The best way to get started with bitcoin is to start using it.
After you’ve got yourself a wallet, you’re ready to get your first bitcoins.
Tip: A satoshi is the smallest unit of bitcoin (0.00000001 BTC). When it comes to buying bitcoin it’s more practical to think in terms of satoshis rather than in whole bitcoins.
How can you buy bitcoin?
The simplest way to buy bitcoin is to buy them from someone who has them. This is the best method for buying bitcoin (if you can find someone).
But of course, not everyone knows someone has bitcoins to sell, so what are your options?
Well, there are companies that have popped up that sell bitcoin for a living. These places offer the most convenient way to buy bitcoin.
Where can you buy bitcoin?
The following are my recommendations for places to buy bitcoin as of July 2020. It’s not an extensive list, but they’re my personal recommendations.
They’re organised by the level of privacy they offer, which I think is the most important consideration when buying bitcoin (see Privacy below).
A. No Privacy
- Coinbase - Mostly worldwide, highly popular, but not a fan myself.
- Binance Jersey* - UK only, large company. Slightly prefer over Coinbase.
These are large companies that make it easy to sign up and buy bitcoin. They’re convenient, but they require ID, and most likely work with governments to share your data.
Nonetheless, they’re hard to beat for getting your first bitcoins easily.
- Local Bitcoins* - My top recommendation.
I’m a big fan of Local Bitcoins. They pair you with other people who want to buy and sell bitcoin, so instead of buying from them directly, they help you to find other people to trade with. This is more in the spirit of bitcoin.
In November 2019 Local Bitcoins started requiring ID to sign up and trade, which was a shame. I think they had little choice due to changes in Finnish regulation, especially seeing as they have become a popular destination to buy and sell bitcoin.
Nonetheless, I still like them, and despite requiring ID I prefer to use them over the large companies above.
C. High Privacy
These are decentralised exchanges that aim to fill the gap that Local Bitcoins left behind. They pair you with other people looking to trade, but do not require ID, and instead use other mechanisms to try and ensure honest trading.
These exchanges are trickier to use and do not have as many traders, so the prices for coins are usually not as competitive. If you’re a complete beginner I wouldn’t recommend starting with these, but they are a perfectly valid option if you’re looking for maximum privacy for your coins.
Here are two important things to note when buying bitcoin:
1. Owning Bitcoin
When you buy bitcoin from a website, they will most likely add the bitcoins to your “online wallet”. This is typical, but it’s important to be aware that these bitcoins do not fully belong to you. It may seem that you have the bitcoins in your account, but really they are in the possesion of the company.
It’s like buying gold from a website, but only seeing the amount of gold in your account, and not actually having the gold in your hands. So if the bitcoin company’s computers were to blow up, get hacked, or if the company just plain-old disappears, then your bitcoins are gone too.
So what can you do?
Well, if you want to have complete control over you bitcoins (which I recommend), then withdraw the bitcoins to your own wallet. By “withdrawing” you are asking the company to create a transaction to lock up an amount of bitcoins to one of your addresses. As a result, you will have the keys that allow you to transfer the bitcoins, which means that nobody else has control of them except for you.
Having complete ownership and control of money is what fascinates me about Bitcoin. This is why I recommend withdrawing bitcoins from an online account to your wallet, as this is what gives you the freedom of control that Bitcoin was designed for.
By withdrawing to your wallet, you are now also in control of the security of those bitcoins.
When you buy bitcoins from a company, they’re probably going to ask you to give them your ID.
Why? Because bitcoin is money, and governments like surveillance over money. Bitcoin operates outside of the banking system, and they cannot control it, so the best thing governments can do is to monitor the “briges” in to the digital currency instead.
Anyway, long story short, if you buy bitcoins from a place that asks for your ID, then you can consider any bitcoins you buy from them as being “tagged” to your ID.
What does this mean for you?
Well, let’s say you decide to send those bitcoins to a secret shop. That’s cool, but if that secret shop ever got raided (for whatever reason) and their bitcoins/addresses were found, it would be possible to see all the transactions that the shop had received. As a result, seeing as your bitcoins were tagged to your ID, it would be possible to find out that you sent bitcoins to that shop.
I’m not trying to disuade you from buying bitcoins from companies that ask for your ID, but it’s important to be aware of how they operate. Just remember that bitcoin transactions are connected together, and so the privacy of your coins depends on you not creating links from your identity to the addresses you use.Bitcoin can be used anonymously, but only if you are cautions to not tie your identity to any addresses that you use. By buying bitcoins from a company that requires your ID, you are sacrificing your privacy for convenience.
Benjamin Franklin Quote
Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. – Benjamin Franklin
I do not believe that ID-requiring companies have the true spirit of Bitcoin at heart, but they do make for a convenient and easy way to get your first bitcoins.
The best way to buy bitcoin is with people you know and trust. Meet people1, make friends, and trade things. This is the purest form of trade, and it’s the ultimate way to buy and sell bitcoin… if you can.
Companies offer a convenient way to buy bitcoin, but you pay for that convenience with your privacy. Be aware of this when you use the coins you buy from them to pay for something. Furthermore, the coins in your online wallet are not in your control, so withdraw them to your own wallet if you want them to actually be your coins.
Note: A popular phrase in Bitcoin is “not your keys, not your coins”. In other words, if you don’t have the private keys needed to send the bitcoins in a transaction, then you technically do not have ownership of them.
The places you can buy bitcoin from changes all the time, and varies depending on where you live. The ones I’ve listed above are my best suggestions, but there may be better options out there for you. It’s always good to have a look around.
Best of luck, be smart, and have fun.
- Links with an asterisk* after them are affiliate links, which means I may receive a payment if you use them. I have listed what I think are the best places to buy bitcoin, and used an affiliate link they have one. Any payments I receive from these links go toward the upkeep of this website, so if you use them, thank you. However, feel free to visit these websites directly if you prefer.