Bitcoin is a cryptocurrency that was first introduced in 2009 by Satoshi Nakamoto, the thing that made bitcoins unique was that bitcoins were based on blockchain technology. Blockchain or distributed ledger technology was a technological break through back in the day and since then it has transformed the financial world. Since the introduction of bitcoins, dozens of cryptocurrencies have been introduced and now the industry is experimenting with concepts like tokenization of assets. Blockchain technology has proven to be a real game-changer and it all began with bitcoins.
The world has been slow to embrace bitcoins for all the benefits that they offer. Blockchain technology allows cryptocurrencies to work on a decentralized system, keeping the identity of users safe. These are two of the focal point upon which fiat currencies are structured. Centralisation and data sharing. Countries keep money supply centralized because it is easier to control and centralization also allows countries to use currencies as bargaining chips. For example, the U.S can impose sanctions on other countries so that they cannot deal with dollars. Bitcoins, allow users to operate without the fear of these characteristics and this is where cryptocurrencies and fiat currencies differ and this is also the reason why countries have been largely unwilling to completely embrace bitcoins. Countries like Russia are even considering outlawing the usage of bitcoins whereas many countries in Asia have got regulatory restrictions over cryptocurrencies in one form or the other.
None of this has however threatened the rise of cryptocurrencies very much.
This graph shows that the global share of crypto assets is all set to increase exponentially in the coming years. Especially if we look at the global financial environment right now, we can see that markets are tanking and the financial system is taking consecutive blows. At times when the global economic system is in a position of weakness, yes the value of bitcoins has reduced but this shows that the future may belong to decentralized currencies that are not as susceptible to external shocks as the fiat currencies that we have today.
Also Read: How to buy bitcoin in hong kong
If you have come here, worried by the news to find a way to purchase bitcoins, then you have come to the right place. The purpose of this brief discussion on the nature of cryptocurrencies and their future potential was to shed light on the fact that crypto-assets are in this for the long run. Let us now look at some of the ways in which interested individuals and investors can purchase bitcoins.
There are three main ways through which users can purchase bitcoins
- Bitcoin exchanges
- P2P Bitcoin directories
- Bitcoin ATMs
Bitcoin exchanges are online platform that allow users to exchange their currencies like pound sterling, dollar and euro etc for bitcoins. Bitcoin exchanges work exactly like your conventional foreign exchange market except for the fact that they deal in bitcoins. There are many bitcoin exchanges that are providing services to bitcoin users. Some of the most notable bitcoin exchanges are
There are numerous bitcoin exchanges and some of them are not very good therefore if you are looking for a bitcoin exchange then it is advised to carry out proper due diligence first. Look for exchanges that have been in the market for a long time and are offering competitive rates. In addition to this, look for reviews of users for the exchange you are interested in.
Getting Verified On The Exchange Of Your Choice
If you have already got a bitcoin wallet then you will need to sign up with the bitcoin exchange of your choice. The sign up procedure is a simple one but it required verification of your identity to prevent fraud and to comply with regulations. For this you may be required to submit your social security number or drivers license, these requirements depend upon the bitcoin exchange you are signing up for. The verification process may take anywhere from 3 days to a week. Once your account is verified you can make transactions.
Some sites like Coinbase impose restrictions on credit and debit card transactions and these limits are applied based on the level of verification. For example some accounts may be restricted to $300 worth of purchases in a week. Whereas sites like Coinmama offer higher limits and make it simple for customers to buy bitcoin with credit card instantly after verifying their identity.
The rates charged on each transaction will also vary with every bitcoin exchange and the rate of bitcoin offered will also vary in a similar manner. Bitcoins do not have any single value, their value is determined by the general demand and supply and thus each bitcoin exchange will offer a different rate but the variation in rates between different exchanges will not deviate by a lot.
Bitcoin exchanges offer multiple features. Some bitcoin exchanges like Coinbase offer trade in bitcoins, multiple currency support and multiple method of payment such as credit cards, debit cards prepaid cards and bank transfers whereas some exchanges act more like holding platforms that allow users to invest in bitcoins and then speculate upon the value instead of allowing them to withdraw bitcoins to use in transactions. Such exchanges are not true exchanges and the risk of loss is generally high as not every knows how to speculate upon the price of bitcoins. So if you are a new comer or are only looking for an exchange to purchase bitcoins so that you can use them for transactions then it is better to use an exchange like Coinbase and Coinmama, where you can withdraw your coins.
P2P Bitcoin Directories
Peer to peer bitcoin directories are perhaps the most widely used method to purchase bitcoins. These directories are basically platforms that serve to connect bitcoin sellers and bitcoin buyers. They are very much like peer to peer lending sites in this manner, they take out the need for an intermediary and allow buyers and sellers to get in contact to carry out transactions directly.
Some of the leading P2P bitcoin exchanges right now are:
- Local Bitcoins
The P2P site will charge you a fee for connecting you to the seller or buyer but this fee is less compared to the rate charged by bitcoin exchanges especially on credit cards. Furthermore, P2P bitcoin directories allow users to transact in cash and this method is preferred by many users as they do not want their data to be shared with the regulatory authorities. Sites like Coinbase keep a track on your bitcoin activity in trail to make sure that the bitcoins are not used for any illegal or illicit use, although this doesn`t sound wrong but this defeats the purpose of a crypto currency. Some people prefer to keep their online identity and data hidden from the government even though they do not indulge in any illegal activity.
Another quick way to purchase bitcoins is through a Bitcoin ATM. But you will have to be lucky enough to have one near you. Most Bitcoin ATMs are installed in malls and places where people can easily access them. Bitcoin ATMs, allow users to deposit cash and then transfer bitcoins directly into their bitcoin wallets. Thus, many users prefer to use them at these ATMs to keep the identity of the user safe and so the data is not shared with the regulatory authorities.
You can go to www.coinatmradar.com to look for the Bitcoin ATM that is closest to you. According to the website there are approximately 7156 ATMs operating in 75 countries. So if you live close to one, then you should not have any trouble in getting your bitcoins through cash.
So these are some of the ways in which you can trade bitcoins. Whenever you purchase bitcoins, make sure that you do not do so through a method that may be prohibited in your jurisdiction. Additionally , before trading in bitcoins it is better to check up with local legislation to make sure that you are allowed to trade in bitcoins as some countries have outlawed. Many parts of Asia, Europe and America however have embraced crypto currencies and you should have non trouble in trading in bitcoins through the methods mentioned above.