GUEST:
Here’s a mind blowing fact: If you bought $500 worth of Bitcoin in 2009, you’d be worth more than Tiger Woods today. After six years of news, court cases, regulation, and investments, most people would agree that Bitcoin isn’t a fad.
As Federal Reserve Chairman Ben Bernanke has pointed out, “[Virtual currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.” In our increasingly digitalized economy, Bitcoin is quickly becoming an innovative alternative to legacy technology.
It’s easy to see why there is so much hype around Bitcoin, but where can people buy Bitcoins today?
One option is to mine them, though I’ll save you the hassle of going down that road. There are easier methods of getting a hold of Bitcoin, like purchasing it with a fiat currency.
Below is a guide for how you can buy Bitcoin.
Online Wallets
After years of becoming accustomed to using services like PayPal for online money transfers, a number of companies in the Bitcoin industry have built similar platforms as trusted providers to enable users to easily buy and sell Bitcoin using a bank account.
Mass consumer adoption for Bitcoin is a primary objective of most Bitcoin companies and they’re constantly making their applications easier to use. As a result, many Bitcoin wallet services allow you to purchase Bitcoin straight from your wallet.
Online wallets allow you to withdraw cash from your bank account and convert it to Bitcoin at the current exchange rate. Most online Bitcoin wallets allow you to hold your bitcoin on their platform and use the account to pay for goods and services, much like PayPal. But, since each one carries different features, it’s important to choose one that fits your needs.
Below are a few services that allow you to buy and sell Bitcoin through their online wallets:
Circle – Circle provides an Bitcoin wallet that also enables you to purchase Bitcoin. After purchasing, you’re able to send funds with a text message, email, or wallet address. When you buy Bitcoin with a Circle wallet, you’ll receive a portion of your Bitcoin instantly and get the remainder after a few days. Circle’s services are available to users in the United States.
Coinbase – Coinbase is one of the most funded companies in the Bitcoin industry. Their platform provides a way to buy/sell Bitcoin and send funds with an email or wallet address. The company charges a 1% fee for Bitcoin purchases, which users receive in 3-4 business days. Coinbase also offers users to store their Bitcoin in a Vault account. Coinbase is available in 24 countries.
Snapcard Bitcoin Wallet - Snapcard offers a online Bitcoin wallet that supports Bitcoin and two other major digital currencies (Dogecoin and Litecoin). Users are able to create an account, attach their bank account and buy Bitcoin instantly. You can also send bitcoins to other users with a text message, email, or wallet address. Snapcard is available to users is the United States.
Wire to Exchange
After the collapse of MtGox in 2014, the largest Bitcoin exchange of its time, some people are slightly hesitant to send international wires to exchanges or hold funds on exchange platforms. But that hasn’t stopped exchanges from being another popular service to buy cryptocurrency.
Unlike Bitcoin wallets, where users purchase Bitcoin directly from the wallet service provider, a Bitcoin exchange serves to facilitate trades between users who wish to buy and sell Bitcoin. Below is a quick list of some of the biggest players out there:
BitStamp - As one of the most popular exchanges in the world, BitStamp has grown to prominence as a reliable exchange to buy and sell Bitcoin. New users submit documents (copy of photo ID, proof of residency) which takes 1-2 days to verify new accounts. Users then make bank wire transfers to deposit funds onto the exchange platform, which can take 2-5 days. Once funds are in the account, users can buy and sell Bitcoin between users. Trading fees start at 0.5% and decreases with higher volume. There is also a small fee to withdraw funds from the exchange that varies from country to country.
BTCChina – By sheer trading volume that takes place on Bitcoin exchanges, BTCChina controls 70 percent of the market share. Although the Bank of China restricts renminbi (Chinese currency) deposits and withdrawals from Chinese Bitcoin-related companies, BTCChina has found workaround solutions for its domestic traders, while managing to scale internationally by launching USD trading accounts. Users are subject to a rigorous sign-up process before being allowed to buy and sell Bitcoins. Once the account is set up and fully verified, trades are free, and withdrawal fees are 0.38%.
In Person Meetings / Marketplaces
Although there seems to be many different ways to purchase digital currencies, when Bitcoin first started, enthusiasts had to either (1) mine Bitcoins, or (2) find somebody that would sell them Bitcoins. People all over the world connected to exchange goods or services for Bitcoins. This exchange has sprouted some of the most industry-changing companies that have helped accelerate the digital currency community. These methods are still thriving today:
LocalBitcoins.com – Another option to buy digital currency is through a marketplace called Localbitcoins.com. LocalBitcoins acts as the trusted party by holding funds in an escrow account and releasing them after both parties have agreed to a price and quantity. Alternatively, it lets you schedule meet-ups where you can interface with someone in person, have them send you bitcoins, and pay in cash. There have been a few reported incidents, but for the most part it has been successful in creating the largest person-to-person Bitcoin exchange today.
Local Bitcoin Meetups – Another way to buy digital currency is to attend local Bitcoin meet-ups, where you can hang-out with other bitcoiners locally. Most attendees will be happy to help you get Bitcoin and grow the user base. Additionally, it’s a great place to hear about the latest news in the industry from local Bitcoin companies and experts in the Bitcoin space.
Bitcoin ATMs
Just like regular ATMs, Bitcoin ATMs are popping up in most major cities. Using a Bitcoin ATM Finder, you can enter your address and find a location near you. Like traditional ATMs, Bitcoin ATMs are operated by a number of companies that all charge varying fees. The biggest difference between Bitcoin ATMs and regular ATMs is the fee structure. Instead of charging a flat rate, most charge a percentage of the total transaction (typically 5-10%). Additionally, you’ll need a verified phone number and usually a photo ID in order to use a Bitcoin ATM. Still, they provide the convenience of accepting cash and converting to Bitcoin instantly and because of their familiar form-factor, most users can get Bitcoin relatively painlessly.
The Bitcoin ecosystem is growing quickly and the number of ways to easily and securely buy cryptocurrency is only expanding. Online wallets still provide one of the fastest ways to purchase Bitcoin online. With companies improving the design and consumer-friendliness of instant purchasing online, it’s becoming easier to see the possibility of consumer adoption just around the corner.
Plus the proliferation of Bitcoin ATMs around the world makes it easier to explain cryptocurrency to older generations and those less comfortable with online banking.
However you choose to purchase your Bitcoin, there are more options today than ever before – a huge sign of success for the expanding Bitcoin industry.
Ioannis Giannaros is the COO and co-founder of Snapcard, a company that on-boards consumers and merchants to Bitcoin and alternative decentralized digital currencies.
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