A “First-Time” Layman’s Guide to Purchasing Bitcoin
If you are a newcomer to the cryptocurrency space and are unfamiliar with how it works, here is a brief introduction:
Bitcoin is a peer-to-peer digital currency that enables cross-payments throughout the world without a centralized intermediary like a central bank or government institution. The undergirding technology, blockchain technology, is a digital ledger that records transactions in an immutable manner that cannot be tampered with. The beauty here is that all transactions are verified through mining blocks, groups of “transactions” that cannot be tampered with.
There are many ways an individual can purchase bitcoin and other cryptocurrencies. The most popular destination to purchase cryptocurrency, most notably in the United States, is Coinbase, a digital exchange platform that was founded in 2012. While users can purchase over twenty different cryptocurrencies on this site, let’s start with bitcoin, the largest and most common form of cryptocurrency.
To purchase bitcoin here, you first have to set up a Coinbase account. Here you will be prompted to complete some basic information for identity verification purposes. Coinbase will request information from you such as a driver’s license or other form of government issued ID to prove your existence.
After you have completed this process, you will be prompted to add a bank account/debit card. This will allow you to not only purchase bitcoin but convert your cryptocurrency back into your main (fiat) currency if you ever choose to cash out.
Coinbase will now conduct a verification review before granting you the ability to make a bitcoin purchase. If you are approved, it is very important to understand that you do not need to purchase an entire Bitcoin or even a half of one.
This is a common mistake and misconception, namely that an individual has to purchase an entire cryptocurrency to obtain ownership of that coin/token. With cryptocurrency. So keep in mind that every coin is a unit of account, meaning many coins can be bought in fractions, including bitcoin.
With Coinbase, Gemini, or even PayPal, there is a minimum purchase one can make, which is generally in the $2.00 – $5.00 range. Your cryptocurrency journey can begin easily with a purchase of less than ten dollars.
When making a cryptocurrency purchase, in this example, Bitcoin, you need to go to a wallet associated with Bitcoin. On Coinbase, after clicking your bitcoin wallet, there will be a buy option. It will then show you what payment methods you have for buying Bitcoin. After you have executives a purchase, your transaction will typically be listed as pending depending on the method of payment you use.
An initial mistake people make when purchasing their cryptocurrency is assuming that the cryptocurrency you purchased will hit your digital wallet immediately. This may not necessarily be the case as there are many factors such as your bank or whether you used a debit or credit card.
It is also crucial to understand that you’re at the mercy of the market when you are waiting for a transaction to complete. Let’s say for example, you purchase one full bitcoin at $20,000 USD. So if bitcoin lets say drops to $19,000 by the time your transaction completes, you’ll end up with $19,000 dollars worth of bitcoin. In other words, while the amount of bitcoin your purchased remains constant, its dollar value is subject to change.
However this is not the case when selling your Bitcoin into fiat money. Here, the price you sell at is the price you’ll get in your account.
Keep in mind that the procedures of each bitcoin exchange can vary greatly. By way of example, on Gemini, it’s important to note that in order to utilize a bank account, you must first submit a wire transfer worth $100.00 from your bank account for verification purposes.Upon successfully completing this step, your bank account will be verified so that you can purchase bitcoin or another cryptocurrency listed on that site.
Let’s now talk about the immense amount of value the global payment platform PayPal has brought to the cryptocurrency space since allowing for customers to purchase bitcoin on their platform. On PayPal, all an individual has to do, like depositing cash into their PayPal account, is choose the cryptocurrency they want to buy out of the four that are listed as of now. Once purchased, the cryptocurrency will be held in your PayPal wallet.
PayPal has made it extraordinarily easy for cryptocurrency consumers to enter the market because of the simplicity of their model. In essence, it is like the process of depositing money into your PayPal account. As of right now PayPal users can purchase Bitcoin, Ethereum, Litecoin or Bitcoin Cash on the PayPal platform with the company offering brief introductory lessons on the intricacies of cryptocurrency, Bitcoin and blockchain technology.
The great news in all of this is that as time has pressed on, cryptocurrency accessibility is becoming more and more accessible to those new to the space. With Coinbase, Binance, PayPal, Gemini and about 80 more exchanges, the ability to purchase and begin your cryptocurrency journey is becoming easier and easier.
This article hopefully has provided you with a rudimentary understanding of the basic principles of cryptocurrencies and how to purchase them. Through this simple guide, you will be on your way to purchasing your first piece of cryptocurrency, joining the 21st-century paradigm of digital finance.