Bitcoin seems to be experiencing renewed interest. On the heels of a US government shutdown and with a slew of companies old and new supporting it, Bitcoin is once again center stage. So at this point you’ve heard of Bitcoin, maybe you’ve visited weusecoins.com or read up on Bitcoin here on cryptojunky, yet still haven’t taken the dive and tried Bitcoin out. Well in order to really give it a try you’ll need to get some Bitcoin in your Bitcoin wallet, which is what this article is all about.
There are a few different options for purchasing Bitcoin. The ones I’ll be covering here are centered on buying Bitcoin in the United States. I’d love to cover purchasing Bitcoin in other countries too, but am not well versed enough yet in Bitcoin markets outside the US (Though feel free to mention your favorite non-US exchange/service/site in the comments). Generally there are four different ways you can go about acquiring Bitcoin: Online Exchanges, Online Services, Locally, Bitcoin ATMs.
Currently there aren’t any convenient or safe ways of purchasing Bitcoin with services like PayPal, Western Union, or Credit/Debit card. This is mostly due to the fact that these services deal with chargebacks while Bitcoin by its very nature doesn’t allow for chargebacks.
Bitcoin exchanges are just what you’d expect, an online exchange where you can buy and sell Bitcoin for traditional currencies. There are quite a few of these available yet each has its own benefits and downsides.
Bitstamp has gained a significant amount of trading volume over the last several months. Today it is generally considered one of the best options for US based bitcoiners. Additionally, an increasing number of merchants are using the price of Bitcoin at BitStamp as their exchange rate. For the time being at least, I’d suggest using BitStamp if you decid to buy/sell Bitcoin on an exchange.
MtGox was by far the largest exchange earlier this year, and had traditionally been the only exchange doing significant trade volumes. However, MtGox has been beset by technical and legal problems. The exchange, which is based in Japan, ran into legal troubles with the US government earlier this year. Today, many users are experiencing very long delays when it comes to withdrawing funds from their accounts. This has led to an inflated price. MtGox Bitcoin prices are generally $10+ more expensive than other exchanges, such as Bitstamp. Currently I would strongly advise against using MtGox as an exchange as you’re unlikely to receive withdrawn funds in a timely manner and will pay a higher price for you Bitcoin.
Coinbase – A Bitcoin Service
If I had to recommend one way to buy Bitcoin, it’d be through Coinbase. Coinbase is a US based startup that went through the silicon valley startup incubator ycombinator in 2012. Coinbase works by linking your bank account with your Coinbase account. Once verified, you can purchase/sell Bitcoin via bank transfer.
Coinbase recently added a requirement that you have a VISA card linked to your account for instant purchases. Without this, you’ll receive your Bitcoin once your wire transfer goes through. They will provide you with an expected date that your Bitcoin will be available, but in my experience I receive my Bitcoin much earlier.
Another big plus for using Coinbase is that their service also includes a pretty good mobile wallet app for Android. It has been incorporated into other apps, such as Gliph, and may help spread Bitcoin further into the mobile space. Even if you aren’t all that interested in purchasing Bitcoin with Coinbase, their other services are worth checking out. If you have a friend that already uses Coinbase, make sure to ask them for a referral link, you may earn your friend some Bitcoin.
The big downside to Coinbase is that you lose anonymity. If, like many users, this isnt a concern then go ahead and use Coinbase. If anonymity is a big concern for you, then our next Bitcoin purchasing technique may be what you’re looking for.
LocalBitcoins is a site that allows you to link up with other local Bitcoin users and purchase Bitcoin in person. A lot of Bitcoin users have reported success with this service, though I’ve never personally used it. The prices that are found on LocalBitcoins are usually a bit higher than they would be through an exchange or other service.
One draw of local bitcoins is that it allows you to retain some anonymity. By buying Bitcoin in person you can avoid linking your bank account or other financial data with your Bitcoin transactions.
Currently there are two companies with Bitcoin ATMs infiltrating North America. Robocoin, which launched their first ATM in Vancouver, BC earlier this week, is based in Canada. The other option is Lamassu, which has at least one ATM in the United States. At this stage it is unlikely that you have a Bitcoin ATM placed conveniently nearby, though I’d expect that to change in the not to distant future.
There are almost certainly going to be a number of new services popping up around Bitcoin in the coming months. I’m in the process of trying out Coinkite, and will report back once I can give a decent assessment. Another one to look out for will be circle, a new Bitcoin company that just raised nine million dollars.
If you read this far I congratulate you! The first five commenters that provide some feedback on this article, i.e. your favorite Bitcoin purchasing technique, will be sent 0.05 BTC each (make sure to include a Bitcoin address). As always thanks for reading, and for the newcomers, welcome to Bitcoin!