There are several different ways to buy Bitcoin. Depending on where you live, and your current life situation, some ways will certainly be better than others. That’s for you to figure out. I’m going to try to get you going in the right direction with a combination of research and my personal experiences with purchasing Bitcoin. In a later post, I’ll be discussing how to buy altcoins. Bitcoin is the gateway drug though. Most altcoins cannot be purchased with fiat so your first step, if you are just joining the Crypto Revolution, is to buy some Bitcoin.
Coinbase is the largest and probably best known cryptocurrency exchange out there that will trade you Bitcoin in exchange for fiat money such as dollars. Coinbase makes every effort to comply with US law and is probably the safest place to buy and sell Bitcoin if you want to stay comfortably within the bounds of repressive US financial laws. The IRS has recently demanded that Coinbase turn over all of their US customer data so that the IRS can sniff for people they think aren’t paying enough of their Bitcoin profits to Washington DC. Along those lines, Coinbase is insured so theoretically, if they experienced a massive hack, you would be compensated for any Bitcoin you lost while holding it on their exchange.
A great advantage of Coinbase is that you can use it to buy not just Bitcoin, but also Litecoin, Bitcoin Cash, and Ethereum directly with fiat money. Coinbase will also allow you to buy Cryptocurrency with a credit card, which is rare and convenient. Coinbase is good to go in several countries, mostly North America and Europe, but for a full list, click here: Coinbase also trades in more than one fiat currency, including Dollars (USD) Pounds (GBP) and Euros (EUR).
A disadvantage of Coinbase is that not everyone can use them. In their effort to comply with all laws, Coinbase has determined that the banking laws of Wyoming, Hawaii, and Minnesota are beyond ridiculous to deal with, thus if you live in one of those states, you cannot use Coinbase. Also, Coinbase has fairly high fees for trading. These fees can be reduced significantly by using Coinbase’s GDAX platform.
I have been buying Bitcoin and Ethereum on Gemini for almost a year now with no problems. Gemini is a large, insured, secure, financial law compliant exchange. Gemini is based in New York and is compliant with all their laws. Gemini was built by the Winklevoss twins to provide an easy way for people to trade their fiat money for Bitcoin. On Gemini you can trade dollars for Bitcoin or Ethereum and you can convert those cryptocurrencies back into fiat as well.
Gemini’s great advantage is that it is simple, easy to use, and has very low fees. They are available in most states. Gemini is not available to residents of Alaska, Arizona, Hawaii and Wisconsin. Gemini is not widely available overseas, however residents of Canada, Singapore, South Korea, and the UK can use Gemini. For a more exhaustive list, click here:
A disadvantage of Gemini is that they only accept ACH deposits or bank wire transfers. I personally don’t like bank wires, (lots of fees) so I use ACH to deposit dollars into my Gemini account. Gemini will allow you to immediately trade those dollars into Bitcoin or Ethereum, but you must wait until the ACH fully clears before you can move you coins. It usually takes four business days for an ACH to fully clear. In my case, I’m usually buying Bitcoin, then moving it to a crypto trading hub such as Bittrex, to trade for altcoins. It can be frustrating to have to wait almost a week (especially if you have a weekend or a holiday in the middle of your four business days) for approval to be able to move your coins. The crypto markets move very fast and four days can be a killer!
Kraken is a San Francisco based Bitcoin Exchange. Kraken has been around for a while and was chosen by the MtGox trustee to handle their Bitcoin. I haven’t personally used Kraken, but it seems they are being overtaken by other exchanges.
Kraken will trade in the Euro, US Dollar, Canadian Dollar, and Yen fiat tokens. They also allow trading in several different cryptocurrencies, much more than Gemini. Like Coinbase and Gemini, Kraken complies will Know Your Customer (KYC) laws and requires a significant verification process to be able to fully utilize their features.
Cointal is a promising new peer to peer exchange. They are a featured exchange on Bitcoin.com. Basically the platform matches buyers and sellers of various cryptocurrencies who want to exchange for fiat and vice versa. The funds are held in escrow until both parties are satisfied with the exchange. I have not used this or any other peer to peer service, but please let me know if you have experience with Cointal.
Abra is a smartphone wallet that you can link to your bank account to exchange fiat currencies for Bitcoin or Ethereum. I’ve used Abra for iOS on my iPhone and I like them. Abra is easy to use and doesn’t have as annoying of a verification process as some other exchanges. Abra advertises that it has a partnership with American Express to allow you to link your American Express card to your Abra wallet and buy Bitcoin on credit. I have an American Express card, I tried to link it and buy Bitcoin with it, but it didn’t work. I got an error message any way that I tried it. Also be aware that there are extra fees involved with buying Bitcoin with your American Express as opposed to your linked bank account.
The last choice I’ll mention here is Local Bitcoins. Local Bitcoins is like Cointal, a peer to peer exchange where you chose to transact with an individual and it usually requires a physical meeting to get your Bitcoin or fiat. Of course, if you are carrying large amounts of physical cash, there is a security concern. Always try to meet in a secure, public area as opposed to your living room or driveway.
Local Bitcoins has been the victim of attacks by statists. A Local Bitcoins aficionado was recently arrested in Detroit because his exchange activities annoyed the financial ruling class. I expect more Local Bitcoins users to be made examples of in this way in the near future. Use at your own risk.
That should be good to get you started. Those are more exchanges than I’ve ever used. You should know however, that there are hundreds of different exchanges out there. If one of these doesn’t work in your particular jurisdiction, look for an alternative. I guarantee there is a way to buy Bitcoin for you.
I am currently an American Citizen working overseas. It makes things very difficult. Almost every site requires two factor authentication. Two factor authentication is great, and a good idea to secure your coins, but it is extremely difficult when someone wants to verify your identity with your US phone number but your US phone is in a place where it cannot receive texts or calls. I’ve found ways around it to buy my Bitcoin. You can too.