Today we are going to talk about the most important step in wading into the crypto world: buying Bitcoin. After that, I will go over how to buy altcoins.
People make buying Bitcoin a lot more complex than it is. Hopefully I will be able to provide you with a clear and easy to follow guide on getting yourself some Bitcoin.
Step 1. Download a wallet app, either for your computer or phone, and install it.
I recommend a wallet that allows you to control your own private keys. Bitcoin is like cash, if you don’t possess it, you don’t really own it. In order to securely possess your bitcoin, you need to store it in a wallet that lets you control your cryptographic keys.
Green Address https://greenaddress.it/en/
Both of these wallets are excellent options that let you control your private keys, and they are available for a wide variety of devices.
There are many other bitcoin wallets, so if you decide to go with a different one, make sure it allows you to control your private keys. If it doesn’t, don’t use it.
If you plan on storing bitcoin long term, a hardware wallet is the best choice.
A hardware wallet is a small device that plugs into your usb on your phone/computer and allows you to store your bitcoin on the secure device, offline. This is the most secure way to store your coins.
A couple of good options for hardware wallets:
Step 2. Backup your wallet.
Once your wallet is installed, back it up and make sure you save the backup seed phrase, or .dat file.
The .dat file is the backup file of your wallet’s data. Save it securely on a usb, or another device, in an encrypted file.
The seed phrase is a mnemonic set of random words, which store all the information needed to recover a bitcoin wallet.
It is extremely important you do not lose the seed phrase.
Make multiple copies and hide them well. You can recover your bitcoin even from a lost or broken device as long as you have your seed phrase for recovery.
It is also extremely important you never let anyone else have your seed phrase, ever.
With your seed phrase, anyone could just recover your wallet and spend your coins. Scammers have been know to try to trick new users. This is your warning to protect it like you would your life savings, because it’s that important.
Now that you have your backup safely secured, you’re ready to go. Next step is to pick an exchange to buy your bitcoin from.
Step 3. Choosing a Bitcoin exchange & Purchasing your Bitcoin
Just like wallets, there are many, many bitcoin exchanges. I could write a series of articles covering just the topic of exchanges.
In this overview, I am going to include a few of the most popular, and allow you to do your due diligence in deciding which one works best for you.
- Coinbase https://www.coinbase.com/
- Bitstamp https://www.bitstamp.net/
- Kraken https://www.kraken.com/
- Poloniex https://poloniex.com/
- Bittrex https://bittrex.com/
- Once you choose an exchange you will need to register and create a profile.
- The next step is to verify your account for “Know Your Customer” (KYC) and “Anti-Money Laundering” (AML) purposes. Usually, you need to provide a valid photo ID, and proof of address. Verification times can vary from a few minutes to several days, depending on the exchange.
- Setup 2 factor authentication on your phone, for security. This step is a must. Always use 2fa on any site you are buying/selling bitcoin or other coins. Security is important.
Google Authenticator is your best bet for a 2fa app. Install it and add accounts by scanning a qr code.
- Send money from your bank, to deposit on the exchange. This may take several days also, depending on the exchange. Coinbase offers instant purchase, upon deposit for US customers.
- Once your deposit has been credited you may purchase bitcoin from the exchange. Once purchased it will be credited to your personal wallet on the exchange.
An exchange wallet is a wallet in which the exchange controls the private keys.
They are fine to use while buying/selling on the exchange.
They are not reliable for long term storage of your coins. For long term storage it is better to have a wallet which you control the private keys or a hardware wallet.
Once you have bitcoin in your wallet, you can also use it to purchase another coin listed on the exchange.
Make sure if you purchase another coin you google and install it’s associated wallet before you store it off the exchange. The same steps for the bitcoin wallet from above apply in regards to securing your private keys, for any other crypto wallet.
Do not send any other kind of coin to a bitcoin wallet, or vice versa. You will lose your coins. Always use a wallet for the coin you are using.
It is very important that once you are finished buying/selling that you send your bitcoin(or other coin) to your personal wallet. Do not leave it on the exchange.
- On some exchanges for added security you can add your wallet/wallets to a whitelist, which restricts your withdrawals, to only be authorized for the wallets that you whitelist. See your exchange’s help menu for more info.
Many exchanges have been hacked or have mismanaged funds, causing their users to lose their deposited funds. This is why it’s important to store your coins in YOUR wallet which you control the private keys. Exchanges have become a lot more reliable than they were in the early days of bitcoin, but things do still happen every so often, so protect yourself.
The exchanges I have recommended are the safest ones, however it is always better to be cautious instead of sorry. When you have your bitcoin in your wallet which you control the private keys, you are no longer at risk.
Alternatively, you can use https://localbitcoins.com to purchase in cash, without providing any ID, but you often pay a premium for privacy.
If you choose to use this method only purchase from a seller that has made many transactions with a very high approval rating. This will minimize your risk.
Buying altcoins is pretty much the exact same as buying bitcoin , except you need to use bitcoin to buy them (or ethereum), instead of fiat currency.
Many exchanges have a wide selection of altcoins, but they may be a riskier purchasing experience, as many of them are in unregulated jurisdictions.
My recommendation is to use Bittrex. Bittrex is a reputable US based exchange that is under US law, and regulations. They have aml/kyc compliance. They have been around for a long time, and are one of the world’s most popular exchanges.
Bittrex has a huge selection of altcoins in Bitcoin, Ethereum and USD, CNY pairings. They have over 150 different altcoins with new pairings added frequently. Bittrex is my favorite place to buy and sell altcoins.
You can deposit in Bitcoin, a number of altcoins, or one of the supported currency pairings, making it super convenient.
It may seem like a lot to take in, but once you start doing it you’ll realize it’s not as difficult as it may seem.
The main things to take away is :
Keep your coins in your own wallet that you control the keys, and to not give your private key seed phrase to anyone.
Don’t leave your coins on the exchanges, store them in your wallet.
Also one last tip. Don’t rush sending bitcoin. Once it has been sent it cannot be unsent. So take your time, and double check your addresses, etc.
If you’re going to send a large amount, send a small test amount first, to make sure. Be smart like it was gold or something, because it is, just the digital version.