How To Buy Bitcoin: A Beginner’s Step-by-Step Guide

Bitcoin, introduced in 2009, was the first cryptocurrency and remains the foundation of the digital currency world. It rose dramatically to $19,850 through 2017 and hit an all-time high of over $73,000 in 2024.

As an asset class, cryptocurrency is considered more volatile than bonds and stocks. But it’s possible to make a reasonable profit if you know how to buy Bitcoin. Here’s a full overview of how to get started.

You can start this week.

Step-by-Step Guide on How To Buy Bitcoin

Like any other asset class, there are a few steps you’ll need to take to set up an account and buy Bitcoin.

Step 1: Choose a Cryptocurrency Exchange

. Fortunately, there are a few different ways to do this.

Cryptocurrency Exchanges

Cryptocurrency exchanges facilitate cryptocurrency trading for several kinds of assets, including fiat currencies and digital currencies. Such a platform would act as an intermediary between seller and buyer, making money through transaction fees and commissions.

Typically, there are two types of cryptocurrency exchanges:

These cryptocurrency exchanges are third parties between sellers and buyers. They are more reliable since there’s a company involved. Some examples include Kraken and Coinbase. These exchanges are very user-friendly as they allow users to view their accounts and make transactions via convenient websites and applications.
These exchanges facilitate peer-to-peer cryptocurrency transactions without an intermediary. Some examples include Blocknet and AirSwap. These exchanges are at a lower risk of being hacked since users do not have to transfer their cryptocurrency or other assets to an intermediary.

Coinbase, Kraken, Binance and Gemini are some of the more popular cryptocurrency exchanges. Coinbase is known for its beginner-friendly interface, while Kraken provides advanced tools for experienced traders. Binance supports a wide variety of cryptocurrencies, and Gemini emphasizes strong security measures and compliance with regulations.

When choosing an exchange, consider the fees they charge, as these can vary for trades and withdrawals. Security is also important, so look for platforms with strong encryption and two-factor authentication. Don’t forget that user experience matters — a simple and intuitive interface can make managing your crypto investments much easier.

Cryptocurrency Brokers

Cryptocurrency stockbrokers are a firm or agent that handles a client’s assets and trading.

, offering free Bitcoin trades. EToro, a social trading platform, is another prominent cryptocurrency broker.

Step 2: Create an Account

To set up an account on a cryptocurrency exchange, you’ll need to provide personal information like your name, email address and sometimes a government-issued ID for verification.

Choose a strong password that is hard to guess, combining letters, numbers and special characters. Also, enable two-factor authentication for added security. This provides an extra layer of protection by requiring a code from your phone or email in addition to your password.

Alternative Ways To Buy Bitcoin

If you don’t want to set up an account there are other ways to buy Bitcoin:

These are just like regular ATMs but can be used to sell or purchase Bitcoins. According to Coin ATM Radar, there are over 37,000 ATMs of this sort in the U.S.
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You can purchase Bitcoins from another owner directly, sort of like buying something off Etsy. Some tools for this include Bitquick and Bisq. However, you should be careful when purchasing cryptocurrency directly from someone without the involvement of a third-party intermediary.

Step 3: Deposit Funds

, credit or debit cards and PayPal. Each method has different processing times. For example, bank transfers might take a few business days, while PayPal and card payments can be faster.

It’s also important to understand deposit fees, as some methods may charge a small percentage or flat fee for transactions. Be sure to review the platform’s details on fees and times before choosing your deposit method.

Step 4: Buy Bitcoin

Once you have linked your wallet to the exchange, you must select the number of Bitcoins you want to purchase. As of this writing, one Bitcoin costs about $96,000, making it difficult for everyone to purchase a round-number amount.

You can buy the cryptocurrency in fractions, allowing you to purchase exactly the amount you want.

Once you know the amount of Bitcoin you want to buy, decide on the type of order:

: Lets you buy Bitcoin immediately at the current market price, which is fast but might cost slightly more if prices are changing quickly.
: Lets you set the price you’re willing to pay, and the order will only go through if the market reaches that price. While limit orders give you more control, they may take longer to complete or might never go through if the price doesn’t reach your set amount.

Step 5: Store Your Bitcoin Safely

. Hot wallet transactions are quicker, while those in cold wallets have extra steps to maintain security. The latter takes longer but is more secure.

Hot Wallet

Storing your cryptocurrency in a hot wallet means the assets are stored by a provider or trusted exchange in the cloud. You can access your Bitcoins through a computer browser or an app.

All trading exchanges come with complimentary hot wallets where all your Bitcoins are automatically stored. If you want to store your Bitcoin in a third-party hot wallet, you can download a free app and use it to keep your assets safe.

Some hot wallet providers include Coinbase, Electrum and Mycelium.

Some pros of a hot wallet include:

Quick to access
Easy to use
Usually free

However, hot wallets are connected to the Internet, making them susceptible to hacking and presenting other, more technical vulnerabilities.

Cold Wallet

A cold wallet is an offline encryptable device where Bitcoins can be downloaded. You can carry the device around and it’s considered safer than a hot wallet.

Two cold wallet providers are:

Their cold wallets cost $79 to $399.
Their cold wallets range from $49 to $169.

When you’re creating digital wallet accounts, make sure the passwords are strong. Here are some pros of cold wallets:

More secure than hot wallets
Completely offline

What You Need To Know About Buying Bitcoin

Understanding how to buy Bitcoin is just the first step — it’s also important to consider key factors like market volatility, investment goals and security before making a purchase.

Bitcoin and Cryptocurrency Basics

Bitcoin is a type of cryptocurrency that works without the need for a central authority like a bank. It uses a technology called blockchain, which is a secure system that records all transactions.

Cryptocurrencies, like Bitcoin, are stored in digital wallets and can be used for online payments or as an investment.

Volatility and Risk Associated With Bitcoin Investments

Bitcoin is highly volatile, meaning its price can change quickly, sometimes rising or falling by large amounts in a short time. This makes it a risky investment because you could lose money if the price drops.

It’s important only to invest what you can afford to lose and to research carefully before investing.

Setting Investment Goals

Before investing, it’s important to think about your financial goals. Decide how much money you can set aside for investing without affecting your daily needs or savings. For example, if your goal is to grow wealth over several years, you might invest more than if you’re saving for a short-term expense.

Diversification is also key. Essentially, it means spreading your investments across different types of assets, like stocks, bonds and cryptocurrencies. This reduces risk because if one investment loses value, others in your portfolio might still grow. A balanced portfolio can help protect your money over time.

How Much Should You Invest in Bitcoin?

If you’re new to cryptocurrency investments, you should be pretty careful since the market is very volatile, and you can end up losing your money quickly. Here are some tips to be on the safer side:

Make sure you learn everything you need to about cryptocurrency exchanges before selecting one. You can also talk to experienced investors through online forums or consult with a financial advisor.
Investing in Bitcoin seems lucrative since the currency has spiked exponentially recently. Still, you should not put all your money in one cryptocurrency. Instead, diversify your investments so that your portfolio is stable even when there are shifts in the market.

contributed to the reporting for this article

Information is accurate as of Feb. 6, 2025.