So you've been watching the rising prices of cryptocurrencies over the past year or so and have decided it's time to jump in.
But you're not sure how to get started.
The best place to buy bitcoins for beginners is, without question, Coinbase. When it comes to ease of use, security, and convenience, Coinbase is hard to beat.
Today, I'll show you exactly how to buy bitcoins on Coinbase, step by step.
Related: Why Bitcoin Could Hit $75,000 in 2018
I consider Coinbase the easiest "on-ramp" into the world of cryptocurrencies - much as America Online was to the Internet back in the 1990s. (I believe Coinbase ultimately will be the first Bitcoin stock to have an IPO.)
Coinbase offers four major cryptocurrencies - Bitcoin, Ethereum, Litecoin, as well as Bitcoin Cash, a separate version of Bitcoin that "forked" last August.
For an overview of exchanges that offer a wider selection of cryptocurrencies and have more robust trading features, check out this article.
But Coinbase offers what beginners need most...
Why Coinbase Is the Best Place to Buy Bitcoins If You're a Novice
- Ease of use: The Coinbase interface is clean, straightforward, and written in plain language. Getting U.S. dollars in and out of your Coinbase account is relatively painless when you link it to your bank account. You can also link your account to a credit card.
- Security: Coinbase uses a two-step verification of all accounts and stores 98% of customer funds offline - out of reach of hackers. And if somehow the company's storage was breached, it has an insurance policy to cover any customer losses. That means you can feel comfortable storing your cryptocurrency at Coinbase rather than downloading and setting up a separate software wallet.
- U.S.-based: Coinbase has its headquarters in San Francisco.
- Convenient: You can access Coinbase through a browser on a PC or with a smartphone app.
- It's an exchange, too: When you have an account at Coinbase, you automatically have an account at GDAX, the company's full-featured Bitcoin exchange. If and when you feel ready to move on to Bitcoin trading rather than just buying, your GDAX account is ready and waiting.
For these reasons, Coinbase has experienced dramatic growth over the past couple of years, from about 4 million customers in mid-2016 to more than 13 million by the end of 2017.
But such rapid expansion has caused growing pains.
When cryptocurrency prices are spiking or plunging, the site can get very slow or even crash. Customer service can be spotty, as the company has struggled to keep up with its exploding user base. Coinbase fees also tend to be a bit higher than on other Bitcoin exchanges.
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That said, I've had a Coinbase account since 2013 and personally have not had any issues buying, selling, or transferring Bitcoin or U.S. dollars in and out of the account. And none of those issues change the fact that Coinbase is the best place to buy Bitcoin if you're new to cryptocurrencies.
Now here's your step-by-step guide on how to open, set up, and start using a Coinbase account...
How to Buy Bitcoins on Coinbase
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STEP ONE: Go to the Coinbase website (www.coinbase.com). Fill in your e-mail address, and click the "Get started" button.
STEP TWO: You will see a "Create your account" dialog box. Fill in the blanks, making sure to create a strong password (use a mix of letters, numbers, capital letters, and special characters). Coinbase will send you a verification e-mail. You'll need to check your e-mail and click on the link in the Coinbase e-mail to continue. Clicking on the verification e-mail will take you back to the Coinbase site.
STEP THREE: You will be walked through a series of screens that ask you for additional information. First, it will ask if you're setting up an account for an individual or a business. After you click on "individual," you will be asked for a phone number. Be sure to use a mobile phone number, not a landline, as Coinbase sometimes uses the text messaging feature to send the security codes required in two-step verification.
STEP FOUR: Now you've arrived at the "Add account" page. This is how you'll get U.S. dollars into your account to buy Bitcoin. You have three options: a bank account, a credit card, or a wire transfer. A bank account gives you higher limits than a credit card. (Coinbase has limits on how much cryptocurrency a customer can buy or sell in a given time period.) The link to a bank account also works both ways - when you sell, you can transfer the proceeds back into your account, which isn't possible with a credit or debit card. But using a credit card gives you the ability to buy instantly. Fund transfers via bank accounts take four to five days to confirm - not ideal when you want to buy now. However, you can link both types if you like, as well as more than one of each type. To link a bank account, click on that option, and scroll through the list to find your bank. Then, all you have to do is type in the online ID and password you use when logging in to your bank's website. The credit card option asks for the number, expiration date, CVC code (a three-digit code, usually on the back) and your zip code - pretty similar to how you'd make a credit card purchase on a retailer's website. You may also need to submit an image of a photo ID, such as a driver's license, to confirm your identity.
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STEP FIVE: To enable your Coinbase U.S. dollar wallet, you need to do another verification step. (I know all this verification seems burdensome, but it's necessary to prevent fraud, and much of it is required by law.) Click on your name in the upper right corner of the Coinbase screen and select "Settings" from the drop-down menu. To verify your U.S. dollar wallet, click on the link highlighted with the light blue background (the words are "verifying your identity"). You'll be taken to a page that asks for your personal identification data, as well as your occupation.
STEP SIX: At this point, you're ready to use the Coinbase service. The Dashboard page has prices and charts of the four cryptocurrencies you can buy. You can track prices by the hour, day, week, month, or year. To buy Bitcoin, just click on the "Buy/Sell" button at the top of the page. There you will find options you want to buy. You can set the amount either in to buy any of the four cryptocurrencies, a choice of payment method (if you have more than one), and boxes where you can set the amount U.S. dollars or the cryptocurrency - in this case, Bitcoin.
You can also set up recurring buys here if you want to purchase a set amount of a particular cryptocurrency at a set interval of a day, week, every two weeks, or monthly. A screen to right details the transaction. If everything looks correct, click on the big blue "buy" button at the bottom of the screen. The cryptocurrency is deposited directly in your Coinbase wallet (immediately if you used a credit card, several days later if you used a bank account).
Congratulations, you just bought some Bitcoin!
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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.