How to Buy Bitcoins in 2024? (4 different methods reviewed)

Summary

In this informative video from 99Bitcoins, Nate guides viewers through the process of purchasing their first Bitcoin. The video emphasizes the importance of using a secure Bitcoin wallet and understanding the risks associated with investing in cryptocurrencies. It advises viewers to only invest what they can afford to lose and offers tips on selecting a trustworthy exchange based on factors such as accepted payment methods, fees, and the exchange's reputation. The video also explains the distinction between trading platforms and brokers, and the pros and cons of each. Additionally, it covers alternative methods of acquiring Bitcoin, including using Bitcoin ATMs or purchasing from individuals with caution. The key takeaway is to always move purchased Bitcoins to a personal wallet to mitigate the risk of losing funds due to exchange insolvency or hacking.

Takeaways

• 💡 Start with a Bitcoin wallet to store your coins, which can be a mobile or desktop wallet for small amounts, or a hardware or paper wallet for larger amounts.
• 🔑 Copy your Bitcoin address from your wallet as you'll need it to receive your purchased Bitcoins.
• 💰 Consider your investment carefully; only invest what you can afford to lose and not more than 5% of your disposable income or total wealth.
• 📈 Bitcoin can be bought in fractions, allowing you to invest in less than one Bitcoin, down to one-hundredth if you wish.
• 🔍 When choosing an exchange, consider factors like accepted payment methods, fees, exchange rates, and the exchange's buying limits and reputation.
• 🌐 Ensure the exchange you choose accepts users from your country and offers a payment method that suits your needs.
• 💵 Be aware of different fee structures, including deposit, transaction, and withdrawal fees, which can impact your final investment amount.
• 📉 Understand that low-fee exchanges may have higher exchange rates, effectively 'hiding' their fees.
• 🛡️ After purchasing, move your Bitcoins from the exchange to your personal wallet to avoid the risk of losing your investment due to exchange insolvency or hacking.
• 🏧 Bitcoin ATMs offer a quick and relatively anonymous way to buy Bitcoins with cash, but be aware of the fees they charge.
• ⚖️ If buying from an individual, use escrow services or meet face-to-face with cash to minimize risk, and wait for transaction confirmations before considering the deal complete.

Q & A

What is the main purpose of the Bitcoin Whiteboard Tuesday series?

The main purpose of the Bitcoin Whiteboard Tuesday series is to educate viewers on Bitcoin basics and to provide information that can be used to learn more about Bitcoin or to answer questions that friends or family members might have.

Why is it recommended to have a Bitcoin wallet before purchasing Bitcoins?

A Bitcoin wallet is necessary to hold and manage your Bitcoins. It generates your Bitcoin address, which is required to receive Bitcoins during a transaction.

What are the different types of wallets mentioned for holding Bitcoins, and when should they be used?

The script mentions software wallets for small amounts, and hardware or paper wallets for large amounts. Software wallets can be mobile or desktop and are convenient for everyday use. Hardware and paper wallets are more secure as they are not connected to the Internet, reducing the risk of theft.

What is the personal rule of thumb for investing in Bitcoin suggested in the video?

The personal rule of thumb suggested is to never invest more than 5% of your disposable income or total wealth in Bitcoin, considering its high risk nature.

How can one find a suitable Bitcoin exchange to buy Bitcoins?

One can use the 'Buy Bitcoin' page mentioned in the script, which matches users with the best exchange based on their location. Alternatively, individuals can do their own research considering factors like accepted payment methods, fees, exchange rates, and the exchange's reputation.

What are the different types of fees associated with Bitcoin transactions on an exchange?

The different types of fees include deposit fees, transaction fees, and withdrawal fees. Each fee can vary and impact the total amount of money received or spent during a transaction.

Why is it advised to move Bitcoins from an exchange to a personal wallet after purchase?

It is advised to move Bitcoins to a personal wallet to ensure the security of the investment. If kept on an exchange, there is a risk of loss due to insolvency or hacking, as seen with past incidents involving exchanges like MT.Gox, BTC-e, and Bitfinex.

What are Bitcoin ATMs and how do they facilitate the purchase of Bitcoins?

Bitcoin ATMs are machines that accept cash and dispense Bitcoins in return. They offer a relatively anonymous way to buy Bitcoins instantly without the need for lengthy identity verification processes.

What precautions should be taken when buying Bitcoins from an individual?

When buying from an individual, it's important to verify the seller's identity, use an escrow service if possible, avoid irreversible payment methods until the coins are received, and wait for at least 2-3 confirmations before considering the transaction complete.

What is the Know Your Customer (KYC) process and why is it required by most exchanges?

The KYC process is a regulatory requirement where users must provide additional information such as ID, proof of residence, and sometimes proof of income to the exchange. It is required due to the increasing mainstream adoption of Bitcoin and the need for exchanges to comply with government regulations.

What is the significance of Bitcoin transaction confirmations and why might the number of confirmations needed vary with the transaction amount?

Bitcoin transaction confirmations validate the legitimacy of a transaction on the blockchain. The number of confirmations needed can vary with the transaction amount because larger transactions carry more risk, thus requiring more confirmations to ensure the transaction is irreversible and secure.

Outlines

00:00

😀 Introduction to Bitcoin Basics and Buying Bitcoin

Nate from 99Bitcoins introduces the Bitcoin Whiteboard Tuesday series, which educates viewers on Bitcoin fundamentals. The focus of this video is on purchasing one's first Bitcoin, emphasizing the importance of hands-on experience with a live transaction. It outlines the necessity of having a Bitcoin wallet before making a purchase and provides a refresher on wallets, their types, and their functions. The video also advises viewers on the amount of money to invest in Bitcoin, suggesting a cautious approach due to its volatile nature. It guides viewers on how to choose a suitable Bitcoin exchange, considering factors such as accepted payment methods, fees, exchange rates, and the exchange's reputation. The distinction between trading platforms and brokers is explained, and the importance of moving purchased Bitcoins to a personal wallet for security is highlighted.

05:03

💡 Steps for Purchasing Bitcoin and Security Considerations

This paragraph explains the process of buying Bitcoin in detail. It starts with signing up and completing the Know Your Customer (KYC) process on an exchange, which has become a regulatory requirement. After purchasing, it strongly recommends transferring Bitcoins to a personal wallet to mitigate risks associated with keeping them on an exchange. The video also discusses alternative methods of acquiring Bitcoin, such as using Bitcoin ATMs, which offer a degree of anonymity and instant transactions but may involve higher fees. For those preferring to buy from individuals, the video advises on verifying the seller's identity, using escrow services, and waiting for transaction confirmations before considering the purchase complete. It concludes with an encouragement to take the leap and purchase one's first Bitcoin and offers assistance via email for any questions or difficulties encountered.

Keywords

💡Bitcoin

Bitcoin is a digital currency, also known as cryptocurrency, which operates on a decentralized ledger system called the blockchain. It is the main theme of the video as it guides viewers on how to purchase their first Bitcoin. The script emphasizes the importance of understanding Bitcoin basics and the process of buying it to gain firsthand experience with the technology.

💡Bitcoin Wallet

A Bitcoin wallet is a software program where users can store, send, and receive Bitcoin. It generates a Bitcoin address, which is used to receive transactions. The video discusses the importance of having a wallet before purchasing Bitcoin and differentiates between software, hardware, and paper wallets based on the amount of Bitcoin one intends to hold.

💡Risk

Risk is the possibility of losing some or all of the money invested in Bitcoin. The video stresses that Bitcoin is a very risky asset and advises viewers to only invest money they can afford to lose. It relates to the video's theme by cautioning potential investors about the financial implications of buying Bitcoin.

💡Exchange

An exchange is a platform where users can buy, sell, or trade cryptocurrencies like Bitcoin. The script details the process of choosing an exchange, considering factors such as accepted payment methods, fees, and the exchange's reputation. It is central to the video's narrative as it guides viewers on how to select a suitable platform for their Bitcoin purchase.

💡Know Your Customer (KYC)

KYC is a process used by exchanges to verify the identity of their users, which includes providing identification and proof of residence. The video mentions that most exchanges require KYC compliance due to increased regulation, which is a step in the process of buying Bitcoin from an exchange.

💡Transaction Fees

Transaction fees are the costs associated with Bitcoin transactions, which can include deposit, transaction, and withdrawal fees. The video explains that these fees can vary by exchange and can impact the total amount of Bitcoin one receives, making it an important consideration when choosing an exchange.

💡Exchange Rate

The exchange rate is the rate at which Bitcoin is traded for another currency, such as the US dollar. The script warns that some exchanges may have lower fees but higher exchange rates, effectively 'hiding' the fees within the rate. Understanding exchange rates is crucial for investors to know the true cost of their Bitcoin purchase.

💡Buying Limit

A buying limit refers to the maximum amount of Bitcoin one can purchase on an exchange, which can be influenced by the user's payment method and level of identity verification. The video points out that for those looking to buy large amounts of Bitcoin, the buying limit of the exchange is an important factor to consider.

💡Trading Platform vs. Broker

The video distinguishes between trading platforms, which automatically connect buyers and sellers, and brokers, which simplify the buying process by selling Bitcoin at a predetermined price. Understanding the difference is important as it affects the cost and user experience of purchasing Bitcoin.

💡Bitcoin ATM

A Bitcoin ATM is a machine that allows users to buy Bitcoin with cash. The video mentions that these ATMs offer a relatively anonymous way to purchase Bitcoin and that they usually charge a fee for their service. Bitcoin ATMs are an alternative method for buying Bitcoin outside of online exchanges.

💡Escrow Service

An escrow service is a third-party entity that holds the buyer's funds until the seller fulfills their part of the agreement, such as delivering Bitcoin. The video suggests using an escrow service when buying from an individual to reduce the risk of fraud, which is an important consideration for those choosing to buy Bitcoin peer-to-peer.

Highlights

Every few weeks, 99Bitcoins will release a new video explaining Bitcoin basics

Today's topic is how to buy your first Bitcoin

Having a firsthand experience with a live Bitcoin transaction teaches you more than watching videos

Before buying Bitcoin, you need a wallet to hold them. Wallets generate your Bitcoin address for receiving

For small amounts, use a trusted software wallet. For large amounts, use a hardware or paper wallet

Recommended wallets are listed at the bottom of the video based on device and OS

Decide how much money you can afford to invest in Bitcoin, which is a very risky asset

As a rule of thumb, don't invest more than 5% of your disposable income or total wealth in Bitcoin

One Bitcoin can be divided up to 8 decimal points, so you can buy fractions like 0.5 or 0.01 BTC

Choosing the right Bitcoin exchange involves checking factors like accepted payment methods, fees, exchange rate, buying limit, and reputation

99Bitcoins' 'Buy Bitcoin' page matches you with the best exchange based on your location

Trading platforms automatically connect buyers and sellers, while brokers simplify the process with a predetermined price

It's important to use a reliable company whether buying from a trading platform or broker

For buying large amounts like over $10,000 in Bitcoin, there are specific exchanges and brokers for such transactions

After buying Bitcoin on an exchange, it's highly recommended to transfer it to your personal wallet to avoid risk

Bitcoin ATMs allow buying Bitcoin with cash in a relatively anonymous process, but charge a fee

When buying Bitcoin from an individual, verify their identity, use an escrow service if possible, and wait for 2-3 confirmations before considering the deal complete

Remember to use the resource section or contact 99Bitcoins if you get stuck during the process

Transcripts

Hello guys and gals, I'm Nate from 99Bitcoins,

and welcome to Bitcoin Whiteboard Tuesday!

Every few weeks we’re going to send you a cool new video, just like this one,

explaining some Bitcoin basics.

You can use them to learn more about Bitcoin yourself

or you forward them to friends or family members who have questions.

Today’s topic is how to buy your first Bitcoin.

If you’ve followed our previous lessons,

then you’re probably somewhat of a Bitcoin expert by now.

However, nothing will teach you more about Bitcoin and how it works

than having a firsthand experience with a live Bitcoin transaction.

By buying even a small amount of Bitcoins,

you’ll probably learn more than by watching this whole video series.

So let’s get started!

Before you can buy Bitcoins, you’re going to need a wallet to hold them.

If you’ve watched our previous episode about wallets,

then you’re all set.

However, if you’re completely new to Bitcoin,

or if you can’t quite recall what we talked about in the video,

here’s a short refresher:

Bitcoin wallets are programs that help you send and receive Bitcoin.

They generate your Bitcoin address,

which serves as your personal address for receiving Bitcoins.

If you’re buying small amounts of Bitcoin, you can use any trusted software wallet.

It could be a mobile wallet or a desktop wallet,

it doesn’t really matter.

For large amounts of Bitcoin though,

you’ll want to use only Hardware or Paper wallets.

These wallets aren’t connected to the Internet,

and so they eliminate the possibility of someone stealing your funds

unless they’re actually holding your physical wallet.

To make it easier on you, we’ve listed some recommended wallets,

depending on your device and operating system,

at the bottom of this video.

Once you choose your wallet, open it and copy your Bitcoin address.

You’ll need it later on.

Got your address?

Good, you now need to ask yourself a very important question:

How much money do you intend to invest in Bitcoin?

Bitcoin is a VERY risky asset.

This means you should never buy any amount you can’t afford to lose.

It’s important to think this through.

If this is the first time you’re buying Bitcoins,

choose an amount that won’t affect you financially

if Bitcoin were to drop to zero.

In general, we tend to be overly optimistic when we invest,

and we forget about the very real possibility of a downside.

Our personal rule of thumb is to never invest more than 5% of your disposable income

or total wealth.

Keep in mind that you can always buy less than 1 Bitcoin.

One bitcoin can be divided up to 8 decimal points.

This means that you can buy half a bitcoin, a quarter of a bitcoin,

or even one-hundredth of a bitcoin.

Of course, the amount you’re going to spend on Bitcoins

will lead you to your next step: choosing an exchange.

Choosing an exchange is hard work.

Each exchange has different rules, accepted payment methods, and fees,

along with other factors to take into account.

If you want to avoid the hassle, you can use our “Buy Bitcoin” page,

which matches you up with the best exchange based on your location.

There’s a link to that page at the bottom of this video as well.

This, of course, is a very rough match,

but it will give you the best result 95% of the time.

If you want to do your own due diligence, however, here’s what you need to look out for.

The first thing you’ll want to check is that the exchange accepts users from your country.

Not all exchanges accept customers from all around the world.

The second thing you’ll want to check is

what payment methods are accepted by the exchange.

Some exchanges accept a wide variety of payment methods,

and some accept only wire transfers.

Payment methods that allow the buyer to request his money back,

like credit cards or Paypal, will usually be accompanied by higher fees.

This is because the seller is taking the risk

that you’ll cancel the payment after you get your coins.

On the other hand, payment methods that can’t be reversed,

such as wire transfers, are usually cheaper.

The third thing you’ll want to check is

how much you’ll need to pay in fees for your transactions.

There are three kinds of fees:

deposit fees, transaction fees, and withdrawal fees.

Each one is different

and can affect the total amount of money you’ll receive in the end.

The fourth thing you’ll want to be aware of is the exchange rate.

Some exchanges have low fees,

but their exchange rates are higher relative to the competition.

This means that the fees are “hiding” in the exchange rate.

Fifth, you’ll want to know your buying limit.

Your buying limit will depend on your payment method

and your identity verification level.

If you’re looking to buy a large amount of Bitcoins,

some exchanges won’t allow it due to their low limits.

Finally, you’ll want to check out the exchange’s reputation.

Is it well known in the community?

How well is the support in the event you get lost in the process?

Have there been a large number of complaints against the exchange?

Keep in mind that no exchange is free of negative reviews,

but it’s important to consider the volume and the content of those reviews.

One important distinction to make is

the difference between trading platforms and brokers.

Trading platforms are sites that automatically connect buyers and sellers.

This means that you buy from people who’ve placed sell orders on the site

without ever communicating with them directly.

The platform usually takes a small fee for the service.

Conducting transactions on trading platforms like Bitstamp or Kraken

is usually the cheapest way to get bitcoins, but often it’s not very user friendly.

Trading platforms have options like limit orders and stop loss

that can confuse inexperienced users.

Also, when you place an order, it may not be fulfilled immediately

due to a lack of sellers at the price at which you want to buy.

In order to avoid the hassle, you can use a broker.

Brokers are sites that simplify the process by allowing you to buy coins through them

at a predetermined price.

When you buy from broker sites, the process is usually much simpler,

but it’s also more expensive.

In the end, it doesn’t really matter if you’re buying your coins

from a trading platform or a broker.

What matters is that the company is reliable

and that you’re happy with the price you’re paying.

Sometimes it’s worth it to spend a bit more money

in order to finish the process hassle free.

As a side note,

if you’re looking to buy large amounts of Bitcoin,

let’s say over $10,000 worth,

there are specific exchanges and brokers that deal in these sort of transactions.

If this is the case for you,

take a look at the resources section at the bottom of this video.

Now that you know how much you want to spend and you’ve chosen your exchange,

it’s time to make the trade.

Sign up for the site you’ve chosen and complete the registration process.

Most exchanges today will have a Know Your Customer process,

also known as KYC, that you’ll have to go through.

This means you’ll need to supply the exchange

with some additional information like your ID, a proof of residence,

and in some cases even a proof of income.

As Bitcoin has become more and more mainstream,

exchanges have become subject to stricter regulations by governments,

and in many cases,

they’re unwillingly forced to request this information from you.

Once you finish the registration and your identity is verified,

you can finally buy your bitcoins.

I hate to break it to you, but the process doesn’t end there.

After the transaction is complete,

it’s highly advised that you move your bitcoins

from the exchange into your own personal wallet.

If Bitcoin’s history has taught us anything,

it’s that if you keep your money on an exchange,

you don’t actually own that money, the exchange does.

If the exchange becomes insolvent or it gets hacked,

you risk losing that money for good.

This happened in the past with MT.Gox,

and it’s happened more recently with exchanges like BTC-e and Bitfinex.

Once the coins are in your account, make sure to withdraw them

to the Bitcoin address you’ve copied from your wallet.

After the coins arrive safely in your wallet,

then you can proudly say that you’ve bought your first Bitcoin.

Other options to buy Bitcoins include Bitcoin ATMs.

Bitcoin ATMs are machines that accept cash, also known as fiat money,

and send you Bitcoins in return.

Some ATMs allow you to only buy Bitcoins

and some will allow you to sell your Bitcoins as well

by giving you cash in return.

Many people love to use ATMs

because of the relative anonymity throughout the purchasing process.

You don’t have to wait for long identity verification processes to finish.

Just enter your money and get your coins instantly.

Bitcoin ATMs are run by companies

that usually charge a specific fee for their service,

so make sure you’re aware of the fees before making the transaction.

If you want to find a Bitcoin ATM nearby use the link in our resource section below.

Before we end this lesson, I want to touch upon one other subject.

Some people will prefer to buy bitcoins from an individual and not in an exchange.

In this case, there are a few things to watch out for:

First, try to see if you can verify the seller’s identity.

Some people will want to remain anonymous, and that’s fine,

but verifying someone’s identity

will dramatically reduce your risk of being scammed.

Second, try to use some sort of escrow service

that will hold your money until the seller sends you the coins.

If that’s not possible stick to cash and meet with the person face to face.

In any case never use irreversible payment methods like wire transfers

before receiving your coins.

Finally, you’ll want to wait for the Bitcoin transaction to have at least

2–3 confirmations before considering the deal complete.

Of course, this depends on the amount of money you’re exchanging.

Smaller amounts can do with only one confirmation.

Keep in mind that buying from an individual usually involves a lot of uncertainty,

and sometimes it’s just not worth the few bucks you’ll save in the process.

That’s it for today’s video.

All that’s left for you to do now is go and get your first Bitcoin.

Remember, if you ever get stuck,

use the resource section at the bottom of this video,

or just shoot us an email.

Good luck, and I’ll see you… in a bit.