Buying bitcoin for the first time can be intimidating because the very concept of bitcoin is complex and different from traditional currencies. Bitcoin is also very different from physical assets like gold and real estate – you can’t see or hear a bitcoin! Also, choosing where and how to buy bitcoin can be a daunting task, but if you’re willing to put in the time and effort to learn the basics, the process of buying bitcoin can be easy.
This article will help you understand what these basics are so that buying bitcoins is less intimidating.
The learning curve
If you’re new to bitcoin you might be wondering where to start. Understanding bitcoin has a learning curve, and you’ll want to take the time to learn how it works. Having a better understanding of bitcoin will make it easier to buy because you’ll know the “why” behind the steps involved.
First, you’ll want to learn about bitcoin transactions and blockchain because when you buy bitcoin you’ll encounter things like transaction fees and the need to wait for transaction confirmations. Bitcoin transactions consist of cryptographic signatures that contain public and private keys. Your private keys control your bitcoins and if someone else has access to your keys, they can spend your bitcoins. So, it is very important to have a good understanding of bitcoin security. Bitcoin wallets control your public and private keys for you, and each wallet has several trade-offs between security and ease of use. Make sure you choose a wallet that has the features you need. Check out our review of the best cryptocurrency wallets.
There are several ways to buy bitcoins, from bitcoin ATMs to local vendors, but most people choose to buy their bitcoins from an online exchange. Bitcoin exchanges are marketplaces that allow users to exchange traditional currencies for bitcoin and vice versa. Some companies buy bitcoins and sell bitcoins directly to their customers. These companies are not technically exchanges, but are often called exchanges because of their similarity from a user’s point of view. When we mention exchanges in this article, we also include this type of activity.
Once you learn the basics of bitcoin, the next step is to choose an exchange to buy bitcoin from. This can add to the difficulty of buying bitcoins because there are so many exchanges to choose from. Check out CryptoVantage’s list of the best cryptocurrency exchanges to help you make your decision.
When you sign up for an exchange, you will typically be required to prove your identity by sending photo ID along with some additional personal information. Exchanges are required to know the identities of their users – a rule known as Know Your Customer (KYC) – due to anti-money laundering (AML) laws. This can be a big hurdle for newcomers since it is a much more complex registration process than regular websites. However, once you have registered and proven your identity, you will be able to continue buying bitcoins without repeating the process. Check out our exchange reviews for more information on the specific processes of registering and identifying many popular exchanges.
You may be reluctant to buy your first bitcoin because you’re concerned about the responsibility that comes with keeping it safe. With a little research, you will find that there are many resources available to help you with this. The most important thing to keep in mind is that anyone with access to your private key can spend your bitcoins, so be sure to protect your keys! Check out our “How to spot cryptocurrency scams” guide to protect yourself from scammers trying to steal your private keys, and remember to keep multiple physical backups of your keys.
It may seem like a lot at first, but many of the things that make it difficult to buy bitcoin only need to be done once: you only need to learn the knowledge requirements once, and you only need to register with an exchange once. After that, you can buy bitcoins with ease.