How to Buy Bitcoin

Bitcoin, which is a digital currency built on blockchain technology has attracted a lot of investor attention since 2009. Following the 2008 banking crisis in the USA, the foremost digital currency was created to serve as an alternative currency free of control and manipulation. Its transactions are therefore publicly monitored, and yet the users are protected through the use of special addresses called private keys. It is no wonder bitcoin has generated a lot of interest.

Buying bitcoins differs somewhat from buying fiat money. Whereas fiat money is typically issued by central banks of countries and can be purchased in Forex bureaus and other finance houses, bitcoin is mined and traded electronically only. See this article to understand how bitcoin is made and how it works. To use or trade bitcoins, you’ll need a bitcoin wallet.

Bitcoin Wallets

Traditional monies are kept in bank accounts. To make purchases, you require a bank card with your bank details in addition to your secret pin. Bitcoin operates in a similar fashion. A bitcoin wallet is an application that allows you to purchase coins and trade them successfully. You are given a free private key upon registration, which is a 256 string of alphanumeric characters. The key is proof that you are entitled to bitcoins from a specific wallet.

Note that a private key can’t be recreated once it’s lost. If you lose your key, you lose all your coins. You can acquire a free wallet in the form of an app on Coinbase, Exodus or any other provider, or purchase a hardware device which resembles a pen drive. Because they can be disconnected from the internet, the physical devices are considered safer. Though the integrity of blockchain technology is highly praised, keeping your private key safe is critical to your ability to use bitcoin or any other cryptocurrency.

Coin Exchange

Coins are traded globally on exchanges like Coinbase and Bitbargain. The coin exchange serves as a gateway to acquiring coins and selling them, and offers a safe and secure online platform to tap into the burgeoning digital currency market.

To purchase coins, you first have to register for free on your exchange of choice by entering your email address, password, and other personal details. Because you still need physical cash to buy coins, you will need to connect your bank details or credit card to your account.

Buying Coins

After successfully creating your account on a coin exchange, you are free to buy coins based on exchange rates between the coin and your fiat currency.

Buying coins on exchanges has parallels with trading stocks on the stock market. For example, you can place a market order authorising the exchange to buy coins for the best available price on the platform. As with other markets, coins are sold by individuals at different prices. The market order therefore allows the exchange to sift through all available prices on the exchange at that point in time in order to choose the cheapest on the list.

Using a limit order, on the other hand, lets you buy coins at a price below the prevailing ask price. In this case, you set the price at which you are willing to pay for a bitcoin. The seller will then have to match your offer for the exchange to authorise the transaction. Note that there are transaction fees pertaining to coin trade on the exchange.

As at the end of September 2018, a bitcoin was going for over $6604.97. If you are on a budget, you are still able to buy half, a quarter, or even as low as one hundredth of a millionth, known as a Satoshi. With the private key associated with your purchased coin, you are free to make purchases on select online shops.