The value of Bitcoin (BTC) has risen dramatically over the past few years. One bitcoin cost roughly $500 in May of this year. A single Bitcoin was valued at about $30,000 as of May 2022. That’s an almost 6,000 percent increase in revenue.

According to some observers, the price of Bitcoin might grow much more as cryptocurrencies and blockchain technology become more commonplace in people’s everyday lives. Purchases of Bitcoin, however, are fraught with danger. The price of BTC has risen dramatically, but it has also fallen precipitously.

For instance, Bitcoin’s value dropped from about $20,000 in 2017 to around $3,100 in December of last year. Nevertheless, experts believe that it’s not yet the end of the Bitcoin era.

In this article, we’ll be covering the different ways to buy Bitcoin this 2022.

Before You Make Your First Bitcoin Purchase

Investing in Bitcoin may seem complex, but when you break it down into steps, it’s actually more straightforward. To invest in or trade Bitcoin, you only need an account at a service or exchange, although it’s also a good idea to store it in other safe ways.

Bitcoin investors need a few things to get started: a cryptocurrency exchange account, personal identification documents if you use a Know Your Customer (KYC) platform, a secure Internet connection, and a way to pay. 

You should also have your own wallet that is separate from the exchange account. For this, bank accounts, debit cards, and credit cards are all excellent ways to pay. You can also get bitcoin at special ATMs or through P2P exchanges.

How To Buy Bitcoin: Step-By-Step Guide

Here are four simple steps that you need to take to buy bitcoin. Don’t forget that you still need to do your research and choose the best option for your situation.

Step 1: Choose A Service Or Place Where You Can Trade Crypto

The first step in buying bitcoin is to choose a service or place to trade crypto. Cryptocurrency exchanges, payment services, and brokerages are popular places to buy and sell cryptocurrencies. 

Cryptocurrency exchanges are the easiest to use because they have the most features and the most cryptocurrencies to trade.

You can buy, sell, and hold cryptocurrency if you join a cryptocurrency exchange. Most of the time, it’s best to use an exchange that lets you withdraw your crypto to your own online wallet to keep it safe.

There are many different kinds of places to trade cryptocurrency. Because the Bitcoin philosophy is based on decentralization and individual freedom, some exchanges let users stay anonymous and don’t ask for personal information. Most of the time, these exchanges work independently and are decentralized, which means they don’t have a single point of control.

Even though these systems can be used for bad things, they can also help people who don’t have bank accounts. Some people, like refugees or people who live in countries with little or no infrastructure for government credit or banking, can join the leading economy through anonymous exchanges.

At the moment, though, the most popular exchanges are not decentralized, and users have to show proof of who they are. Some examples of these exchanges in the United States are Coinbase, Kraken, Gemini, FTX, and Binance US. The number of features that these exchanges offer has grown by a significant amount.

In the last ten years, the crypto world has snowballed, with many new tokens competing for investors’ money. Except for Bitcoin and a few well-known coins like Ethereum, not all of these tokens are available on all exchanges. Each exchange option has its own set of regulations that determine which tokens can be traded and which cannot.

Coinbase, Kraken, and Gemini all let you buy Bitcoin and a growing number of other cryptocurrencies. These three might be the easiest ways to get started with crypto in the whole industry. However, US investors can only buy a limited number of altcoins from it. But traders from outside the US have a more comprehensive range of tokens to choose from on its platform.

When making an account for a cryptocurrency exchange, it’s essential to use safe Internet habits. This includes two-factor authentication and a long, unique password with a mix of capital letters, small letters, numbers, and special characters.

Step 2: Hook Your Exchange Up To A Payment Option

Once you’ve decided on an exchange, you’ll need to get your personal documents together. Depending on the exchange, these may include a picture of your driver’s license or Social Security card, as well as information about your job and where your money comes from. 

After the exchange has made sure you are who you say you are, it will ask you to link a payment method. Most exchanges let you link your personal bank account or a debit or credit card directly.

Bitcoin is legal in the US, but some banks may question or even stop deposits to sites or exchanges that deal with cryptocurrencies. It’s a good idea to make sure that your bank will let you deposit money at the exchange you choose.

There are different fees for using a bank account, debit card, or credit card to make a deposit. Researching the fees for each payment option will help you decide which exchange to use or which payment option will work best for you.

Fees are also charged for each transaction on an exchange. These fees can be a flat rate (if the amount being traded is small) or a certain percentage of the amount being traded. On top of the transaction fees, there is a processing fee for credit cards.

Step 3: Place Your Order

After choosing an exchange and a payment method, you can now buy bitcoin or other cryptocurrencies. In the past years, cryptocurrency exchanges have been slowly gaining popularity. They have grown a lot in terms of how much money they can make and how many features they have. 

Changes in how cryptocurrency exchanges work are similar to changes in how people think about cryptocurrencies. 

A business that was once thought to be a scam or to use questionable methods is slowly becoming a legitimate business that has caught the attention of all the big players in the financial services business.

Now, cryptocurrency exchanges have almost as many features as stock brokerages. There are several order types and ways to invest in crypto on the market today. Nearly every cryptocurrency exchange lets you place both market and limit orders, and some also allow you to place stop-loss orders. 

Step 4: Safe Storage

Wallets for Bitcoin and other cryptocurrencies are a safe place to store digital assets. By keeping your crypto outside of the exchange and in your own wallet, you can be sure that only you have the private key to your money. 

It also lets you store money outside of an exchange, so you don’t have to worry about your exchange getting hacked and your money being lost.

You have a couple of choices when selecting a Bitcoin wallet. The first thing you should know about crypto wallets is the difference between hot wallets and cold wallets.

Hot Wallets

Hot wallets or online wallets are wallets that can be used on computers, phones, or tablets that can connect to the Internet. This can make your coins vulnerable because these wallets make the private keys to your coins on these Internet-connected devices. 

These wallets work best for holding small amounts of cryptocurrency or cryptos that you are actively trading on an exchange. A hot wallet is kind of like a bank account. Conventional financial advice says that you should only keep spending money in a checking account and keep the rest of your money in a savings or investment account. 

You could say the same thing about hot wallets. Hot wallets include mobile, desktop, web, and custody wallets in an exchange account.

Cold Wallets

Cold wallets do not need access to the internet, so it is less likely to be hacked. You may also hear these wallets called offline wallets or hardware wallets. These wallets store a user’s private key on something that doesn’t need internet connections. They can also come with softwares that works in parallel so that the user can look at their portfolio without putting their private key at risk.

You can only get the money in these addresses if you have that piece of paper with the private key on it. Many people laminate these paper wallets and keep them in safe deposit boxes at their bank or in a safe at home. Because you can’t sell or trade bitcoin quickly when stored this way, these wallets are best for long-term investments and high security.

How to Buy Bitcoin Using PayPal

You can also purchase bitcoin from PayPal in two ways. The most convenient way is to buy cryptocurrencies with a PayPal account linked to a payment mechanism, such as a bank account or debit card.

The second option is to use your PayPal account balance to buy cryptocurrencies from a third-party provider. This option is less convenient than the first because very few third-party websites allow users to buy bitcoin with the PayPal button.

How to Buy Bitcoin Through a Credit Card

The process for purchasing bitcoin with credit cards is similar to the idea of buying it with debit cards or through automated clearing house (ACH) transactions. You must enter your credit card information and authorize the transaction with the exchange or electronic trading firm. 

Frequently Asked Questions

What Are the Most Popular Bitcoin Buying Sites?

Cryptocurrency exchanges, brokerages (both crypto and mainstream), and payment services like PayPal are the most popular places to buy bitcoins. Bitcoin can also be purchased through peer-to-peer exchanges. You can indirectly own bitcoin by investing in companies that have it on their balance sheets, such as Tesla, Inc. (TSLA) or MicroStrategy Incorporated (MSTR). 

What should I expect to pay to buy Bitcoin?

Typically, the cost of purchasing bitcoin includes a fee per trade and the cost of converting a fiat currency (usually dollars) to bitcoin. This conversion spread is how cryptocurrency exchanges and payment services make money. The fee per trade is determined by the amount of the trade. A larger trade amount will result in higher fees. 

The overall purchase price is also affected by the features provided by the venue. For example, Robinhood currently does not offer an online wallet for storing bitcoin. As a result, you’ll have to budget wisely for online wallet costs when making your purchase.

Key Takeaway

The process of purchasing bitcoin is slightly more complicated than buying traditional equity or stock. This is primarily because the cryptocurrency ecosystem and infrastructure are not as developed as conventional trading.

A bitcoin purchase consists of four steps:

• Choosing a service or location for the purchase
• Connecting with a payment method
• Placing an order
• Ensuring safe storage for your purchased cryptocurrency

Each of these steps necessitates research and a careful evaluation of the benefits and drawbacks of each service. Bitcoin can also be purchased at Bitcoin ATMs, through payment services such as PayPal, and mainstream brokerages such as Robinhood.