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The three key points to consider when buying bitcoin are:
Payment methods range from credit card to bank transfer, payment app (PayPal, Apple Pay, Google Pay, Samsung Pay, etc.), face-to-face with cash, and even barter. Each payment method carries tradeoffs in terms of convenience, privacy, and associated fees.
Platforms/venues for buying bitcoin include digital wallet providers, centralized spot exchanges, OTC desks (private 'Over-The-Counter' exchange services used primarily by high-net-worth individuals), peer-to-peer marketplaces, and even payment apps like PayPal.
Of course, it's also possible to buy bitcoin face-to-face. For example, you could give cash to your friend in exchange for receiving an agreed amount of bitcoin.
As for where your bitcoin goes after you buy it, the options are:
When you hold bitcoin in a wallet you control, known as a self-custody wallet (or 'non-custodial' wallet), you never have to ask for permission to use it. This means you can receive your bitcoin without waiting for a third party like a centralized exchange to approve the transaction. It also means you can send your bitcoin wherever you want, whenever you want.
By contrast, many custodial Bitcoin wallets impose severe restrictions on what you can do with your bitcoin. For example, you may be asked to register an address before sending bitcoin to it, and you may be required to wait several days before being allowed to make a withdrawal. In some cases (PayPal for example), withdrawals of any kind are simply not permitted. It's also not uncommon to have your account frozen altogether. If you've been deemed a security or fraud risk, for example, you may be locked out of your account with no recourse to action.
The best self-custodial Bitcoin wallets also enable you to customize the 'network fee' each time you send. This means you can save money on transaction fees when you're not in a rush, or pay more to send faster when you are.
Perhaps most importantly, self-custody wallets are more secure. As long as you maintain key management best practices, you'll never have to worry about getting hacked, nor will you be exposed to counter-party risks like a centralized exchange getting hacked or going bankrupt.
If you don't have a bitcoin wallet yet, check the Bitcoin.com Wallet - easy-to-use, self-custody Bitcoin wallet trusted by millions.
Read more: What's a self-custodial Bitcoin Wallet?
When you buy bitcoin with a government-issued currency through an exchange service, you're interacting with a regulated business. Such businesses must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations pertaining to the transfer of money. These regulations require the collection and storage of customer information, including identity documents and sometimes proof of address.
Fees for buying bitcoin depend on the payment method and platform/venue used. For example, if you're buying directly from a friend and settling in cash, you'll only need to consider the 'network fee' for sending the bitcoin from your friend's digital wallet to yours.
Learn about sending bitcoin, including information of network fees and more.
If you're paying with a credit card or bank transfer, you'll of course need to factor in the fees for using those payment methods.
Beyond that, exchange services charge additional fees for facilitating trades. These fees cover the exchanges' operating costs plus a small margin. In general, you'll pay lower overall fees for larger purchases, so it often makes sense to avoid making many small buys.
Read more: How bitcoin exchange works.
Having gone through the basics of buying bitcoin, let's look in more detail at the methods and processes.
Skip ahead:
Crypto wallets allow you to buy bitcoin conveniently from within the wallet app, and the Bitcoin.com Wallet is no exception. Importantly, the Bitcoin.com Wallet is fully non-custodial. This means you're always in complete control of your bitcoin. Here's the process for buying bitcoin using our app:
Of course, you can also use your Bitcoin.com Wallet to receive, hold, and use the bitcoin you've already purchased via a different method. Other methods for buying bitcoin include:
You can buy bitcoin from the Bitcoin.com website using your credit/debit card or other payment method (Apple Pay, Google Pay, etc.). When you buy bitcoin from our website, you'll need to decide where to receive it. This means you'll need to input a Bitcoin 'address' when prompted.
A Bitcoin address looks something like this:
3J57t1XpEZ73CZmQvfksriyiWrnqLhGTLy
Here's the process for buying from our website:
Visit our Buy Bitcoin page.
Select Bitcoin (BTC). Note: you can also purchase a range of other digital assets.
Choose whether you want to pay in USD or another local currency, and enter the currency amount (eg. $100).
Click the BUY button.
Enter your wallet address. Here's where you'll decide where the bitcoin you're buying goes. For example, you can send bitcoin straight to your Bitcoin.com Wallet. To do so, you just need to know your Bitcoin address. To get the right address:
Complete the purchase process by providing your payment details.
With this method, the bitcoin you purchase will at first be held by the cryptocurrency exchange on your behalf. If you'd like to take full control of your bitcoin, you'll need to withdraw it from the exchange to a self-custodial wallet like the Bitcoin.com Wallet. When you withdraw bitcoin from an exchange, you'll be subject to the exchange's withdrawal policy and fees. In some cases, you may not be able to withdraw for days or weeks, and the withdrawal fee could be much higher than a Bitcoin transaction fee would normally be.
Read more: How to send bitcoin.
Here's the typical flow for buying bitcoin from an exchange.
A variety of platforms facilitate the trading of bitcoin and other digital assets by offering 1) a venue for buyers and sellers to post their buy and sell orders, and 2) an escrow and dispute resolution service.
Since these platforms principally help people find each other, in many jurisdictions they aren't technically classified as exchanges or 'money transmitters,' so in some cases they don't require you to reveal your identity in order to use them. For privacy-conscious buyers, therefore, P2P platforms can be an effective method for obtaining bitcoin despite being generally less convenient, and often more costly overall (it can be hard to get the "correct" market rate using this method due to lack of liquidity). Note however, that as a seller, using a peer-to-peer platform to engage in the commercial sale of bitcoin (beyond, say, a few small transactions here and there) may find you on the wrong side of the law in your country.
Read more: How does Bitcoin exchange work?
Most peer-to-peer Bitcoin exchanges integrate a reputation system, meaning they track and display the trading history of their users. If you're looking to buy using a P2P exchange, you'll want to choose sellers who have a good reputation, meaning they've completed several trades and never had a complaint.
The process for buying bitcoin using a peer-to-peer exchange is typically as follows:
For p2p bitcoin purchases and trading, we recommend LocalCryptos.
Sending bitcoin is as easy as choosing the amount to send and deciding where it goes.
To receive bitcoin, simply provide the sender with your Bitcoin address, which you can find in your Bitcoin wallet.
Make sure your cryptoassets are safe with these simple tips.
Learn how to quickly and easily create a Bitcoin wallet. Understand the different wallet types and their respective pros & cons.
How safe is it to store your crypto on centralized exchanges?
Learn how to sell bitcoin into local currency safely.
Sending bitcoin is as easy as choosing the amount to send and deciding where it goes.
To receive bitcoin, simply provide the sender with your Bitcoin address, which you can find in your Bitcoin wallet.
Make sure your cryptoassets are safe with these simple tips.
Learn how to quickly and easily create a Bitcoin wallet. Understand the different wallet types and their respective pros & cons.
How safe is it to store your crypto on centralized exchanges?
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