One of the most typical questions, when people are introduced to the cryptocurrency and blockchain scene, is “How do I buy cryptocurrency”?
Well, depending on your needs, there is a variety of ways to acquire blockchain tokens.
If you already have a bank account, this may be one of the easiest ways to buy. You can send a wire transfer to exchange, use Paypal, a credit or debit card, buy with cash locally, and swap cryptocurrency.
The market is offering lots of creative ways to turn fiat currency into cryptocurrency, with one site even offering to trade gift cards in for Bitcoin.
Well, you may not even have to get off your couch! Just continue reading below about the different options for acquiring crypto-tokens.
Before you buy
Probably the most important thing you should do before you purchase cryptocurrency is to make sure you have a wallet to store the tokens. Wallets range in security, and the most secure of them is a hardware wallet.
One quick note: If you don’t have a wallet and keep your cryptocurrency holdings on the exchange, then, technically, the exchange is holding the crypto and not you. You are trusting a third party, but exchanges are much more susceptible to hacks, and they can change the rules for withdrawals at any time.
There are various options for attaining cryptocurrencies. Below we’ll go through some of these options and highlight the essential details to not on each way of buying.
OPTION 1 – Buy cryptocurrency with cash
- CRYPTOCURRENCY ATMs
Need to get cryptocurrency in a hurry? Well, using a local Bitcoin ATM might be the service you need! These machines are just like normal ATMs at the bank, but they also work with cryptocurrency.
Most of them accept paper cash and will send you a digital token in exchange, and some will even allow you to send Bitcoin and other currencies for local currency. Availability can still be scarce in rural regions, so the best chance to find those ATMs is in big cities.
Pros: Straightforward and quick, and no need to spend time setting up an account on a website or an exchange
Cons: Limited locations, higher transaction fees, and prices
- LOCAL CRYPTOCURRENCY
If there are no cryptocurrency ATMs around your local area, then you might have better luck in finding someone to meet up with in person.
It is typically easy to meet someone in a café and exchange funds in a safe environment. But standing on the street corner and yelling “sell me bitcoins” won’t get you very far- although if you try this out, I would be glad to hear how it worked out for you.
It’s far better to use something like a LocalBitcoins.com – a long standing and reputable service that helps people find each other. That can be especially helpful in areas you cannot easily access other crypto services or when traveling internationally.
Pros: Purchase anywhere, efficiently, and do so with more privacy than a bank transfer. Plus, it is an opportunity to connect with other crypto enthusiasts.
Cons: You have to use more caution to avoid scams, and it is a more expensive method than market exchanges.
OPTION 2 – Bank Transfers – cryptocurrency exchanges
Coinbase is probably the most popular service to trade with cryptocurrencies. Available in dozens of countries, Coinbase has continuously operated since the early days of Bitcoin. It is an easy-to-use consumer service, but there are limits on how much can be bought at once.
Also, it may take several days to connect your bank account, verify your identity and complete your first purchase. Recently, Coinbase has introduced instant purchase of up to $25.000 in Ethereum, Bitcoin, and Litecoin for anyone with a U.S. bank account.
- TRADING PLATFORMS/EXCHANGES
Another viable option is to use a more traditional exchange. If you have experience with trading in other stock or commodity markets, the ability to trade more frequently and the advanced interface will likely benefit you.
Reliability and reputation during peak times can vary, sometimes freezing the services up completely.
There is a variety of cryptocurrency exchanges, some of which allow traditional fiat currencies to be withdrawn/deposited. High-volume exchanges are suited in case you need to change a significant number of tokens or if you require unique functionality such as margin trades or limit orders.
Some cryptocurrencies are more popular on some exchanges than other. They also frequently have a difference in prices, so I advise you to shop around and compare fees.
Pros: Fair market prices with access to hundreds of cryptocurrencies. Plus, you have the flexibility to watch, market movement over time or to set limit buys and sells.
Cons: Time investment needed to sign up and go through the identity verification process. Bank transfers can take up to a week. What is also essential is that exchanges may track where and how you spend your cryptocurrencies, and they are susceptible to hacks.
OPTION 3 – With Card
Buying cryptocurrencies with credit and debit card used to be very difficult. However, with more and more people wanting access, it is now becoming more widely available.
There are many exchanges which are now offering this option, but there are some sites which focus more on selling cryptocurrency for cards.
Pros: It doesn’t require any technical know-how and instant purchase.
Cons: More expensive and highest fees in the space, limited privacy, limited amounts, and you should also be aware of fraudulent sites that are trying to collect your information.
OPTION 4 – Paypal
Buying cryptocurrencies with Paypal is probably one of the most challenging ways at the moment during to high risk of chargebacks for sellers. But if you want to use Paypal, there are a few sites which offer this option, such as Virwox and Local Bitcoins.
Pros: Use unspent funds you have got sitting in your Paypal account and the ease of keeping track if your purchases.
Cons: More expensive with high fees and exchange rates. It also requires multiple steps and is not secure for sellers.
OPTION 5 – Buy cryptocurrencies with gift cards
One of the sites which are worth mentioning is Paxful. You can buy and sell bitcoin on Paxful for a huge variety of other means such as air miles, reward points, and even gift cards.
It is now easier than ever to trade with cryptocurrencies. You do not have to spend months mining and sending your electric bill skyrocketing to own cryptocurrencies anymore.
Once you have used any of those methods, what you do with your cryptocurrencies is up to you. Some want to spend, and others look to turn them into a long-term investment.