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How to purchase Bitcoin safely and easily

Photo by Shutterstock.
Photo by Shutterstock.

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Getting Bitcoin is often the first thing investors do when they want to get into cryptocurrency, and more investors may want to do that right now.

For people who are used to traditional financial goods, though, buying even a more popular cryptocurrency like Bitcoin can feel like entering a strange land.

The good news is that you can buy bitcoin and other cryptocurrencies in a lot of different ways, such as through stockbrokers, exchanges, and even in-app sales in some crypto-related apps.

This blog will go into detail about the different ways to buy Bitcoin and things you should think about when doing so.

It will be a complete guide for people who want to get into the crypto market.

Ways to buy Bitcoin

There are several avenues for purchasing Bitcoin, with Bitcoin wallets and centralised crypto exchanges being among the most prevalent methods.

Additionally, certain traditional online brokers and a limited number of money transfer apps also offer options to buy Bitcoin.

Below is a summary of the process involved in buying Bitcoin.

Select a crypto-trading platform

Cryptocurrency exchanges offer a convenient avenue for trading due to their extensive features and wide range of cryptocurrencies available.

They facilitate buying, selling, and holding cryptocurrencies, with the option to transfer funds to online wallets for security.

There are various types of cryptocurrency exchanges, including those that prioritise user anonymity and operate in a decentralised manner without requiring personal information.

These anonymous exchanges can be particularly beneficial for demographics such as refugees or individuals in regions with limited credit or banking infrastructure, as they provide access to the mainstream economy.

Creating an account

To begin trading on most platforms, users typically need to verify their identity and add a payment method.

While certain decentralised exchanges offer anonymity, popular exchanges require users to provide identification documents.

The account setup process closely resembles that of traditional brokerage accounts, as many centralised exchanges adhere to Know Your Customer (KYC) regulations.

You may need to enter the following:

  • Government-issued identification.
  • Social Security number or taxpayer identification number.
  • Photo or video confirmation of identity.
  • Documents verifying your address.

Keep in mind that different exchanges support various payment methods, and fees can vary significantly.

Placing a trade order

Cryptocurrency exchanges now offer functionalities similar to traditional stock brokerages, providing various order types and investment options.

Most exchanges support market and limit orders, with some offering additional features like stop-loss orders.

Kraken stands out for offering a wide range of order types, including market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders.

Additionally, exchanges facilitate recurring investments, allowing users to dollar-cost averages into their chosen investments.

Securing your assets

Utilising Bitcoin and cryptocurrency wallets provide a safer storage solution for digital assets.

Storing crypto in a personal wallet, rather than on the exchange, grants investors control over the private key associated with their funds.

While exchanges do offer wallets, it's advisable not to rely on them for significant or long-term cryptocurrency holdings.

Purchasing Bitcoin using a credit card

Buying Bitcoin with a credit card is possible through various channels, with exchanges being the most common option.

Upon registering with an exchange, you typically have the option to fund your account using a credit card.

However, using a credit card for Bitcoin purchases on exchanges may incur additional fees. Furthermore, some credit card issuers prohibit cryptocurrency transactions.

More economical methods for buying Bitcoin include linking your exchange account to your bank account and initiating a wire transfer.

Financial experts generally advise against buying Bitcoin with a credit card due to the accumulating interest, which adds to the inherent risk of investing in Bitcoin.

Even if you pay off your credit card balance monthly to avoid interest charges, you may still face platform-related fees for using a credit card to buy Bitcoin.

Be a wise Bitcoin buyer

Last but not least, you can buy Bitcoin with a credit card through platforms, but there are usually extra fees and risks involved.

Due to the interest that builds up on credit card purchases, experts warn against this method. It is less cost-effective and risky than other options like bank transfers or wire transfers.

Before choosing a way to pay for Bitcoin, it's important to think about the fees, risks, and possible interest charges.

This should not be taken as financial advice to buy, trade, or sell cryptocurrency or use any specific exchange. This is not intended for use as investment, financial or legal advice as each individual's need will vary.