How Do You Buy Bitcoin?

How Do You Buy Bitcoin?

So you want some Bitcoin the most globally known cryptocurrency that has attracted everyone’s attention, but how do you actually buy a Bitcoin? Well, the most common place to puchase some Bitcoins is to go into an online marketplace, also known as an exchange or cryptocurrency exchange. Basically, its a website which you can buy or sell bitcoin essentially the same way you buy any other product or service online. The most popular cryptocurrency exchange is Coinbase which acts like a digital currency exchange or broker for millions of users worldwide. For a full list of exchanges and pros and cons see our Where to buy bitcoin guide.

Have a Bitcoin Wallet

When you are buying Bitcoin, you will need somewhere to store it. Think of this as a "virtual wallet" or "Bitcoin wallet" where you can download it for your computer or a mobile app for iOS or Android mobile phones. There are various different types a of bitcoin wallets you can choose from including paper wallets, software wallets, hardware wallets, hot wallets and cold wallet.

Buying Bitcoin using a Mobile App

When you have downloaded wallet which is a mobile app. You can link it to a traditional payment method like your debit card, credit card or bank account to use to purchase the Bitcoins. After the Bitcoin purchase is confirmed, the Bitcoins will be transferred into your virtual wallet on your phone. Storing your Bitcoins on a mobile phone could lead to your wallet being vunerable to hackers so it is recommended to have only a small amount stored on your phone and the rest on a hardware wallet that safe and secure in a hardware device that looks similar to a USB. Most experts consider that hardware wallets are more secure due to the fact that they can be physically disconnected from the internet and have built it cryptographic protection.

Your Private Key Stores Your Bitcoins

Make sure to remember that your private key is access to your Bitcoins. Whomever controls the private key, controls the Bitcoins.

Bitcoin Storage

Who Controls the private key?

Bitcoin Exchange

The exchange company

Hardware Wallet

Your USB device

Software Wallet

Your computer program

Paper Wallet

The paper

Although most Bitcoin exchanges do offer users wallet security, there has been numerous cases in the past where users have lost their Bitcoins completely as wallet private key is controlled by the exchange company and not by you.

This is why, you should consider transferring your Bitcoins into a more secure wallet such as a hardware or paper wallet. Due to Bitcoin balances being stored using a public and private key (which is basically long strings of numbers and letters connected with the mathematic encryption algorithm) that was used to create them. The public key is similar to a bank account number so its publicly shared with others to send Bitcoins to you. While on the other hand, the private key is similar to your debit cards PIN number which should be guarded like your debit card or credit card. The private key is required to authorize the Bitcoin transmissions.

About the Author

Sam Deering

Sam Deering

Sam is a blockchain and cryptocurrency enthusiast, crypto trader, web developer, entrepreneur and also the founder of Crypto News Australia.