Bitcoins are a cryptocurrency or digital currency which has become popular since its coming into existence in 2009. The value of bitcoins has considerably increased over the years. This has led to more and more people wanting to buy them. A common problem faced by most first time buyers is that they don’t know where to start and how to go about buying bitcoins. With the multitude of miners, bitcoin exchanges, and bitcoin wallets, it gets difficult to identify a trustworthy source to buy Bitcoins. If you too have been facing this conundrum then our step by step guide to buying Bitcoins will give you a sense of direction. But before we dive into the 3 step process to buy bitcoins, let’s explore the benefits of investing in bitcoins.
Benefits of using Bitcoins
One of the major benefits of using Bitcoins is that it is not regulated by a centralized entity which is not the case with banks and other financial institutions. So you can send money to another person anywhere in the world without going through a bank or a middleman. And there is no limit to the amount you can send or receive. This method of transaction is considered to be much faster than a bank transfer or a bank wire.
Just as the value of shares changes in the stock market or the value of gold, the value of bitcoins changes from time to time. This volatility of bitcoin value makes it ideal for trading. Investor aficionados across the world have been incorporating bitcoins in their financial profiles. Hence, it comes as no surprise that several people now are trying to purchase bitcoins for the first time. Having said that, let’s take a look at how to buy your first bitcoins.
Step 1. Get your own Bitcoin wallet
Just like you use a wallet or purse to store cash, bitcoins are stored in Bitcoin wallets. So the first step to buy bitcoins is to get your own virtual bitcoin wallet. Another analogy to bitcoin wallets is your personal bank accounts. One can transfer cash to you if they have your bank account details. Similarly, if one knows your bitcoin address they can transfer bitcoins to your wallet. But unlike your bank account number, a bitcoin address is a one-time use e-token. It is unique and can be used for a single transaction. When you make your next transaction, you will have a new bitcoin address. An address is usually a string of text. Your bitcoin wallet software will help you get your bitcoin address as well. A few popular software options of wallets are:
- Coinbase Wallet is an easy to use bitcoin wallet which is tied to its exchange services. All you have to do is log onto Coinbase, sign up and create your account. You just have to follow the steps on the website and voila, you have your own bitcoin wallet.
- Coinhako is a Singapore based startup. It is Asia’s first Bitcoin start up and quite popular in countries like Malaysia and Singapore. Just like Coinbase, the bitcoin wallet service of Coinhako is linked to its exchange services. It is one of the most trusted applications in Singapore for creating bitcoin wallets and performing bitcoin transactions.
Other bitcoin wallet options used by people are Mycelium, Electrum, Blockchain, and Xapo. So now that you have secured your Bitcoin wallet, we move on to the next step, which is to determine where to purchase.
Step 2. Choose your Bitcoin exchange
When it comes to purchasing bitcoins, there are many sources from where you can buy bitcoins. There are brokers, online vendors, exchanges, and ATMs. When it comes to first time buyers, bitcoin exchanges are considered to be an ideal source. Bitcoin exchanges such as Coinbase, CoinHako, Luno, and the Coin Republic. Once you log into these exchange websites or applications you have to set up your account and link your bank account.
Bitcoin exchanges give you the opportunity to trade your Bitcoins just like you would trade shares. You can buy bitcoins with cash from your bank account and then either store them in your wallet or sell them. To know more in detail about bitcoin exchanges refer to our post on ‘7 Best Bitcoin Exchanges’.
Step 3. Purchase your Bitcoins and transfer it to your Bitcoin wallet
The last step in this process is to purchase your bitcoins. As mentioned above, once you have chosen your Bitcoin exchange, then keep your money ready. You can either use a credit or debit card to transfer money or do an online cash transfer. After selecting your bitcoin exchange, keep a track of the changing bitcoin value and make the purchase when you are settled with the price of bitcoins on the exchange site. Once you place your order, your coins will be shown in your exchange account. You can then transfer these to your bitcoin wallet. All you have to do is input your bitcoin address and ask the bitcoin seller to transfer your bitcoins into your account. Once the transfer is done, you will be able to see the bitcoins in your bitcoin wallet. And now you are the owner of your first set of Bitcoins.
Now that you have your desired amount of Bitcoins, you can use it for payment for good and services or store it and wait for its value to increase. Once the value of your Bitcoins goes up, you can trade them to increase your income.
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