How to Buy Bitcoin (BTC)
See how you can buy Bitcoin online through a regulated broker or an exchange using your credit card, debit card or PayPal. We discuss 3 tried-and-tested strategies to get started.
#1. Buy CFDs on the price of Bitcoin
Buy or sell CFDs (Contract for Difference) on the price of Bitcoin through regulated brokers like AvaTrade.com or HYCM.com. When you buy a CFD on the price of Bitcoin, you aren't buying Bitcoin. Instead, you are speculating on the price of the crypto-currency. For example, you should buy a CFD if you expect the price of Bitcoin to rise, with a view to sell it later for more, to realise a profit. Alternatively, you should sell a CFD if you expect the price of Bitcoin to fall, with a view to buy it later for less, to realise a profit.
When you trade CFDs, you'll never be at risk of having your crypto-currency stolen or hacked. This is because you don't own assets. You are simply speculating on price changes.
CFDs allow you to profit from rises and falls in the price of Bitcoin. Interestingly, you can sell a CFD (go short), without owning Bitcoin, because you are only speculating on changes in price. Open a demo account to see for yourself.
All CFD brokers allow you to borrow to finance your investment. Because Bitcoin is particularly volatile, most brokers will cap maximum leverage. Use leverage with caution, as it can magnify your gains, as well as your losses.
If you leverage your trades, you will pay your broker interest on your borrowings. This form of interest is known as "swap fees" in the industry's jargon. They may be either positive or negative, depending on the direction of interest rates. You should enquire about these fees with your broker.
#2. Buy Bitcoin through an exchange
If you are new to crypto-currency, your first point of call may be to buy crypto-currency on an exchange, such as Binance. When you buy Bitcoin through an exchange, you'll swap fiat for crypto-currency. You can keep your coins with the exchange or transfer them to offline storage for greater security. Find crypto-currency exchanges available in your country on cryptobuyer.com.
Buying Bitcoin through an exchange is, by all accounts, the longest running way to buy Bitcoin. By 2013, the Mt. Gox exchange accounted for 70% of all transactions worldwide. However, the exchange was hacked and hundreds of thousands of coins were stolen, most of which have never been recovered to this day.
Crypto-currency exchanges have a poor track record at security. This is why, you'll need to open a crypto-currency wallet or store your coins offline to keep them safe. Offline storage does offer peace of mind, but is susceptible to theft or loss.
It can take many days to open and fund an account with a Bitcoin exchange if you live outside of the USA. Delays can arise when you attempt to fund your account or undergo compliance checks. These steps have become more cumbersome as the industry is more regulated now than it was in its infancy. This can be a concern if you are looking to take advantage of sudden price changes.
You may also find the lack of transparency around pricing frustrating. You'll pay either the exchange a commission or spread when converting fiat currency into Bitcoin. Some platforms will also charge ongoing platform fees.
#3. Buy Bitcoin through an electronic wallet
You can also buy Bitcoin through electronic wallets like PayPal, Skrill or Neteller. First fund your account, then shop online without sharing your card or bank account details. Once you've opened an account with one of these services and added funds, you can buy Bitcoin and other crypto-currencies online. For example, Skrill allows you to place conditional buy or sell orders that only execute once certain price points have been reached. You can also build your reserves over time through recurring purchases.
Skrill and NETELLER offer a safe and easy way to buy Bitcoin online. You could open an account in minutes and fund it through a bank transfer or card payment. You can use your account immediately, albeit with lower deposit and withdrawal limits, until you have verified your identity.
Skrill and NETELLER also provide clarity of pricing, charging 1.50% when you convert crypto-currency into USD or EUR and 3% otherwise. These fees apply on both sides of a transaction.
Simplicity comes at a price. Electronic wallets like PayPal, Skrill and Neteller charge significantly higher fees than crypto-currency exchanges or CFD brokers.
When you buy Bitcoin, you can only profit from increases in price. This means it's best to buy in a bull market, when the price of Bitcoin is in a clear uptrend.