How to buy Bitcoin and other cryptocurrencies
To understand buying cryptocurrencies, you'll first need to understand what a wallet is. A wallet is needed to hold any amount of Bitcoin or any other coin. Each wallet has a balance, and can both send and receive money. A wallet has a private key (i.e. password), and whoever has your private key has access to your wallet.
Every coin has their own wallet. You could have a Bitcoin wallet, a Litecoin wallet, etc. Think of these wallets as different bank accounts. You can't deposit Bitcoin into a Litecoin wallet, or any other. There are a few wallet managers out there such as Coinomi (a mobile wallet for Android), or Coinbase (a website wallet).
Many people trust companies to manage their wallets, if you've chosen a good trusworthy business this is likely a safe choice. If you don't like the option of someone else holding your money, it's also possible to control your own wallet by using a hardware wallet like the Ledger wallets, which means nobody but you has access to your wallet's private key.
To buy Bitcoin or any other cryptocurrency, you can create an account on an exchange. Similar to how stocks are sold on an exchange, cryptocurrency exchanges match buyers and sellers up for an agreed price.
What makes a good exchange?
There are tons of exchanges out there. You'll want to know that you're using a good exchange, because you're trusting these companies that they will keep your investments safe. You'll want to consider the following factors when picking an exchange:
- Where they're located - If you're a U.S. citizen, you'll want to use an exchange based in the U.S. because regulations can be different in other parts of the world.
- Customer support - If something goes wrong or you need help, you'll want to know you can get a timely response from someone who can help.
- Past performance - An exchange's past performance is a good indicator of its future as well. Avoid exchanges that have had any security breaches, significant downtime during perirods of high market demand, or other problems that could affect your funds.
- Insurance - Some exchanges are fully FDIC insured, which is great for peace-of-mind.
Which exchanges we like
These are what we think are the easiest and most beginner-friendly exchanges to purchase cryptocurrencies:
- Bitcoin, Litecoin, and Ethereum - Coinbase is a trusted and user-friendly US-based exchange that supports the three big coins. They have secure storage systems and your balances are fully insured.
- Other cryptocurrencies - Bittrex is a great US-based exchange that's only for crypto-to-crypto purchases. That means you can't deposit USD, you would need to purchase Bitcoin first on Coinbase using your bank account or credit card. Then you can send those new Bitcoins to your Bittrex account and trade your Bitcoin for other coins, such as Neo or Vertcoin.
- If you have your own wallet - If you already have a wallet and you just want to use an exchange to trade one cryptocurrency to another, services such as Changelly are a great option. You can convert Bitcoin to Ethereum, or Ethereum to Litecoin, and tons of other combinations instantly.
Many areas of the world have ATMs that can be used to purchase cryptocurrencies with a debit card or cash, especially cities or places with large populations. While crypto ATMs are mostly only for Bitcoin at the moment, they're still one of the easiest ways to purchase. Unfortunately, sometimes the fees on these machines can be higher than if you were to use an exchange.
To find Bitcoin ATMs near you, try Coin ATM Radar.