Mining Bitcoin isn’t the only way to get your hands on the stuff, you know.
In fact, mining Bitcoin is a complete pain in the buns. At a minimum, you need specialized software, a sophisticated hardware rig to run it and a considerable amount of electricity to power the whole thing.
Really, the simplest way to amass Bitcoin is to just buy it. Of course, that’s something of a process in and of itself.
Before you’re ready to ride the Bitcoin rollercoaster, you’ll need to establish an account with one of the major exchanges (like Coinbase or CEX), connect a bank account or credit card and transfer money over. That process, which we break down below, should take roughly 10 minutes or so. Unless, of course, an exchange is suffering some sort of outage — an increasingly (and disconcertingly) common occurrence.
Where can I buy Bitcoin?
There are many other points of entry into the Bitcoin universe, however. You can play day trader and use a regulated exchange like GDAX (which is owned by Coinbase). On the opposite end of the spectrum, you can find someone local willing to trade cash for Bitcoins, if you’re into meeting up with strangers in parking lots. And if you operate a business, you can accept Bitcoin as payment for goods or services.
Or you can go the high finance route. On Monday CME Group, the largest derivatives exchange in the world, made it possible to trade in Bitcoin futures, opening up another avenue and marking another milestone in the cryptocurrency’s evolution. And Bloomberg reports that Goldman Sachs is planning to launch a Bitcoin trading desk in 2018.
Can I play the Bitcoin market without buying Bitcoin?
You can do the Bitcoin thing without owning it outright. The eToro “social trading” network doesn’t sell Bitcoin, but lets you follow traders and wager — or in the parlance of the app, “copy” — their performance and profit (or lose) from the price swings. And it’s only a matter of time before the big institutional investors figure out a way to offer Bitcoin to the masses through ETFs and index funds.
Where should I buy Bitcoin?
For now, the most popular way to purchase Bitcoins remains an exchange like Coinbase or CEX. That noted, even Coinbase, the most established platform, is struggling to keep pace with demand. There are frequent outages that can make it difficult or impossible to buy — and, perhaps more frustratingly, sell — and there is no shortage of customers, investors and speculators with nightmare stories to tell. So, as with everything cryptocurrency-related: do some research and caveat emptor.
Factors to consider when buying Bitcoin
Despite its imperfect customer service track record, it’s no surprise that most Bitcoin buyers go to Coinbase. It has the largest volume of trading, venture backing and makes a complicated process fairly simple and user-friendly.
Still, every cryptocurrency and exchange has its own protocols and rules, some of which are more stringent than others. Some require that you verify your identity before buying and selling. Some enforce strict buying limits, while others will take any amount of money you’re inclined to part with.
With the price of Bitcoin fluctuating dramatically from hour to hour, the transaction time — how quickly currency is transferred from your bank account or credit card to your Bitcoin wallet — can vary widely depending on which exchange you use and your payment type. And then there is the matter of fees, which can quickly erode your balance. We’ll take a look at each of these factors below.
How much (or how little) Bitcoin can I buy at once?
Even if you’re sitting on piles of money, itching to buy Bitcoin, there are limits. Some platforms and exchanges put a weekly or daily cap on how much Bitcoin you can buy depending on which payment method you use, how long your account has been active and your purchase history. And even if you verify your identity, you may still be limited to buying $750 of Bitcoin per week with a credit card or $10,000 to $15,000 per week if you use a bank account.
Of course, you can purchase smaller amounts, too. Coinbase will let you buy $1.99 worth of bitcoin — but will take 99 cents off the top in fees.
