How do you purchase bitcoin in 2019? Increasingly, buying bitcoin via bank transfer may be the best option for most people. Keep reading for an up-to-date guide to purchasing bitcoin.
There are two main ways of acquiring bitcoin:
- Mining bitcoin. Mining is relatively complicated and not the best approach for first-time bitcoin investors, although it can be more cost-effective if done properly.
- Purchasing bitcoin using fiat currency. Fiat currency means “regular” currency—such as U.S. dollars or Euros. Buying bitcoin is the easiest and fastest way to acquire bitcoin and start investing.
How Do You Buy Bitcoin?
If you decide to use the second route described above to acquire bitcoin, you have several options to consider.
The first is which bitcoin exchange to use. A number of sites allow you to exchange fiat currency for bitcoin. Coinbase is the most popular, but other common options include Kraken and Gemini. The major differences between the exchanges include the transaction fees they charge and the amount of personal information they collect about you.
Another factor to weigh is whether you will buy bitcoin using a credit card or via bank transfer. Recently, a number of banks in several countries have announced that they will ban bitcoin purchases via credit card. This makes buying bitcoin via bank transfer the only option for a growing number of people.
That’s not necessarily bad news for bitcoin investors. Bitcoin exchanges tend to charge lower transaction fees if you buy bitcoin with a bank transfer, so you save money. The exchanges also generally allow you to buy more bitcoin at once via bank transfer than if you used a credit card. On the downside, buying bitcoin through a bank transfer tends to entail longer delays before the bitcoin becomes available to you, due to the time it takes banks to process funds transfer requests.
You can also argue that buying bitcoin with a bank transfer is less risky because you are investing capital rather than using leverage. If you buy bitcoin using a bank transfer and bitcoin’s price plummets, you’ll lose money (unless you can wait out the storm and let the price recover), but at least you won’t end up with credit card bills that you can’t pay and a tanking credit score.
Beating the Bitcoin Credit Card Ban
Keep in mind that if you really want to buy bitcoin on credit, there’s nothing stopping you from borrowing money using an instrument other than a credit card, placing the money in a checking account and purchasing bitcoin using the checking account.
You may also be able to purchase a different kind of cryptocurrency with a credit card, then exchange that for bitcoin. It is currently unclear whether banks intend to ban purchases of all types of cryptocurrency using credit cards, or just bitcoin.
The bottom line: If you want to buy bitcoin, making the purchase via a bank transfer is probably your best bet. It is the path of least resistance, and it is more cost-effective.
That said, if you really want to buy bitcoin using credit, there are solutions for doing so even if your bank is among those that have now banned bitcoin purchases using credit cards.
Interested in getting clarity on your financial picture before investing in bitcoin? Get your credit report now!