How Can I Buy Bitcoin?
You’ve likely heard about bitcoin from the news, from a friend or at a party. It has been hard to avoid. Maybe you shook your head in wonder over bitcoin’s legendary run-up to nearly $20,000 in late 2017. And maybe now you’re wondering why everyone is still talking about it years later.
But wait … What’s this about central banks all over the world—in Europe, the UK, the US, and China, to name just a small sample—contemplating offering their own cryptocurrencies? Wow. Now, all you want to know is:
How can I get in on bitcoin?
Search on that question and you’ll find numerous ways to buy bitcoin—so many that it may be hard to discern the more realistic and safe approaches from the riskier ones. Serious investors may wish to skip straight to the “How to Buy Bitcoin on an Exchange” section.
Three Ways to Buy Bitcoin
For the more crypto-curious, here are the main realistic ways to get bitcoin:
- Buy bitcoin on a regulated cryptocurrency exchange.
- Get a job that pays you in bitcoin.
- Use a bitcoin ATM.
Whatever approach you choose, you’ll usually need software called a “digital wallet” to store it, or you can store your bitcoin with an exchange like Gemini.
For more about that, read “How Do I Securely Store Bitcoin.”
What About Mining to Get Bitcoin?
You’ve heard about “mining” bitcoin. Technically this is still an option—very technically. There are only about 18 million out of a possible 21 million bitcoins already mined and in circulation. But mining didn’t merit a place on the bullet list above because of its big “ifs”:
- If you have the capital to invest in the necessary high-powered computers
- If you have the technical skill, and
- If you have the time.
Buying Bitcoin on an Exchange, in Four Easy Steps
The majority of bitcoin buyers—from regular people to speculative traders to institutional investors—will buy bitcoin on a regulated exchange.
At Gemini (a licensed digital asset exchange and custodian regulated by the New York State Department of Financial Services), you can buy a nominal amount of bitcoin instantly and complete the process in minutes.
Step 1, Initial Account Set-up:
When purchasing bitcoin through Gemini’s web exchange (or through the mobile app) click on the “Get Started” button in the top right corner, which takes you to a page offering the choice of “Personal Account” or “Institutional Registration.”
After choosing Personal:
- A form asks for your country and state.
- Next, for enhanced security, Gemini asks for your cell number to text a security code you have to enter; and you may be required to input your social security number and date of birth.
Step 2, Linking to Your Bank Account:
To link your bank account on Gemini, a dialog pops up informing you that Gemini uses Plaid to link to your bank.
Plaid is the technical infrastructure API for consumer bank account access used by everyone from Venmo to American Express. Your information is encrypted end-to-end, and Plaid users like Gemini never get to see your bank credentials.
To link your bank you'll need to...
- Select your bank.
- Enter credentials, then another security code that is sent to your phone.
- Next, select the account to link to at your bank.
Step 3, Add Funds to Your Exchange Account:
On the web Exchange, you can navigate to your “My Account” function and add funds. When you click, the bank account you entered pops up. You'll then select the amount you want to transfer.
Even though it takes a couple of days for the transaction to settle (i.e. when Gemini receives the funds from your bank you deposited), Gemini makes the funds immediately available, meaning Gemini “advances” you money so you can buy bitcoin immediately. This is why you cannot withdraw funds until the money you deposited from your bank into your Gemini account clears.
Step 4, Buy Bitcoin:
Gemini facilitates the trading of various tokens, including bitcoin, ether, litecoin, Zcash, Chainlink, and more, all listed on our cryptocurrency exchange.
Once you select the cryptocurrency you want to buy—let’s say you want to buy bitcoin—two big buttons will appear: “Buy” and “Once”—both of which are part of a pull-down menu.
You can Buy, Sell, or Create an Alert; and you can do it once or set up a recurring buy on a daily, weekly, biweekly, or monthly basis.
To do this, you will...
- Select your order. For example, you can select buy (also known as “side” in the trading world) and once (also referred to as “frequency” among active traders), type in the quantity you wish to buy, and click “Review order.”
- Click “Place order” and next you should see a “Success!” image along with the transaction details.
Note: At Gemini, to fully complete the registration process, and to be able to withdraw money from your account, you must send picture identification to verify your identity. You can do this by showing your driver’s license to your device’s webcam and then enter your license number when prompted.
Voila! You are the proud owner of cryptocurrency! The mobile process is even faster and easier.
Other Ways to Buy Bitcoin
As noted at the outset, there are two other ways to get bitcoin.
In Your Paycheck:
Even if your employer offers you the option to be paid in bitcoin, there are considerations when getting bitcoin as a salary: 1. The IRS taxes bitcoin as property, not currency. Consult your tax professional to understand the tax implications of getting paid in bitcoin. 2. Not a lot of companies pay in bitcoin. In general, only cryptocurrency industry companies and a handful of other tech startups pay in bitcoin.
A Bitcoin ATM:
You can find bitcoin ATMs by typing your zip code into one of the bitcoin ATM search sites. The fees vary and tend to be higher than traditional ATMs.
A quick search uncovers a typical bitcoin ATM fee to be higher than the regulated exchange fees shown in Gemini’s web and mobile fee schedules. You’ll likely pay a higher price for your bitcoin, too.
Cryptocurrency Exchanges Are Often Your Safest Bet
While there are many possible ways to buy bitcoin, few are truly practical for the vast majority of interested buyers.
Most serious investors — and even the crypto-curious looking to dabble — are likely to opt for the safety, low fees and price transparency of a regulated cryptocurrency exchange.
This content is for general informational purposes only and is not investment, tax or legal advice. Past performance may not be indicative of future results. You should consult your own appropriately qualified and licensed tax, legal and accounting advisors before engaging in any transaction.