How To Buy Bitcoin Safely | The Beginners Guide To Buying Crypto
How To Buy Bitcoin Safely | The Beginners Guide To Buying Crypto
If you’re new to cryptocurrency and you’re thinking of investing in the market, then you’re probably wondering about the best way to get started. There’s no denying that Bitcoin (and all major cryptocurrencies, in general) has had the best year it’s ever had in history.
Just this year, the price of Bitcoin has jumped from $27,900 in late-December 2020 to a whopping $54,000 (as of October 2021, when we’re writing this). That’s a huge amount of growth! Along with Bitcoin, other major cryptocurrencies, such as Ethereum, Litecoin, Stellar Lumens, and more have quite literally “gone to the moon.”
One of the things that make first-time investors a bit wary about investing in cryptocurrency (other than the obvious market volatility), is the fact that Bitcoin isn’t backed by the FDC. This means that there’s absolutely no insurance on your investment. With regular fiat money that’s stored in a bank, every banking member is insured for up to $250,000 by the federal government.
But as the saying goes, “If you risk nothing, you’re really risking everything.” This is a moment in history where the entire way that society treats money is changing, and many believe that cryptocurrency and blockchain payments will eventually take over the world and replace fiat altogether. Now is your chance to be part of history.
However, the question still remains, “How do I buy Bitcoin safely?”
Well, we’re about to show you! In today’s article, we’ll take a break from our usual VPN reviews to provide you with a complete beginners’ guide on how to buy Bitcoin safely. We’ll show you your different options for buying Bitcoin, explain where and how Bitcoin is stored, and how to safely purchase your first bit of cryptocurrency.
Let’s take a look!
How Do I Buy Bitcoin and Cryptocurrency?
Unlike cash, which is usually given out in the form of physical paper or loaded debit/credit cards, cryptocurrency isn’t typically given out as payment in today’s world. This means that to buy cryptocurrency, most people will have to trade their fiat currency in exchange for a cryptocurrency. On a surface level, it’s kind of similar to currency exchange.
Crypto coins can be purchased by using one of three different methods:
- Trading cash/card for crypto at a Bitcoin ATM.
- Purchasing Bitcoin from a cryptocurrency exchange like Coinbase or Gemini.
- Investing in Bitcoin with a hedge/mutual fund or a trading/money management app like Robinhood, Webull, or CashApp.
Where Is My Bitcoin Stored?
When you purchase Bitcoin, your coins are stored in a secure “wallet,” which is represented as a unique hash code stored on the blockchain. Each wallet is encrypted with two keys, one for sending and the other for receiving. Bitcoin can’t be sent or received without this code.
When you purchase Bitcoin on an exchange, the cryptocurrency is stored in your account’s wallet. From here, it’s easy to trade and exchange your Bitcoin for other cryptocurrencies. However, you may also choose to move your newly-purchased crypto funds to a personal, more secure crypto wallet, such as Trezor or Exodus.
If you’re purchasing large amounts or planning on keeping your Bitcoin long-term, then we recommend using a third-party wallet, as they’re less vulnerable to hacks and penetration. This will also make it impossible for the exchange to control your money. As long as your crypto is stored in an anonymous crypto wallet, your funds can never be frozen.
Buying Bitcoin On A Crypto Exchange Vs. Buying Bitcoin On An Investment App
Above, we mentioned that the two most popular ways of purchasing cryptocurrency are on a crypto exchange (such as Coinbase or Gemini, for example) or by investing in cryptocurrency from an investment app or a mutual/hedge fund.
These are two very different methods that many people get confused about. To clarify, the only way that YOU will actually own your Bitcoin or crypto is by purchasing it on an exchange or from a Bitcoin ATM (see below). When you “purchase” Bitcoin or crypto on your CashApp, Robinhood, or Webull account, you don’t actually own the crypto; you’re just investing in it. The app owns your crypto and securely stores it in its own wallets.
Simply put, if you invest in Bitcoin from an app like Robinhood, you won’t be able to use your crypto to make crypto purchases, transfer your funds to another wallet, or withdraw them from a Bitcoin ATM.
Conversely, if you purchase your Bitcoin/crypto from an exchange or ATM, then you actually own the coins and can do whatever you wish with them (trade for other cryptocurrencies, goods/services, cold storage, etc.). This is why we recommend using legitimate crypto exchanges for purchasing Bitcoin over random apps that could come or go.
What’s The Best Crypto Exchange To Buy Bitcoin On?
If you do a quick internet search for cryptocurrency exchanges, you’ll likely come across a handful of them. The most common ones are:
- Binance US.
If you’re just getting started and you mainly want to invest in Bitcoin and other “major” cryptocurrencies, then we recommend creating a Coinbase account. The fees may be slightly higher when you first trade fiat for crypto, but Coinbase is secure, has a mobile app, and is incredibly simple for first-timers to use.
Once you have some more advanced knowledge of the crypto market and want to start investing in “alt-coins” (smaller, less known cryptocurrencies), then you might consider joining a more expansive exchange such as Bittrex or Binance US.
These platforms are a bit more technical (harder for beginners to understand); however, they allow users to invest in a wider range of alt-coins that have yet to be fully approved and listed on larger exchanges like Coinbase and Gemini.
Should I Buy Bitcoin At A Bitcoin ATM?
Bitcoin ATMs are popping up all around the world. You can find them located in stores and malls in pretty much every major city in the world where crypto is legal and unregulated. The advantage of Bitcoin ATMs is that they make it incredibly easy to buy Bitcoin (and other major cryptos like Litecoin and Ethereum).
As long as you have your hash code for an existing crypto wallet (i.e., Exodus Wallet, Coinbase Wallet, etc.), then all you need to do is input your wallet address and some cash into the ATM to purchase Bitcoin. Depending on network speeds, you should have access to your funds within an hour. As long as the ATM is located in a safe location, then they’re relatively safe and easy to use.
The main downfall of buying Bitcoin at a Bitcoin ATM is that the fees can be very high. In some cases, fees may be as much as 10%! For this reason, we generally recommend buying your BTC from a proper online exchange, as it will be far less expensive in terms of fees.
How To Buy Bitcoin Anonymously At An ATM
The only real benefit of using a Bitcoin ATM is that you can remain completely anonymous while buying your Bitcoin, as you’ll be bypassing major exchanges that require email and ID verification.
To buy Bitcoin anonymously, just wear a facemask, glasses, and a hoodie to mask your face. Then, using a pair of leather gloves, access the Bitcoin ATM, purchase your Bitcoin using cash, and send the funds to an anonymous wallet that’s not associated with your name or email.
How To Buy Bitcoin Safely Online Using Coinbase: Step-by-Step
Hopefully, by now, you should know enough about the process to feel comfortable about buying your first “bits” Bitcoin. Here’s how to buy Bitcoin safely online using the popular Coinbase exchange.
1. Create A Coinbase Account With A Strong Password: First, head over to www.coinbase.com, and create your account. When creating your account, make sure that you choose a strong password. This will make it difficult for hackers to guess your login credentials and steal your uninsured funds.
2. Verify Your Identity On Coinbase: Before you’re allowed to purchase or trade large amounts of cryptocurrency, you’ll need to verify your identity on Coinbase. This can be done through your account ID settings. Usually, you’ll need to present pictures of your passport or government ID and complete a facial recognition scan to prove that you are who you say you are.
3. Set Up Two-Factor Authentication: To ensure that your account is 100% safe and secure, you’ll most definitely want to set up two-factor authentication. This will prevent any unauthorized login attempts to your account.
Anybody (including yourself) accessing your account from an unrecognized IP address will be required to input a passcode that’s either sent to the primary email address or phone number associated with the account. This is an essential layer of security, especially if you plan on storing larger amounts of money in your Coinbase account.
4. Connect Your Bank Account or Card To Coinbase: Next, you’ll need to connect your bank account or your credit/debit card to your Coinbase account. The advantage of having a card connected is that you can purchase/deposit funds and trades immediately. While bank transfers take longer to go through, your purchase limit is significantly higher. We recommend connecting both for easier trading.
5. Navigate To The ‘Trade’ Tab On Coinbase: Once you’ve connected your payment method(s) to your account and completed all account verification, you’re ready to buy your first Bitcoin! Navigate to the ‘Trade’ tab on your Coinbase desktop site or mobile application, scroll through the list of tradeable cryptos and click the ‘Buy’ button. A dialogue box will appear, allowing you to choose whether you want to make the purchase with your connected card or your bank account.
Generally speaking, most instant purchases made with a card take less than 10 minutes to go through, before the funds are available in your account.
6. Pro Tip- Buy Bitcoin Anonymously With A VPN: If you want to remain more anonymous while buying Bitcoin or you’re accessing your private Coinbase account on a public/unsecured wi-fi network, then it’s a good idea to connect to a high-quality VPN service like NordVPN or ZenMate to ensure that no third parties are peeping in on your online activity.
There you have it! We hope that you enjoyed this guide on how to buy Bitcoin safely. Once you’ve purchased your first Bitcoin through an exchange like Coinbase, we recommend keeping it securely stored in a private, anonymous crypto wallet where hackers can’t gain access to your funds.
If you’re going to be actively investing on an exchange platform, then only keep enough funds in your exchange account to actively trade with. Anything that you plan on storing long-term is better kept in a more secure wallet.
We wish you the best of luck going forward in your investment journey!