How To Buy Bitcoins
Buying bitcoin is easy if you know how and can be overwhelming if you don’t. Let take a look at how to make buying bitcoin fast and easy. First you need to have a basic understanding of how a bitcoin is purchased, stored and traded.
Trading: The Bitcoin Exchange
Wallets: Bitcoin Storage
Once a bitcoin is purchased, it is stored in a wallet. This is like an online bank account for your bitcoin. You can login to your wallet and see the number of bitcoin you have and their value, based on the current exchange rate. Every wallet has a Bitcoin Address. This is a series of letters and numbers that uniquely identify your wallet, much like a routing and account number at a bank. A Bitcoin Address looks like this:
Purchasing: Exchanges and Wallets
The easiest way to purchase bitcoin is to use an exchange that has its own wallet. This means that you can buy your bitcoin and store it in the same location. There are a few sites you can go to buy bitcoin that are also wallets: Coinbase and Bitstamp to name a couple.
When choosing an exchange/wallet service you will want to look at:
- Fees they charge for processing
- Time it takes for deposit
- What banking system they use
Coinbase charges a 1% fee plus a $0.15 bank fee. A normal ACH transfer takes 4 to 5 business days unless you use their “Instant Buy” feature, in which case you will get your bitcoin instantly. The Instant Buy feature works by connecting your credit card to your account instead of just a bank account. Coinbase is American based and works with US bank accounts.
Bitstamp fees are based off a fee schedule starting at 0.50% for transactions under $500. They are best for non-US based accounts and work with the EU Bank (SEPA), and international wire transfer.
Setting Up Your Account
We are going to walk through the setup process using Coinbase.
Step 1: Go to Coinbase.com and click Sign Up
You will be prompted to enter in your email and password. Then click create account or create bitcoin wallet
Step 2: Verify your email address. You will receive a verification email from Coinbase, if you do not see it after a couple of minutes make sure to check your junk mail box. Click the link in the email to verify your account. You will then be prompted login. Next you will be asked to review their user agreement, enter your name and accept their user agreement.
Step 3: You will be asked to review and sign the user agreement. Just type your full name in the space provided below the agreement and click Accept.
Step 4: Go to Settings and click thePersonal Details tab. You will be able to enter in your full legal name, birthday and address. You can also add your phone number for extra verification on your account.
Step 5: To verify your phone, add your phone number and click next. Click the link for Text Message or Phone Call. Coinbase will call or text you an authorization code. Enter the code in the box that says 7 digit code.
When you set up an account, you wallet is automatically created for you. You can view your wallet by clicking My Wallet or Accounts in the side menu. You will be able to see your bitcoin balance in your wallet and the valuation in USD. Your account is now set up and you are ready to buy your bitcoin.
Adding Your Bank Account
Before you can by your first bitcoin, you have to connect your bank account.
Step 2: Select the type of bank account you will be using and then enter the routing and account number.
Step 3: You have 2 options for verification. Option1, you can provide your online bank account login credentials, and your account will be verified by a successful test login from Coinbase. Option 2, Coinbase will make 2 small deposits in your account. After 2-3 days, you will see those amounts in your account. Then go to the Verifications, click Verify Account and enter in the amounts.
Adding Your Credit Card
A credit card cannot be used to buy bitcoin directly through Coinbase (It can through TruCoin). Adding a credit card is purely a backup payment only. Adding a credit card eliminates any waiting period for delivery of your bitcoin
Step 1: Go to Buy/Sell and click Payment Methods
Step 2: Click Add A Credit Card.
Step 3: Click I agree to these terms.
Step 4: Enter in your credit card information and click Add.
Step 5: Coinbase will initiate a charge verification, like they did with your bank account. They will make 2 small amounts authorization charges on your credit card. You will see them in your accounts pending transactions list. Once you see those, come back to the Coinbase Payments Method tab on the Buy/Sell page. You will see your credit card listed under the Credit Cards heading. Click the verify link underneath your credit card. This amounts may post to your accounts as quickly as 2 minutes or may take as long as 2-3 days.
Once you have added your credit card, you bitcon purchases will be processed immediately and you will see the newly purchased bitcoin deposited into your wallet.
Step 1: Go to Buy/Sell.
Step 2: Enter in the amount of bitcoin you would like to purchase in the box marked Buy Amount. You will see the current value of bitcoin next to the Buy Amount box. This is the price at which you are purchasing your bitcoin. The lowest amount of bitcoin you can purchase is $0.10.
Step 3: Chose the wallet you would like to have your bitcoin sent (deposited) to. By default this will be the wallet that was set up when you created your account. If you have created more than one wallet, you can chose an alternate wallet.
Step 4: At the bottom of the invoice you will see the Coinbase fee and the Bank fee ($0.15), and then your total purchase amount. This is the amount that will be drafted from your bank account. If that amount is acceptable, click Buy Bitcoin.
You will see your newly purchased bitcoin appear in your wallet in 4-5 days, or immediately if you added a credit card.
Increase Your Buying Limit
If you are trying to buy bitcoin and you are running into a daily limit you may need to provide a secondary verification to increase your buying limit.
Step 1: Go to Verifications. Under the Level 2 header click Verify Your Identity. Enter in your personal information:
- Last 4 digits of your social security number
Step 2: You will be asked a series of identification questions based on public record. Answer these questions correctly and your account will be verified.
Once you own a bitcoin or two you will be able to start spending your bitcoin at merchants all over the world! You can find bitcoin merchants at Bitscan.com, the worlds largets bitcoin merchant directory and bitcoin map. Start by looking at who is accepting bitcoin in your neighborhood.