Brief Guide to Buying Bitcoin - Advice from a Long Time Buyer
I got started buying Bitcoin in January of 2015. The very first thing I did was surf the internet to learn everything I could and found https://bitcoin.org/en/ This page has a link "Get started with Bitcoin" and it has important advice about avoiding scams. It is very easy to lose money when you buy any cryptocurrency if you are careless.
The next thing I did was get a Coinbase account https://www.coinbase.com . I had to make an initial deposit of fiat. In 2015 I did not have to do much on ID other than bank account information. I initially deposited $100. Now I had a Bitcoin wallet. Coinbase has a cousin site, GDAX, with which you can set limit buys and sells on Bitcoin, Bitcoin Cash, Litecoin, and Ethereum.
But I wanted to buy from a Bitcoin ATM (BTM) with cash. Now on Coinbase, my wallet has what is known as a QR code like this one:
You keep an image copy of your QR code (public address of Coinbase Bitcoin wallet) or find your code using the Coinbase app. You put some money, perhaps $20 bill, into the BTM and hold the phone under a scanner at the machine to have it scan your QR code. When the deal is done, your Coinbase indicates the new deposit to your wallet. If you use a non-central exchange for your wallet such as Jaxx, you control the private key. You do not need an initial deposit. You again show your Jaxx Bitcoin QR code to the BTM scanner and it gets updated with more BTC.
Here is what a BTM looks like:
There are drawbacks to buying bitcoin from a central exchange and from a BTM. The BTM charges very high fees. Also it requires a passport or driver's license so you are identified as well as on Coinbase. This is called "Know Your Customer" (KYC).
This brings me the third way of buying Bitcoin. Buy on the street. You can find sellers using https://localbitcoins.com and you both can meet at a pre-arranged spot. Only buyer and seller know the amount of fiat/BTC exchanged. The safest thing to do is buy in small amounts of fiat. Also arrange to meet at a public spot. The advantage of this approach is there is no KYC. I work in a high tech business park and bought bitcoin last year from an engineer who I met at a food truck. You can also join Bitcoin meetups and become a regular attendee and trade with other enthusiasts.
I wanted to keep this short to give an overview. There are a lot more things to be said about why you should own Bitcoin, how it can make sense to buy Bitcoin using a Central exchange versus "on the street," and tax issues.
I highly recommend reading "Mastering Bitcoin" (second edition) by Andreas Antonopolous. He is great at explaining to the layman. If you want to be successful in accumulating Bitcoin you must learn and be patient! Good Luck!
I like the idea of buying Directly from another seller because that is the whole point of decentralisation.
Governments can’t stop bitcoin they can legislate the exchanges and they can and have Illegalise selling of bitcoin peer-to-peer.
They are desperate for control and will try anything to make it difficult.
In Australia there will be a law that prohibits people selling bitcoin directly to other people without a financial license
Yes, my buying “on the street” experience gave me a rush! Even though I’ve been buying precious metals also with no KYC, the cryptocurrency business deal seemed more anarchic. But I think by going to more meetups I will get more opportunities like that!
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STOPI always recommend that newbies start with a central exchange in order to become familiar with Bitcoin in a low-risk environment. It is convenient, even though it goes against the Bitcoin philosophy of decentralization.
Once someone is familiar with Bitcoin, wallets, etc. I suggest networking in a meetup group to keep these transactions "off the books."
Looking forward to more of these articles, we need more people sharing their forays into crypto.
It might be feasible still buy on Coinbase in small amounts like $10 per week worth of cryptocurrency, then once a year you realize the long term gain, allow Coinbase to calculate your capital gain tax, and when you sell you don’t sell but move it to (ahem) “someone else’s “ off line wallet from which they “never spend.” The advantage is you are in a safe environment when you buy (2FA), no one mugging you at a coffee shop, and unlike a BTM the fees for buying are very low. I move my cryptocurrency first to GDAX and then from GDAX I “withdraw” to offline Segwit wallet. Then I allow Coinbase to calculate the tax.
For future viewers: price of bitcoin at the moment of posting is 8590.60USD
Coins mentioned in post:
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