The Importance Of Self-Custody
Before buying bitcoin, it’s important to understand the importance of self-custody.
Bitcoiners often use the phrase, “Not your keys, not your coins,” or “Not your keys, not your bitcoin.”
This refers to the fact that if you don’t have the private key to access your own bitcoin, you cannot guarantee that you’ll always be able to use it, or even that you own it at all.
It’s vital to have control over your own bitcoin to keep it safe and accessible.
Therefore, before buying Bitcoin, you will need a wallet to store and manage it. There are different types of wallets, including:
- Software Wallets: These are mobile or desktop applications you install on your device.
- Hardware Wallets: These are physical devices designed to securely store your Bitcoin offline. These are considered the most secure option.
- Online Wallets: These are web-based wallets provided by various exchanges. While they are convenient, they are generally considered less secure, as they are vulnerable to hacking.
Paper Wallets: A paper wallet is a physical document containing your Bitcoin wallet’s public and private keys. It’s one of the most secure ways to store Bitcoin, but requires careful handling.
The Different Methods To Buy Bitcoin
There are several methods to purchase Bitcoin:
Using online exchanges is the most common method.
- Sign up for an account on a cryptocurrency exchange such as Coinbase, Binance, Kraken, or Bitstamp.
- Complete the identity verification process (KYC) as required by the exchange.
- Link your bank account or credit card to the exchange.
- Place an order to buy Bitcoin, specifying the amount you want to purchase and the price at which you want to buy.
- The exchange matches your order with a seller, and your Bitcoin is transferred to your exchange wallet.
- Locate a Bitcoin ATM near you using websites or mobile apps that track their locations.
- Visit the ATM, and follow the on-screen instructions to buy Bitcoin using cash or a credit/debit card.
- The Bitcoin is transferred to your provided wallet address.
Peer-to-Peer (P2P) Platforms
- Platforms like LocalBitcoins and Paxful allow you to buy Bitcoin directly from other individuals.
- Choose a seller, agree on a price and payment method, and conduct the transaction through the platform.
- The platform acts as an escrow service to ensure a safe trade.
Bitcoin Vouchers or Gift Cards
- Some services allow you to buy Bitcoin vouchers or gift cards, which you can redeem for Bitcoin.
- Purchase these vouchers from retailers or online sellers.
- Redeem the voucher on the service’s website to receive the Bitcoin.
Securing Your Bitcoin
After buying Bitcoin, it’s crucial to transfer it from the exchange or service to your own wallet.
Moreover, exchanges can be vulnerable to hacking. Consequently, you have more control over your Bitcoin’s security in your personal wallet.
Dollar Cost Averaging (DCA) Bitcoin
DCA is a method of buying bitcoin that spends the same amount of fiat money to buy bitcoin on a periodical basis.
For example, you might set up a DCA order to spend £100/$100 per week on bitcoin at whatever price, so the fiat amount stays the same while the bitcoin amount varies as the price changes.
Different services work differently, but make sure to find one that is non-custodial (they don’t hold your bitcoin) and transfers the bitcoin directly into your personal bitcoin wallet.