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Where and How to Buy Bitcoin or Cryptocurrency
Chapter 4
Frequently Asked Questions
If you're still a bit confused, that's okay. Buying bitcoins is hard, but that's why I built this site, to make it easier!
If you still need help, I hope this FAQ will help to answer any remaining questions.
Jordan Tuwiner Founder, Buy Bitcoin WorldwideWhen is the Right Time to Buy?
As with any market, nothing is for sure. Bitcoin is traded 24/7 and its price changes every second.
Use tools like our Bitcoin price chart to analyze charts from other Bitcoin trading sites. These charts will help you understand Bitcoin’s price history across the many global Bitcoin exchanges.
Why Does Buying Bitcoin Take So Long?
Long wait times are usually a problem with existing payment systems, not with Bitcoin itself.
Bitcoin transactions only take about 10 minutes to confirm. Bank transfers in the U.S., for example, can take up to five days to complete.
Bitcoin transactions can be confirmed as quickly as 10 minutes; it’s rare to experience a delay longer than one hour.
This means that a merchant can’t release bitcoins to a customer until five days have passed unless they're willing to take on risk.
Can You Sell Bitcoins?
Yes, of course! Most exchanges that let you buy bitcoins also let you sell (for a fee of course).
If you don't want to sell bitcoins, you can also spend them. While you can't incorporate a company with Bitcoin yet, you can spend it lots of other places.
Why Do I Need to Upload my ID for Some Exchanges?
This is due to Know Your Customer (KYC) laws which require exchanges to record the real world identity of their clients.
Can Anyone Buy Bitcoin?
Bitcoin requires no permission to use or buy.
You will have to check the legality of Bitcoin in your country. In most countries Bitcoin is legal!
Should I Buy Physical Bitcoins?
Physical bitcoins are physical, metal coins with a Bitcoin private key embedded inside.
We recommend that you stay away from physical bitcoins unless you’re a numismatist.
While physical coins sound like a good idea, they force you to trust the honesty of the creator of the coin. The creator could create two copies of the private key.
Unless you immediately open and withdraw the digital bitcoins from your physical bitcoin, the creator could at any time steal the funds it contains.
Can I Buy Partial Bitcoins?
Yes, of course!
Each bitcoin is divisible to the 8th decimal place, meaning each bitcoin can be split into 100,000,000 pieces. Each unit of bitcoin, or 0.00000001 bitcoin, is called a satoshi.
Most exchanges let you buy as little as $5 worth of bitcoins at a time.
Why Should I Buy Bitcoin Instead of Mining?
A long time ago anyone could mine bitcoins on their computer at home. Today, only specialized computer hardware is powerful enough to do this.
Think about it like this:
Should you buy gold or mine gold? Well, to mine gold you need big powerful machines, a lot of time, and money to buy the machinery. This is why most people just purchase gold online or from a broker.
So Bitcoin is no different.
You should just buy some if you want coins without trying to mine.
Do I need a Bitcoin Account Before Buying?
With Bitcoin, there are not really accounts.
Instead, you should have a Bitcoin wallet. If you want to store bitcoins, then a wallet is where you keep them.
In Bitcoin these wallets are not called an account but a wallet functions almost the same way. The only difference is you are responsible for the security if your wallet rather than placing the security in the hands of a bank or trust.
How do I check if I received a Bitcoin payment?
You can check in a Bitcoin block explorer like Smartbit.
Why Would Someone Even Want to Buy Bitcoins?
There are many reasons people want to own bitcoins.
Many people like to purchase some and put them to the side in the hopes that they will be worth more in the future.
Many people are using bitcoins to remit money to their families from out of the country. Right now, Bitcoin is one of the cheapest ways to do this.
People also use Bitcoin to buy stuff online. Big companies like Microsoft, Dell, Newegg and Overstock all accept bitcoins.
Bitcoin is also very unique compared to other markets in that it trades 24 hours a day and never stops. Most stock markets only open on weekdays from 9 AM to 5 PM. So many traders buy and sell bitcoins because it is a fun and fast market to trade.
Can I Buy Bitcoin Stock?
Bitcoin itself is not a stock despite it functioning somewhat like one. You can’t buy bitcoins through a traditional stock fund and instead have to buy bitcoins yourself. This may change in the future if a Bitcoin ETF ever gets approved.
What Happens When you Purchase Bitcoins?
Bitcoins are actually just secret digital codes. When you buy bitcoins, the seller is using a wallet to transfer the ownership of the coins to you. Once your purchase is complete, the codes are now owned by you and not the seller.
Why Are the Chinese Buying So Much BTC?
It seems the Chinese really like Bitcoin’s properties such as its sound monetary policy and that it can be used anywhere in the world. Bitcoin's volatility also makes it interesting for speculative traders.
Is Bitcoin Legal?
Bitcoin is legal in nearly every country. Only a few countries have actually banned the use of bitcoins. Before you buy, make sure you double-check the legal status of Bitcoin in your country.
Why do I need to buy bitcoins before buying most altcoins?
Bitcoin functions as the "reserve" currency of cryptocurrency. So it is very hard to buy other coins without first buying bitcoins. Once you purchase the bitcoins you can convert the bitcoins into other cryptocoins. This is mostly because Bitcoin has very good liquidity and is traded on every cryptocurrency exchange. So most coins are traded against Bitcoin rather than the US dollar or other fiat currencies.
Am I Anonymous when I Buy?
Bitcoin is not anonymous but rather pseudonymous. All Bitcoin transactions are public but it is not always known the real identity behind any given Bitcoin address.
Can I use Multiple Exchanges?
If the limits on one exchange are to low you can simply open an account with another exchange to give yourself the ability to buy more.
You can signup, join, and use as many Bitcoin exchanges as you want that are available in your country.
Do I need to Pay Taxes on Bitcoin?
In most countries you will need to pay some kind of tax if you buy bitcoins, sell them, and make a gain. In the US you must do this on every transaction.
Be sure to check with your country’s tax authorities to make sure you are paying all the required taxes on your bitcoin use.
It is possible to buy bitcoin & crypto in an IRA.
What Other Ways can I Get Bitcoins Besides Buying?
Just like any other form of money, you can get bitcoins by requesting from your employer to be paid in bitcoins.
What Is the Supply of Bitcoins?
The supply of Bitcoin is fixed. There can never be more than 21 million -- and there are about 17.3 million right now. Every 4 years, the bitcoin halving happens where the new supply rate is cut in half.
What's up with the Bitcoin price?
This is the question everyone is asking. No one knows!
It's now been 400+ days since Bitcoin hit an all-time high. The previous high was over 1,000 days.
The good thing is, developers are hard at work to make Bitcoin the best money the world has ever seen.
What is Bitcoin?
Understanding Bitcoin is sometimes difficult for newcomers because it’s really two things:
- digital gold
- a payment network
Bitcoin vs Other Payment Networks
In terms of acting as payment network, Bitcoin works quite differently from others such as PayPal or Venmo. These traditional forms of payment over the internet, which are tied to the legacy financial system, involve the use of centralized, trusted third parties to order transactions and keep track of user account balances.
Bitcoin is Permissionless
In the case of Bitcoin, those who are in charge of ordering transactions are dynamic and potentially anonymous. This is the key differentiator to understand about Bitcoin.
The way in which transactions are processed allows bitcoin to act in a permissionless, censorship-resistant, and apolitical manner.
No single entity is in control of the financial activity that happens on the network.
Anyone can use Bitcoin, whether in the USA, UK, New Zealand, Germany, UAE or any other country.
What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
The above quote is what the pseudonymous Satoshi Nakamoto wrote in the original Bitcoin white paper.
Nakamoto effectively created a decentralized solution to what is known as the double-spending problem. This was an issue seen in many previous digital payment systems.
Bitcoin as Digital Gold
Now that we’ve covered Bitcoin as a payment network, let’s take a look at bitcoin as a form of digital gold.
Bitcoin is often referred to as digital cash due to its ability to be transacted over the internet in a manner similar to physical cash, but the digital gold analogy makes more sense due to the monetary properties of bitcoin.
In the beginning, 50 bitcoin were created roughly every ten minutes, but that increase in supply is halved every four years.
The issuance schedule will continue until around the year 2140, when the supply will be capped at nearly 21 million bitcoins.
This monetary policy is a part of the Bitcoin network’s consensus rules, and there is no central banker in charge of controlling the supply.
When was Bitcoin Created?
On August 18, 2008, the domain name "bitcoin.com" was registered.
A few weeks later, on October 31, 2008, the world as we know it would be changed forever.
On that day, a link to a paper with the title Bitcoin: A Peer-to-Peer Electronic Cash System, was uploaded to a cryptography mailing list.
In January of the following year, the bitcoin software was implemented and released as open-source code.
The bitcoin network was created on January 3, 2009, when the first block of the chain was mined.
This was called the genesis block. Embedded in the coinbase of that block was a text alluding to a British news headline from that day referring to bank bailouts.
A cypherpunk by the name of Hal Finney was the first person to receive a bitcoin transaction. Finney downloaded the software for bitcoin when it was released and on January 12, 2009, he received ten bitcoins. The first commercial transaction with bitcoin was executed in 2010 when a programmer bought two pizzas from Papa John's for ₿10,000.
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