How to Buy Bitcoin - Beginner’s Guide 2021
How to Buy Bitcoin in 2021
Keep hearing about Bitcoin and wondering how you can buy Bitcoin? Read our beginner's guide on how to buy Bitcoin today!
Have you heard the buzz surrounding Bitcoin and looking to get in on the action? If so, never before has it been so easy to buy Bitcoin from the comfort of your home. In fact, if you have a debit/credit card or e-wallet to hand - you can buy Bitcoin in less than 10 minutes.
If you’re keen to make a purchase right now but don’t have the faintest idea where to start, you’ve come to the right place.
In this How to Buy Bitcoin Guide, we’ll discuss the many ways in which you can invest in this cutting-edge digital currency. We’ll cover what sort of fees you should expect to pay, how to choose the best Bitcoin broker, and ultimately - the steps required to buy Bitcoin today.
How to buy Bitcoin in 5 Steps
If you don’t quite have the time to read this in-depth guide, below we explain the 5 steps required to buy Bitcoin right now.
Buy Bitcoin in 5 simple steps:
To buy bitcoin, the first step is to Open an accout with a regulated exchange, depost funds, select Bitcoin from the trading platform list, and lastly check & confirm the bitcoins have added to your Wallet.
- Open an account with a regulated, commission-free Bitcoin broker like eToro
- Instantly deposit funds with a debit/credit card or e-wallet
- Head over to the cryptocurrency trading area and select Bitcoin
- Enter the amount that you want to invest/buy
- Confirm the order to buy Bitcoin and have the coins added to your eToro wallet
Step 1: Choose an Online Bitcoin Broker or Exchange
Make no mistake about it - if you want to buy Bitcoin online you will first need to open an account with a broker or third-party exchange. If opting for the former, you will be able to buy Bitcoin directly from the broker.
And the latter - this means that you will be exchanging Bitcoin for another cryptocurrency like Ethereum or Ripple. Without a doubt, using a regulated Bitcoin broker is by far the better option - not only in terms of convenience and cost-effectiveness but safety, too.
All in all, there are many factors that you need to consider before choosing a provider to buy Bitcoin from - many of which we discuss below.
Important Factors to consider before choosing a Bitcoin exchange
First and foremost, we would strongly suggest that you only use a platform that is regulated. In doing so, you can feel confident that your money is in safe hands.
After all, the cryptocurrency industry is fraught with stories of multi-billion dollar hacks - so safety and security should be at the top of your priority list.
On the one hand, you have brokers like eToro that are regulated by four separate tier-one bodies. This includes the FCA (UK), CySEC (Cyprus), ASIC (Australia), and FinCEN (USA). This comes with heaps of regulatory benefits - such as a requirement to segregate client funds.
At the other end of the spectrum, you have third-party cryptocurrency exchanges that operate in 100% unregulated manner.
These are often popular for those that wish to buy Bitcoin anonymously or with leverage. But, your money is at severe risk when choosing a platform that isn’t licensed by a reputable body - so crucially - stick with regulated brokers like eToro.
2. Payment Methods
In a time not so long ago, being able to buy Bitcoin online was a nightmare. You had to open an account with an unscrupulous exchange that only allowed you to deposit funds through a bank wire.
In some cases, it would take up to a month for the funds to be credited. Fast forward to 2021 and it has never been easier to buy Bitcoin - not least because the best brokers will accept debit/credit cards.
This allows you to deposit funds instantly and thus - buy Bitcoin straight away. Popular trading site eToro also allows you to deposit funds with Paypal, Skrill, and Neteller. These popular e-wallets are great for adding an extra layer of security on your purchase.
On the flip side, you might want to avoid Bitcoin brokers that only accept bank transfers - as your purchase will be delayed by several days.
3. Fees and Commissions
When you buy Bitcoin online through a broker - you will, of course, need to pay a fee of some sort. The amount that you pay will vary considerably, as well as the way in which you are charged.
With that said, the vast majority of Bitcoin brokers will charge a variable fee. For example, well-known broker Coinbase charges approximately 1.5% per trade. This means that you will be charged when you buy Bitcoin and again when you sell.
For example, if you bought $1,000 worth of Bitcoin, a commission of 1.5% would result in a fee of $15. Then, if you cash out your Bitcoin when it is valued at $1,300, your 1.5% commission would cost you $19.50.
We should also note that Coinbase charges 3.99% on debit card deposits - so on a $1,000 investment that’s an extra $39. All in all - buying just $1,000 worth of Bitcoin at Coinbase cost you $73.50.
This is super-expensive, which is why we suggest using a low-cost Bitcoin broker like eToro. The same circumstances listed above would cost you nothing in commission - as the broker allows you to buy Bitcoin fee-free.
If you want to buy Bitcoin BTC quickly and easily, with 0% commission, check out eToro Exchange!
If depositing funds in a currency other than US dollars - you’ll pay an FX fee of 0.5%. As such, the most you would have paid to buy $1,000 worth of Bitcoin at eToro is just $5 - as opposed to $73.50 at Coinbase!
4. Other Important Factors
On top of regulation, supported payment methods, and fees/commissions - there are many other factors that you need to check before choosing a Bitcoin broker.
- User-Friendliness: If you are looking to buy Bitcoin for the very first time, it makes sense that you choose a platform that is kind to newbies. By this, we mean that the broker should offer a smooth and crisp investment process that requires no prior knowledge of trading or Bitcoin.
- Minimum Investment: Bitcoin is a highly speculative asset class. As such, if you are not used to enhanced price volatility, you might want to choose a broker that allows you to invest small amounts. eToro, for example, allows you to buy Bitcoin with an investment of just $25. This is an inconsequential amount to most people.
- Storage: Although we cover storage in more detail later on, you need to understand what happens to your Bitcoin after making a purchase. For example, while regulated broker eToro stores your Bitcoin on your behalf, other platforms require you to withdraw the coins out to a private wallet. The latter won’t be suitable for newbies.
As you can see from the above, there is much to consider is choosing an online platform to buy Bitcoin. This can be a time-consuming process when you take into account the hundreds of providers active in the space.
Step 2: Come up With an Investment Plan
Before you get to the stage of buying Bitcoin online, it makes sense to devise an investment plan. This will ensure that you have clear targets in mind, as opposed to investing with your eyes closed.
With this in mind, below you will find a range of metrics to consider when setting up a Bitcoin investment plan.
Long-Term or Short-Term
You first need to assess whether you are looking to buy Bitcoin as a long-term investment or to profit from short-term price movements. If it’s the former, this is known as a ‘buy and hold’ strategy.
In other words, you will be buying Bitcoin and holding onto your coins for many months or years. This is more suited to the ‘average’ investor as you will be less concerned with short-term volatility.
Instead, you’ll buy Bitcoin and likely forget about it until it comes to cashing out. On the other hand, some people lie to buy Bitcoin to benefit from the cryptocurrency’s higher-than-normal volatility levels.
For example, it is not uncommon for the price of Bitcoin to go up or down by 5-10% in a single day of trading. As such, if you have some experience in short-term trading, then Bitcoin could be a great asset to consider.
Target Bitcoin Price
Although not compulsory, a lot of seasoned investors will have a price target in mind. For example, let’s suppose that you bought Bitcoin when it was worth $8,000. You invested a total of $10,000 and want to double your money. As such, your profit target is growth of 100%.
Some Bitcoin investors have no interest in gains of 100% and will view this as modest. This is because many believe that Bitcoin will eventually become mainstream - whatever that looks like.
Crucially, it is important to remember that Bitcoin price was worth less than 1 cent a decade ago. With all-time heights of $20,000, this means that Bitcoin has grown by almost 200 million percent in comparison to its first couple of years of trading.
Consider Regular Investments
Timing the cryptocurrency trading market effectively is super-challenging. The reason being is that this particular trading scene moves in an unpredictable manner. Unlike the traditional stock markets - which benefits from almost 100 years of variable data, Bitcoin was only launched in 2009.
As such, the best way to target Bitcoin might be to make small, inconsequential investments. For example - and as noted earlier, regulated broker eToro allows you to invest just $25 per trade.
This means that you could easily invest a bit at the end of each month. In addition to this, regular investing of Bitcoin will allow you to benefit from dollar-cost averaging. This means that every time you buy more Bitcoin, you will do so at a different price.
Put simply, if you believe that Bitcoin is here to stay, then this allows you to buy the digital currency at a discount when its value goes on a downward trend.
Have you considered buying Bitcoin?
Step 3: Open a Bitcoin Broker Account
Once you have chosen an online broker to buy Bitcoin from, it’s then a case of opening an account. This works in exactly the same way as registering with a stock broker, insofar that you will need to provide some personal information.
This includes your full name, nationality, home address, date of birth, and contact details. Now, if you are using a regulated broker to buy Bitcoin - which you should be, then you will all-but certainly need to verify your identity.
This is known as the Know-Your-Customer (KYC) process and it is something demanded by regulators. All you need to do is upload a copy of your government-issued ID (passport, driver’s license, national ID card) and a proof of address (bank account statement, utility bill, etc.),
The bad news is that a lot of Bitcoin brokers take several days to validate your documents, as they rely solely on manual verification teams. The good news is that new-age platforms like eToro automate the verification process. This means that in most cases, your account will be approved instantly.
Step 4: Deposit Some Funds
Once you have opened an account with your chosen Bitcoin broker, it’s then time to add some funds. Whether or not this is a smooth process will ultimately depend on the types of payment methods that are supported.
For example, you can choose from a debit card, credit card, Paypal, Neteller, and Skrill. These are all instant deposit methods, meaning that you can buy Bitcoin straight away.
Unfortunately, some well-known platforms only support traditional bank transfers. As noted earlier, this means that you will need to wait 2-3 working days for the funds to arrive. By that point, you might have missed the opportunity to buy Bitcoin at a favourable price!
We should also note that most Bitcoin platforms will have a minimum deposit policy in place. Much like brokerage fees, this can vary wildly. With that said, you should expect to deposit at least $50 - $200, depending on the platform you choose.
Step 5: Set up a Trading Order
Whether you are buying Bitcoin, blue-chip stocks, or any asset class for that matter - you will need to set up a trading order of some sort. Put simply, this lets the broker know what it is you are looking to achieve.
Although the specific order form layout can vary from broker-to-broker, you typically need to fill in the following fields:
Some trading platforms allow you to speculate on the price of Bitcoin going up and down. If this is the case, then you will be offered both a ‘buy’ and ‘sell’ order.
Without intending to state the obvious, if you want to buy Bitcoin because you think its value will increase, you need to select a ‘buy order’.
You would be surprised how many newbies make this mistake, so do be extra vigilant.
Limit or Market Order
Leading Bitcoin brokers like eToro give you more flexibility when it comes to choosing a purchase price. After all, the value of Bitcoin will change on a second-by-second basis, so it makes sense to invest at the most favourable price possible.
So, if you were to opt for a ‘limit’ order, this allows you to choose the price that you pay to buy Bitcoin. For example, let’s suppose that Bitcoin is currently priced at $15,000 but you only want to invest in the cryptocurrency continues to climb and hits $16,000.
By placing a limit order, your Bitcoin purchase will only be executed if and when the price hits $16,000. If it doesn’t, your order will remain pending until you cancel it.
With that being said, the vast majority of newbies will stick with a classic ‘market’ order. Put simply, this will execute your Bitcoin purchase instantly.
In terms of what you will pay, you will get the next available price. For example, if Bitcoin is priced at $14,500 - then you will likely have your order filled a few dollars above or below this figure.
You do, of course, also need to let your chosen broker know how much Bitcoin you seek to buy. You can usually choose any amount that you like as long as you meet the stated minimum.
Once again, this is just $25 at eToro - but some brokers require an investment amount that is significantly higher.
Finally, once you are happy with your limit/market order and stated stake size, you then need to confirm the order. Once you do, the Bitcoin will be added to your portfolio at your chosen broker.
Step 6: Storing Your Bitcoin
Bitcoin is a digital currency that does not exist in physical form like pound notes or dollar bills. Instead, Bitcoin lives on a decentralized ledger called the ‘blockchain’. In simple terms, this means that the Bitcoin network is not owned or controlled by any single person or entity.
Taking this into account, the standard process of storing Bitcoin requires a digital wallet. This can be downloaded to your desktop device or mobile phone via an app. There are also web wallets too, which allow you to access your Bitcoin through an online browser.
Although a lot of Bitcoin enthusiasts like the idea of withdrawing their coins to a private wallet - subsequently giving them 100% control of their funds, this isn’t really suitable for somebody without the required know-how.
This is why we think it is better to buy Bitcoin from a regulated broker that they safe-keep your investment for you. For example, once you buy Bitcoin at eToro, you don’t need to worry about sending it a decentralized digital wallet. Instead, the funds will remain at eToro until you decide to cash out.
Step 7: Selling Your Bitcoin
This section will see us conclude our guide on how to buy Bitcoin in 2021. Ultimately, if you are looking to buy Bitcoin online, then this is likely because you are looking to make financial gain.
That is to say, the overarching objective is to sell the Bitcoin for more than you originally paid. When the time eventually comes, you will want to cash out your Bitcoin in the easiest and most cost-effective way.
Whether or not you are able to do this will depend on the method you took when you bought the coins. For example, if you made a purchase through a trusted broker, you can sell your Bitcoin back to cash in a matter of seconds.
In fact, as cryptocurrency can be bought and sold 24 hours per day at eToro, as soon as you click on the ‘Sell’ button the cash will appear in your eToro account. Then, you can withdraw the money straight back to your debit/credit card, e-wallet, or bank account.
If, however, you opted to buy Bitcoin and then withdraw it to a private wallet, the cashout process is a lot more cumbersome. Firstly, you need to transfer the funds from your private wallet to the wallet of your chosen cryptocurrency exchange.
Then, you will need to exchange the Bitcoin for a real currency like USD or EUR. This will, of course, come at a fee. After that, you will need to execute a bank transfer.
Other Ways to Buy Bitcoin in 2021
Looking for a specific way to buy Bitcoin in 2021 that we haven’t quite covered in this guide? If so, check out the options listed below that you also have at your disposal.
Buy Bitcoin Debit Card
Most first-timers will often look to buy Bitcoin with a debit card. This is because debit cards are something that most of us possess - and transactions are usually processed instantly.
In addition to this, when it comes to cashing out your Bitcoin most platforms allows you to send the funds back to the same debit card. eToro, for example, allows you to deposit funds with a debit card at the click of a button.
All you need to do is enter your card details and meet a minimum deposit of $200 and you’re good to go. Supported debit card types include Visa, Visa Electron, MasterCard, and Maestro.
Buy Bitcoin Credit Card
If you want to buy Bitcoin with a credit card, this is possible. However, we should make it clear that your credit card issuer might charge a ‘cash advance’ fee for the purchase.
This isn’t always the case, but if it is - then this usually amounts to 3% of the purchase amount. The interest on cash advance payments kick in straight away, so do bear this in mind.
Nevertheless, eToro once again allows you to deposit funds with a credit card. The transaction is processed instantly and you can withdraw your money back to the same card when it comes to cashing out your Bitcoin.
Buy Bitcoin Paypal
Paypal is yet another option that you have at your disposal when it comes to buying Bitcoin online.
In fact, if you are able to find a platform that supports this popular e-wallet, you will normally benefit from an instant transaction.
Withdrawals are usually processed faster than debit/credit cards too. eToro offers a good selection of e-wallets - including Paypal. It also supports Skrill and Neteller.
We should also make reference to Bitcoin ATMs. Put simply, these are physical ATMs scattered around the world that allow you to insert cold-hard cash. In turn, you receive an equivalent amount of Bitcoin - less fees.
On the one hand, this is a great option for those of you that want to avoid buying Bitcoin online and instead prefer an offline experience. However, Bitcoin ATMs - although convenient, do come with several drawbacks.
For example, fees will often cost you in excess of 10% - which is huge. You also need to be comfortable with operating private Bitcxoib wallets, as you will need to transfer the funds after making the purchase.
This can be done by scanning the QR code on your mobile wallet. Or, by making a manual transfer later from the private keys displayed on the receipt that the Bitcoin ATM prints.
How to Buy Bitcoin 2021 - The Verdict
In summary, this guide has showcased the many things that you need to consider when buying Bitcoin online. As we have concluded, the easiest and most cost-effective way is to use a broker.
For example, our top-rated platform eToro - which is regulated by four reputable bodies, allows you to instantly buy Bitcoin with a debit/credit card or e-wallet.
The best thing about eToro is that it does not charge any commissions - so you can buy Bitcoin in a 100% fee-free environment!
And of course, as there is no requirement to withdraw your Bitcoin out to a private wallet, it takes just seconds to cash out your investment.
The whole Bitcoin buying process outlined above took less than 5 minutes. Create an account, Verify your Mobile phone number, Add a payment method, buy Bitcoin and Check your Bitcoin digital wallet.
eToro – Buy Bitcoin with 0% Commission
eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.
How easy is it to buy Bitcoin?
It is now extremely easy to buy Bitcoin - but, this will ultimately depend on your chosen online platform.
For example, you’ll want to pick a broker that accepts instant payment methods like a debit/credit card or e-wallet. In doing so, you can buy Bitcoin from the comfort of your home in just a few clicks.
What is the safest way to buy Bitcoin?
The safest way to buy Bitcoin is to use a fully-regulated online broker. This should include a reputable licensing body like the FCA (UK), ASIC (Australia), or SEC (US).
Can I buy $100 of Bitcoin?
You certainly can. In fact, is using regulated broker eToro - you can buy from just $25 of Bitcoin!
Can you lose money on Bitcoin?
Whether it’s stocks, bonds, ETFs, or Bitcoin - all financial assets can result in a loss. After all, the value of Bitcoin will go up and down in the open marketplace. Ultimately, if you sell your Bitcoin for less than you paid, you will lose money.
What is the most Bitcoin has been worth?
Bitcoin last hit all-time highs in late 2017 - where it reached a price of just under $20,000.
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Warning: Cryptocurrencies carry a high degree of risk