How To Buy Bitcoin?
If Bitcoin mining is not an option for you then you will either have to earn Bitcoin or buy it. Many people opt for the latter these days and there are many online services known as exchanges where you can trade in Bitcoin, whether you are the buyer or seller. With the rapidly increasing value of Bitcoin, it is often purchased as an investment vehicle rather than as an alternative currency to transact with as it was originally intended. However, you should be cautious when buying Bitcoin. There are many Bitcoin scams on the internet and even in the real world.
Checklist for Buying Bitcoin
First you need to understand what you need to buy Bitcoin. You cannot buy Bitcoin through reputable exchanges without the following:
- Online Bitcoin wallet where your Bitcoins are stored.
- Valid email address and telephone number.
- Photo ID and proof of residence.
- Bank account.
Most wallet services and exchanges require these contact details and documents. Less reputable services will probably let you bypass some of these requirements but then you may be partaking in risky transactions.
Where To Buy Bitcoin?
You can buy Bitcoin from an exchange or directly from a seller. It is recommended that you use a reputable exchange to mitigate the risks of buying Bitcoin. Here the money to buy the Bitcoin is collected from the buyer and released once the seller has transferred the Bitcoin to the buyer. It protects both the buyer and seller. Some wallet providers like CoinBase offer exchange services or you can keep your Bitcoin with one wallet provider and trade with a totally separate exchange. You may want to look at websites like Bitcoin.info, Mt.Gox and BitStamp which are known to be quite reputable services.
Alternatively you can find a Bitcoin seller and transact directly without the fees charged by an exchange. The seller could be somebody you know like a friend or colleague. Or you could meet sellers online through forums and other services. Trading can still be done online but there is the risk of not being paid by the buyer after transfer of Bitcoin or not being sent the Bitcoin after paying for it. There are also meetups in the real world where you could interact with many sellers directly. You could also arrange a face-to-face meeting with a Bitcoin seller but make sure that you read the do’s and dont’s of face-to-face Bitcoin transactions. It can be a risky undertaking.
Paying For Bitcoin Purchases
Most exchanges and even private sellers of Bitcoins will not accept credit cards or online payment services like Paypal. The reason is that the buyer can do a charge-back or reverse payment after the transaction meaning that the seller loses the money they were paid. Some exchanges will allow these payment options but you will first have to deposit the money in an escrow type of service with them and wait for a few days to a week before making a purchase. In this way a charge-back is not possible.
Private sellers often prefer cash when doing a Bitcoin transaction face-to-face. Alternatively they will accept other payment options but make you wait for a period of time for the payment to clear, where you cannot reverse it. The problem with this arrangement is that the seller can then abscond thereby leaving the buyer without Bitcoin and short of the money they paid. Once you have successfully concluded a Bitcoin transaction, you should make sure that you can convert it into cash if you so wish. Some online wallets will convert into cash and wire the money to your bank account but there could be problems depending on the policies of your bank.