limit is a virtue and not a bug. The competition between users who want to submit their transactions creates a fee market which is important in order to incentivize miners to secure the network.
There are tax implications. In most countries selling your bitcoin constitutes a taxable event. You’ll be taxed on any capital gains you make when you sell it for fiat currency. Cryptocurrency tax tools help you generate reports showing your gains/losses.
Mine Bitcoin. It’s now extremely hard for any individual to make money from mining Bitcoin. However, if you’re still interested, learn more about Bitcoin mining here.
Earn Bitcoin for shopping. Providers like Fold, Lolli, and others pay users rewards in bitcoin for buying gift cards from Amazon, Spotify etc or shopping from a merchant belonging to their merchant network.
Get a crypto card. Some crypto card providers also offer “cashback” on debit card purchases. This allows you to spend fiat currency as you would anyway and earn bitcoin rewards.
Get paid in bitcoin for services. It’s increasingly common among freelancers to ask to get paid in bitcoin especially for cross-border transactions because it is cheaper than international bank transfers.
We are a multi-faceted team of crypto enthusiasts based in Berlin.
© 2021 cryptotesters UG
How to buy bitcoin
Crypto wallet guide
Crypto savings accounts
Defi lending rates
Exclusive crypto deals