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How to buy Bitcoin on reliable platforms
How to buy Bitcoin on reliable platforms
Bitcoin

How to buy Bitcoin on reliable platforms

By Marco Cavicchioli - 13 Mar 2020

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How is it possible to buy Bitcoin? First of all you need to know that Bitcoin, or BTC, can not be purchased from the “manufacturer”, because no one can literally produce BTC. 

Bitcoin can only be extracted thanks to mining and once extracted they can be sold on the market. 

Therefore, you can only buy BTC from the miners who mine them, or from other Bitcoin owners who want to sell them. 

However, not only is it not easy, but it is also dangerous to buy BTC directly from a specific seller without relying on a platform that ensures that the exchange takes place on a regular basis, so that the vast majority of purchases are made on so-called exchanges. 

In other words, it is better to use an exchange to buy Bitcoin. 

These cryptocurrency exchanges are nothing more than markets where there are those who sell and there are those who buy, only the purchases generally do not occur directly from a single seller to a single buyer, but the purchase orders are loaded on the so-called generic order book of the platform, which will take care of finding appropriate sales orders from other sellers. 

The platform therefore operates as an automated intermediary that connects purchase orders with sales orders that have the same price. 

Therefore, when buying bitcoins on an exchange, it is possible not to specify any purchase price, so that the platform automatically chooses among the active sale orders those with the lowest prices at that moment, or specify a purchase price in the hope that there is some sale order with the same or lower price. 

That said, you must choose the exchange. There are many exchanges, some with many pairs, i.e. with the ability to buy BTC with many other currencies, some with a few pairs that force you to buy BTC with fewer currencies. There are also exchanges that do not allow you to buy with fiat currencies, but only with other cryptocurrencies. 

Exchanges differ from each other for several reasons, but mainly for two: 

  • Liquidity;
  • Costs.

 In fact, not all exchanges have high exchange volumes, and not all of them are cheap. Before choosing an exchange, it is worth checking what the transaction and exchange costs are, and whether the volumes are sufficient to support the amount of BTC you want to buy, or sell. 

After choosing the exchange you must open an account, and generally complete the long but inevitable process of verifying your identity, especially if you want to buy Bitcoin with fiat currency. 

In fact, only decentralized exchanges do not provide for the identity verification phase, but they use only cryptocurrency, and not fiat currency. For purchases with fiat currency, identity verification is generally required by law. 

Once the identity verification has been completed, the funds can be paid into the exchange in order to purchase. 

If you decide to buy with fiat currency, you generally have two options, either by bank transfer or credit card. 

Paying fiat currency by bank transfer is generally cheaper, but definitely slower. Credit card payment is very fast, but can also be very expensive. 

Unfortunately, traditional financial intermediaries, such as banks, often get in the way when sending, or receiving, fiat currency funds from exchange crypto, so the deposit may not be without problems. 

After depositing the fiat currency on the exchange you can place a purchase order, either a “market” (i.e. without specifying the price) or a “limit” order. In the latter case you can choose a purchase price, but this could also mean the risk of not finding any seller willing to sell at that time. In this case a buying strategy is necessary to evaluate the price trend in the short or very short term. 

Once the purchase order has been loaded, the platform will take charge of it, and execute it automatically if it can find enough sellers to agree to sell at that price. 

If the purchase order is a “market” order, it will be executed immediately by the platform, which will pick up the BTC from the sellers who are selling them at that instant at the lowest prices. 

After the order has been executed the platform will scale the amount in fiat currency used for the purchase from the user’s available funds, and add the BTC purchased to its availability. 

At that point it is advisable to transfer the Bitcoin on a wallet owned, not custodian, so that you have complete and exclusive possession. In fact if the exchange is centralized the real possession of the BTC is not in the hands of the user, but to the exchange itself, and if something happens to the latter you risk to lose the access or the possession. This is instead impossible if you use owned wallets, keeping with extreme care seed and private keys. 

There are several exchanges that allow you to operate in this way, one of which is also a non-custodian wallet: Eidoo

On Eidoo then you can use bank transfers and credit cards to buy Bitcoin, then you can keep them in your own wallet without having to move them. 

Another exchange, but without an integrated property wallet, on which you can make purchases in this way is Coinbase, which together with Binance is one of the most used in the world. 

Other exchange crypto that allow you to follow this procedure in a relatively simple way are Bitstamp and Bitpanda, while for those who have more needs, perhaps for professional issues or trading, are recommended more complete platforms such as Bitfinex and Kraken

 

Marco Cavicchioli
Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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