With Bitcoin constantly in the news, more and more people want to know how to buy Bitcoin themselves.
And who can blame them? Any investment that can go from $13 to more than $1,000 in less than a year is worth paying attention to.
Right now, Bitcoin prices are recovering from the Mt. Gox debacle. From Monday's lows of about $400 on BitStamp, the largest Bitcoin exchange, prices have climbed back over $580. That's a 45% pop in less than three days.
Obviously, a lot of people still believe investing in Bitcoin is a good idea, no matter what the skeptics say.
Investing in Bitcoin can be a little different than investing in other things, like stocks, bonds, or precious metals, but how to buy Bitcoin has gotten easier in the past year.
The good news is, there are several ways to buy bitcoins, depending on what you intend to do with them.
For those just getting started, and even for those looking for alternatives, here's an overview of how to buy Bitcoin.
Back in its earliest days, in 2009 and 2010, buying Bitcoin was a rather complicated affair.
For the most part, only the most computer-savvy folks were involved in Bitcoin. Special software was required to transact in Bitcoin, exchanges were virtually nonexistent, and one Bitcoin was worth only pennies.
How times have changed.
Now people have ways to buy Bitcoin that are much easier. Today there are three basic ways to buy Bitcoin, and a fourth on the immediate horizon.
Let's look at each one:
One of the first ways to buy Bitcoin was the appearance of exchanges, starting with the now-defunct Mt. Gox. But other Bitcoin exchanges soon popped up, including BitStamp, BTC-e, CampBX, and others. On an exchange, you can do more than just buy bitcoins - you can trade them on an open market. The trick with many of these Bitcoin exchanges, however, is getting U.S. dollars into them so you can buy bitcoins. In most cases, you need to wire transfer the dollars in, which incurs fees and takes several days. If all you want to do is buy bitcoins, the exchanges are not the best option.
This website connects individuals in the same area so they can meet and physically make a transaction of dollars for bitcoins. LocalBitcoins works if you live in a populated area and are willing to transact money with strangers. But the prices people pay vary widely, often hundreds of dollars above or below the going rates on the Bitcoin exchanges. You can get a great deal or get ripped off. Use with caution.
As the Bitcoin economy has evolved, "Bitcoin wallet" companies have sprung up that allow people to store their bitcoins remotely. That eliminates the need to have a Bitcoin wallet on their home PC or mobile device, which requires some level of comfort with technology and leaves the owner responsible for insuring their safety. But many of the Bitcoin wallet sites also allow you to buy bitcoins. If you only want to use Bitcoin for transactions, there are wallets like Blockchain.info. But other Bitcoin wallets, like Coinbase, allow you to buy and sell bitcoins. The money comes from a bank account that you link to Coinbase (if you sell bitcoins, you also can send the proceeds directly to that bank account). This is probably the best way to buy Bitcoin for most people.
Right now there are only two Bitcoin ATMs in the United States, in Massachusetts and New Mexico. But rest assured, more are coming soon. Users typically scan a Bitcoin address (a code that tells the network to send the bitcoins to your Bitcoin wallet) by displaying it in the form of a QR code on their smartphone screen. At that point, the user inserts the desired amount of cash into a slot and pushes a button on the Bitcoin ATM instructing it to send the equivalent amount of bitcoin to their Bitcoin wallet, where it appears within minutes.
We've covered some of the basics of how to buy Bitcoin here, but there's so much more - more than we could include in this brief article. To find out more about why Bitcoin is so revolutionary and to get the full details on how to buy Bitcoin, check out this complete report...
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.