How To Buy Bitcoin

 

Since its launch in 2009, Bitcoin has experienced meteoric growth: From October 2013 to early June 2021, for instance, its value increased by almost 30,000%. And while that growth alone is incredible, some analysts say Bitcoin’s value could rise even more as cryptocurrencies and the blockchain technology that power them become more mainstream and integrated into people’s daily lives.

Buying Bitcoin does come with one major buyer beware, though: While it’s experienced immense highs, it’s also fallen to devastating lows.

After hitting an almost $20,000 high in 2017, for example, its value plummeted and rose to no more than about half of that until 2020. Though it’s trended upward since, it remains a very volatile investment, and an ill-timed tweet from Elon Musk can decimate its value. That’s why experts don’t recommend you invest more than a small percentage of your money in Bitcoin.

With all of that said, if you still want to get in on the action, here’s how to buy Bitcoin of your own.

How to Buy Bitcoin in 4 Steps

1. Choose a Crypto Exchange

To buy Bitcoin or any cryptocurrency, you’ll need a crypto exchange where buyers and sellers meet to exchange dollars for coins.

There are hundreds of exchanges out there, but as a beginner, you’ll want to opt for one that balances ease of use with low fees and high security. Be sure to check out our top picks for best crypto exchanges, like Coinbase, Gemini and Binance.US if you don’t already have an exchange in mind.

Make sure to check if your exchange has a Bitcoin wallet built into its platform; if not, you’ll need to find one of your own. You may also choose to buy your crypto on a platform like Robinhood, Paypal or Venmo, though buying crypto this way often means you cannot withdraw your coins and move them to another platform. If you want to hold your crypto to a different wallet, you’ll need to sell your holdings and then rebuy them on a different exchange.

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2. Decide on a Payment Option

After choosing an exchange, you have to fund your account before you can begin investing in Bitcoin. Depending on the exchange, you can fund your account through bank transfers from a checking or savings account, PayPal, wire transfers, a cryptocurrency wallet or even a credit or debit card.

Keep in mind, though, that platforms may charge higher transaction fees for certain funding options. For example, Coinbase doesn’t charge a fee if you do an electronic transfer from a bank account. However, it charges $10 on wire transfers and 2.5% of the transaction amount if you use PayPal.

Things get even pricier if you use PayPal or a debit card to make a direct purchase of cryptocurrency, instead of funding your account and then using transferred money to make your purchase: Coinbase’s fee rises to 3.99% of the transaction amount. Credit card transaction fees on other platforms often run at least this high.

Because fees reduce how much money you can invest (and therefore also how much money you have to grow and compound), it tends to make sense to use electronic transfers from a bank account rather than other methods. In addition, if you use a credit card to buy cryptocurrency, it generally will count as a cash advance and be subject to a higher interest rate than you pay on regular charges. What’s more, taking on debt to buy volatile investments is extremely risky.

3. Place an Order

Once your account is funded, you can place your first order to buy Bitcoin. Depending on the platform you’re using, you may be able to purchase it by tapping a button, or you may have to enter Bitcoin’s ticker symbol (BTC). You’ll then have to input the amount you want to invest.

When the transaction is complete, you will own a portion of a Bitcoin. That’s because it requires a large upfront investment to buy a single Bitcoin now. If Bitcoin’s current price was $38,000, for example, you’d need to invest that much to buy a Bitcoin. If you invested less, say $1,000, you’d get a percentage, in this case 0.026%, of a Bitcoin.