How to Buy Bitcoin in 5 Easy Steps
A step-by-step guide for beginners ready to buy their first Bitcoin
Boring legal disclaimer: I am not a financial advisor. This is for educational purposes only, not financial advice.
Before you buy bitcoin, you should understand these key things. Bitcoin isn’t a stock or a company; it is a currency just like USD or YEN. Because it is a currency, you don’t need to buy one whole bitcoin to start investing. You can buy fractions of bitcoins, just like you can have fractions of a hundred dollar bill.
You are ready to buy Bitcoin once you can answer these questions:
- What is Bitcoin?
- What is the Blockchain? (the basics)
- What is inflation?
- Why are you buying bitcoin?
If you struggle to answer any of these, I recommend checking out my earlier blog on Bitcoin for beginners. Check it out here!
To make a profit from Bitcoin (BTC), you must hold your investment long-term. This means keeping it for months or years, not day trading.
One of the worst things you could do as a bitcoin investor is buying some bitcoin and selling in a panic as soon as you see the value drop. There’s a name for this type of investor — paper hands. Don’t have paper hands, have diamond hands! 💎 🙌
Another key piece of knowledge, a hard truth, Bitcoin is highly volatile (not necessarily a bad thing). The price per coin can increase by $1,000 in a day and drop by $2,000 the next minute. Despite this volatility, it is volatile it has been volatile in an upwards direction for several years.
Bitcoin is not disappearing anytime soon, just like the internet is not going anywhere. It is a currency that holds its value and has been in use for over a decade. The banking systems do not want to lose their power over your money and will do anything to convince you that Bitcoin is a fad that will disappear any second now. If you’re ready to declare independence from a banking system designed to leave you in debt and take control of your finances, you are ready for Bitcoin.
As always, before deciding to spend your money, follow the cardinal rules of investing:
- Don’t invest in something you don’t understand.
- Don’t invest money you can’t afford to lose.
(stonks do not always go up)
Without further ado, here are the 5 steps to buy bitcoin:
- Research
- Choose a wallet/storage
- Verify your identity (usually a photo of your driver’s license)
- Depositing fiat funds (such as USD, EUR, PESO, etc.) — wire transfer or otherwise
- Buy your coins
Step 1: Research
Decide which coin you are going to buy. I recommend sticking with Bitcoin if you are new to crypto since Bitcoin is the most used, secure, and reliable cryptocurrency at this time.
Cryptocurrency is to a website as Blockchain is to the internet.
In other words, pretend it’s 2009 — Bitcoin is Google, and anything else is Yahoo or Ask Jeeves. You could take your chance investing in any other dot com, but you’re probably better off with Google.
Hype runs rampant in the cryptocurrency space. You may find some niche coins that make grandiose claims about the purpose they serve and the returns you can make. However, with a bit of research, you’ll find it’s not a wise investment option.
Besides googling information about different crypto coins, CoinMarketCap and CoinGecko are great resources. These sites list all available cryptocurrencies, prices, and detailed information about each one.
Step 2: Choose a wallet/storage
Storage generally falls into two categories: third-party custodians or local storage. In this article, I will cover how to buy crypto through a trusted custodian vs. holding crypto in a self-managed hardware wallet for simplicity’s sake. If you are interested in the extra security and privacy that a hardware wallet allows, please check out this video: Hardware Wallets Explained
- When choosing a trading app to buy Bitcoin through, consider the reputation and reviews. What are people saying about the app?
- Next, consider if there are any benefits like interest. Some wallets give you up to 10% APY! Imagine if your savings account did that?
Back in the 50s, our parents and grandparents could put money away and expect that savings to increase. Due to inflation, money left in savings today loses value faster than it can gain a measly APY of .4%. Because of severe inflation (which is under-reported), no one can raise a family, buy a house, and retire on a minimum wage job anymore!
Learn more about the ominous state of US inflation here: Inflation Explained Simply
Currently, I earn 6% APY with Blockfi. That means if you put $1000 into BTC, with Blockfi’s 6% APY, you’re making $60 of passive income per year. However, this doesn’t include the compound interest calculated daily. Let’s run this through a compound interest calculator and see what we make in five years…
An initial investment of $1,000 with compound interest calculated daily over five years will net you a total of $350, just from letting your money sit there! This is assuming you never invest more than your initial $1,000. On top of $60 x 5 (years), you are making an additional $50 from the compounding interest.
After ten years, your $1,000 becomes $1,823.
Check out this compound interest calculator to see how much you could make with 6% APY.
Having tested several different crypto Exchanges/Wallets, here are some of my favorites:
Blockfi
- Earn $10 in BTC when you trade $100 or more (using my code)
- Earn 6% APY on 0–2.5 bitcoins (interest calculated daily, paid out every month)
- Earn 3% APY on additional bitcoin above 2.5
- Phone app available
(This is one my of main choices for storing crypto)
Square Cash
- Get up to $15 when you join using my code
- Most simple bitcoin wallet to use (my grandma uses this)
- Free debit card with rewards like 10% bitcoin back, $5 off DoorDash, or 15% off Shake Shack ( I made $100 in 3 months through bitcoin rewards)
- Ability to buy cryptocurrencies and stock
- Phone app available
Code: XHVSRKZ
Robinhood
- Get one free stock
- Fastest purchasing (some applications are microseconds slower, and the price for bitcoin can change by the second)
- Low fees (for purchasing stocks)
- Ability to buy cryptocurrencies and stocks
- Phone app available
Click here to download and get free stock
Coinbase
- Earn $25 in BTC when you trade $100 min.
- Earn free crypto by watching short 2–4 minute videos
- Phone app available
Code: torres_st87
I recommend downloading Coinbase even if you don’t invest with them, simply because you can earn free crypto coins by watching educational videos. I’ve made $50 so far!
Voyager
- Earn $25 in BTC when you trade $100 min.
- Earn 6.25% APY when you hold a minimum balance of 0.010000 BTC
- Low transaction fees (sending and receiving cryptocurrency)
- Phone app available
Code: 2DA601
Please note: this article was written in April 2021, some of these offers may change over time
Lastly, when deciding which application to purchase Bitcoin from, make sure you can move your coins around. Since owning crypto is like owning the key to access your money, you can actually move the key around. Some people choose to hold their digital keys (crypto coins) in a hardware wallet. This could be compared to storing your credit card information in autofill vs your wallet.
One way offers more security, but one offers more accessibility.
A hardware wallet is a high-security wallet, usually a USB drive or other physical device. This device enables you to store bitcoin or other crypto coin funds offline. You connect it to your computer when you need to manage your funds.
Some applications give you crypto “exposure” but do not actually allow you to move or hold your crypto keys. They will allow you to sell your crypto for profit, but never actually hold the access. If you wanted to move your coins to a hardware wallet, this would be an issue.
If you’re interested in using a hardware wallet, I recommend checking out Ledger
Step 3: Verify your identity
After deciding which app you’ll be using to buy and store your crypto, you need to create your log-in details and verify your identity. This process usually requires a photo of the front and back of a valid ID and yourself.
The confirmation typically takes 1–3 days.
Step 4: Deposit funds
When you are verified, you’ll be able to connect your bank to your account and add funds. This process is more straightforward with some applications than others. Square cash is one of the most simple to deposit funds. On the other hand, Blockfi involves slightly more work but has a higher reward in the form of interest.
Step 5: Purchase Bitcoin
Once your funds have been deposited, you’re ready to buy Bitcoin!
These apps are pretty simple to download and set up, but if you run into any issues, below are video walkthrough links to help you through the process of buying your first Bitcoin on each of the platforms listed above.
Should I wait to buy bitcoin?
In early December 2020, bitcoin was $18k per coin. My husband and I saw the opportunity and suggested many of our friends buy ASAP. The majority of people said, “Eh. I’ll wait till the price goes down.” Later that month, it was $27k per coin. In January 2021, it reached $40k. The moral of the story, no one can predict prices in the future, but Bitcoin is not slowing down for anyone. Buy now and hold on for dear life. (HODL)
Earn FREE Bitcoin
Here are some ways to earn Bitcoin (and other cryptos) for free!
These are all tools I have tried, I wouldn’t make a recommendation unless I had first-hand experience making money with it. 😉
Lolli
- Earn up to 3-27% bitcoin back on purchases from places like Gap, Sephora, Expedia, Groupon, Old Navy, and more!
- Lolli can be downloaded as a browser extension or an app.
- Earn $10 in free bitcoin when you use my code and shop
Square Cash Debit Card
When you sign up for square cash, opt-in for their free debit card. You simply load the card with money and use it like a regular debit card.
- Get $15 when you sign up with my code: XHVSRKZ
- Earn 10% back in bitcoin
Sign-up bonuses
- With the codes in Step 2, you can earn up to $25 of free bitcoin when you buy your first $100 of crypto
On Twitter, a number of high-profile investors and Crypto apps run free crypto contests. If you follow them, you might come across a contest and win! Be wary of scams asking for personal information. The only information someone needs to send you BTC is the wallet address, not a password.
Here’s what I and a few friends won from Cash’s last contest!
I just got what they did there with the emojis… 🐝🍵🌊, get it? Bee tea sea 😂
Here are some trusted Twitter pages that host giveaways:
Bitcoin is for people who are tired of being in debt to maintain a basic standard of living.
Bitcoin is for people who don’t trust big banks have their best interests in mind.
Bitcoin is for people who are tired of their savings being depleted.
Bitcoin is for people who want the option to retire.
I hope this has been helpful to walk you through the simple steps to buy bitcoin. Buying bitcoin is a major step towards financial security and I wish you luck in your journey to freedom from inflation. Feel free to reach out to me with any questions you have about crypto!
Follow me on Twitter for crypto memes and education @Kayto_Han
To learn more about inflation and how it’s depleting your savings account, click here
