So, obtaining your first bitcoins, or your first bits, is much easier than it seems. These methods will not be anything new for anyone that has been involved with digital currency for very long, but they are not immediately obvious to those with no previous experience.
How to Buy Bitcoins Directly
This is the traditional way to get bitcoins, and is likely the way that most people that have BTC today obtained a large portion of theirs. In fact, we have an entire section devoted to articles about the various places to buy bitcoins, as well as developments in these companies. To skip straight to that, go to our top menu, mouse over “Getting Started”, then click “Where Can I Get Coins?” (or just click the previous link).
However, to obtain BTC this way, one must first make a decision. You can: Use an exchange, buy bitcoins directly from a company, or buy bitcoins from local individuals.
Using a Bitcoin Exchange
Bitcoin exchanges were the primary method of purchasing bitcoins for a very long time, though their marketshare is slowly declining following a string of scandals, as well as the emergence of other options. However, for experienced traders, or users who would like to purchase and sell BTC often, an exchange is still one of the best choices.
Basically all Bitcoin exchanges have a similar process to get started. Sign up for an account, provide identification for AML/KYC purposes, then transfer USD (or another accepted currency) into your account. This process generally takes a few days, and so it is not exactly a great way to get bitcoins quickly.
However, Cryptsy, and a few other altcoin exchanges, can be used to easily, and quickly, obtain bitcoins if you have another digital currency that you would like to exchange for bitcoins.
BitFinex is the largest Bitcoin exchange outside of China, though it is relatively new compared to the others. It offers advanced trading features, including margin trading and lending, which was a huge step forward in the digital currency world. The exchange controls 16% of the market at the moment.
VirWoX was started as an exchange for Linden Dollars, which is a currency in the online game “Second Life”, but has added other currencies since that time. It has been around since 2007, which is longer than Bitcoin has even been in existence, and is still going strong. VirWoX is also one of the only exchanges that will accept PayPal as a payment method, but charges higher than normal fees. It is difficult to determine the marketshare of VirWox, as it does not have a direct BTC / Fiat exchange. Instead, it uses BTC / SLL (Second Life Linden) alongside it’s Fiat / SLL exchanges.
Bitstamp is one of the oldest Bitcoin only exchanges, and was the largest Bitcoin exchange at one time. The exchange is very trusted in the community, but has had hiccups in the past. It currently controls 7% of the market.
BTC-e is another old Bitcoin exchange, but one that has always maintained a shadowy reputation. It’s location is, as far as I know, not known, though it is thought to possibly be located in Bulgaria. It includes some altcoins on it’s exchange, and has received criticism for it’s support of some coins that had poor reputations in the community. BTC-e currently controls 4% of the market.
Companies Selling Bitcoins Directly
Exchanges are markets that let users trade their currencies with other users. This was the standard until recently, when companies that obtain and sell bitcoins directly to their customers began to emerge. Companies in the past had tried this, and accepted credit cards, debit cards, and paypal, but were forced to charge
Now, at least two companies have emerged that have managed to solve this problem in different ways.
Coinbase, founded in 2012, was created to be a payment processing company for merchants that wanted to accept Bitcoin, but be paid in USD. Coinbase exploded on the scene, and grew to be a dominant force in the market, with millions in funding poured into the company. More recently, they have begun to allow credit and debit card purchases of Bitcoin, but the amount of Bitcoin that can be purchased instantly is limited to a maximum of $1000 per week, and only available for users with the highest level of verification, to reduce the risk of chargebacks or fraud. Any additional Bitcoin that is purchased must be purchased via ACH Bank Wire and is subject to a hold for 3-4 days, until the wire clears.
Trucoin, which recently launched to the public, seems like a newcomer to the Bitcoin world, but was actually founded in 2011. Trucoin operated as an eCommerce drop shipping company for a short period before turning their attention to Bitcoin purchasing and payment processing. However, they have been operating in relative secrecy for the past few years, while building a system designed to eliminate much of the chargeback risk associated with debit and credit card purchases of Bitcoin. By doing this, they provide up to $500 per day in Bitcoin purchases, with the funds available instantly, and have stated that the $500 limit can be raised even higher if an individual requests it from their support staff.
According to Trucoin’s President, the time it takes for the average user to sign up, purchase Bitcoin, and have it sent to their personal wallet is 2 minutes. Trucoin has also prepared for upcoming Bitcoin regulation by partnering with CoinX, as an authorized delegate, which gives the company legal authority to act as a money transmitter in over 2 dozen states. Even more recently, Trucoin announced a move into Bitcoin ATMs, and is partnering with Bitpay to provide Bitcoin ATMs for the Bitcoin St. Petersburg Bowl Game.
There are many other companies that provide credit card and/or debit card purchases for Bitcoin, but the vast majority markup the price significantly, or have even more strict limits on purchasing. However, if you find a new company that is offering these services at competitive rates, please let us know.
Purchase Bitcoins From Other People
Warning: When purchasing bitcoins in person from someone you do not know, always meet in a public place. Coffee shops or internet cafes are generally a good, neutral location, and almost always provide wifi.
While it may seem strange to buy a digital currency from someone in person, that is actually a very common method for a large portion of the community. Some do it to make money, by offering to buy BTC for less than the normal market price, and sell bitcoins for more than the normal market price. Others do it to avoid exchanges, or large companies, either for privacy reasons or because they are wary of trusting others with their funds.
No matter the reason, it is quite easy to find someone in most areas that will sell you bitcoins directly, and the payment options for this kind of purchase can be anything from a bank wire, to cash in hand.
The most popular service used to find bitcoins for sale by individuals is appropriately named “Local Bitcoins“. Local Bitcoins was started in 2012, and has grown steadily since that time. After the Mt. Gox debacle, and other scandals, it’s userbase grew enormously. At this moment, it has users offering to buy or sell BTC in 231 countries and 6835 cities.
Another choice is to visit a website, or forum, to find users to trade with. Bitcointalk’s Currency Exchange Market, as well as the subreddit /r/CryptoTrade are two options. Bitcointalk’s market is more active, but the CryptoTrade subreddit can be used to find people willing to engage in interesting trades.
Spending Cash for Bitcoins Not an Option?
If you don’t have any extra cash to spend on bitcoins, or if you just do not want to buy bitcoins, all hope is not lost! There are a multitude of other options to obtain bitcoins. However, nothing is truly free, so no matter what the choice, you will have to work for it. That being said, in the end, the reward tends to be worth it. The next page will outline a few ways that you can get some bits TODAY, if you are willing to spend a bit of time.