You might have heard about cryptocurrency and want to learn more, but you don’t know where to start. That is understandable. With all the buzz around cryptocurrency, it can be difficult for beginners to understand exactly what it is and how it works. In this beginner’s guide, we’ll explain the ins and outs of buying cryptocurrency in simple terms that anyone can understand, so you can have a good idea of whether it’s right for you.
Cryptocurrency is digital money that is traded on the internet through a system known as blockchain technology. It uses encryption techniques to regulate the generation of currency units, verify transactions, and control the transfer of ownership between parties involved in buying or selling cryptocurrency.
Use a Bank Transfer
The most common way to buy cryptocurrency is through an exchange. Exchanges allow you to trade fiat currency, like USD or EUR, for cryptocurrency in the same way you might use an online trading platform like TD Ameritrade.
There are four main ways to pay for your cryptocurrency when purchasing it through an exchange:
ACH bank transfer: Most exchanges will allow you to purchase crypto using ACH bank transfers, also known as e-checks. When paying with a traditional bank account and routing number, your funds will be available after 3–5 business days. This method of purchasing is slower than others but is widely accepted.
Wire transfer: You can also exchange fiat currency for cryptocurrency using a wire transfer, which can be done from any bank account worldwide. Wire transfers usually take 1–3 business days to process and have higher transfer limits than other payment methods; however, they are more expensive than other options since banks generally charge a fee every time you make one.
Personal check: You can buy cryptocurrency using a personal check in some states, where buying Bitcoin with cash and PayPal is not allowed by law (e.g., New York). However, this method has several disadvantages compared to other payment methods. Like, it takes up to 6 weeks before you receive the actual purchase amount, there’s no guarantee your check won’t bounce.
Buy with a Debit Card or Credit Card
When you’re new to buying crypto, figuring out which platform is best for your needs can be confusing and daunting. That’s why we’ve developed this guide on how to buy cryptocurrency with a debit card or credit card.
If you already have a credit card or debit card, why not use it to make the process even easier?
To get started, first make sure that the exchange you are using has those payment options available. Then, select that option at checkout, verify your identity (if applicable), and enter your payment details. If there are no issues, you should receive your funds instantly.
There are pros and cons to each type of purchase method:
- Cryptocurrency purchased with a debit/credit card may take longer to be transferred than other methods (although there will still likely be a fast deposit into your Coinbase account).
- Purchasing cryptocurrency with a debit/credit card may incur additional fees depending on your bank or credit issuer.
Now that you know how to buy cryptocurrency with credit cards or debit cards, let’s look at some of the most popular exchanges where you can do so in 2021.
Purchase Cryptocurrency Using PayPal
Now that you know about the different ways of buying cryptocurrency, let’s look at how to buy cryptocurrency with PayPal. On this page, we take a look at the exchanges that accept PayPal and how to purchase crypto using PayPal.
The following exchanges accept deposits via PayPal:
- Uphold – Uphold offers a straightforward way of purchasing cryptocurrencies through your PayPal account and also supports credit card purchases. The only downside is that it has a limited number of cryptocurrencies available for purchase.
- LocalBitcoins – LocalBitcoins is a peer-to-peer (P2P) exchange where users can sell or buy crypto in exchange for fiat currencies or other assets, such as gift cards. When buying from sellers on LocalBitcoins, make sure to check their reputation before making a purchase from them.
- Wirex – Wirex is another service where you can use your Paypal account to buy bitcoin and other cryptocurrencies directly using your credit card or bank transfer. It charges 0% fees on transactions made via bank transfers in the UK and EU, while there is a 5% fee charged on transactions made via wire transfers outside of Europe and the UK.
Money to Convert Cryptocurrency
The next step is to find a reputable seller. Do your research and check reviews of the seller’s reputation online. They should have a solid track record with past customers.
You’ll also want to use an escrow service that keeps your coins in safekeeping while they’re being exchanged between you and the seller. Depending on the coin, some exchanges may only act as escrow services and will not buy or sell cryptocurrencies themselves. A few examples are:
- LocalBitcoins (Bitcoin)
- BitQuick (Bitcoin)
- HODLHODL (Bitcoin)
Use a Peer-to-Peer Exchange
Two people, with names such as “Ryan” and “Kathleen”, exchange cryptocurrency directly between each other only where Ryan is transacting through a peer-to-peer exchange account. In this section, you will learn how to choose the best peer-to-peer exchange for your transaction, how to set up a peer-to-peer exchange account, and how to deposit funds via local bank transfer.
Crypto ATMs!
Cryptocurrency ATMs (also referred to as crypto ATMs or Bitcoin ATMs) are a relatively new concept, but they’re growing both in number and in use.
Crypto ATMs work similarly to regular ATMs: you enter the amount of cryptocurrency you wish to buy or sell, and it’ll spit out the equivalent amount in cash (or vice versa). This means that its use is limited only to those looking to buy with cash or sell for cash. While there aren’t many regulatory standards for crypto ATM machines just yet, most crypto ATM companies do require some form of identification before making a purchase.
ATM fees are usually higher than that of other methods on this list—you may be charged anywhere from 5% to 10%. Although using a crypto ATM is a convenient and generally safe way to make a transaction, they are not as secure as some other ways listed here. Still, it can be an excellent choice if you want/need the anonymity associated with buying cryptocurrency with cash.
Easily Buy Cryptocurrency with Your Credit Card
If you’re new to crypto, buying cryptocurrency with your credit card may seem like an easy way to get started. However, this buying method can be complicated by the fact that not all crypto exchanges let you purchase with a credit card. While it’s not impossible to use a credit card for purchases, there are some things you should know before you do.
First of all, remember that using a credit card comes with risks (as well as rewards). Once you go over your credit limit on a credit card or start carrying a balance from one month to the next, your purchases could cost much more than the sticker price due to interest. To avoid these extra fees, make sure the amount of cryptocurrency you want is within your budget and feel comfortable paying it off at once.
In addition, if you want to buy cryptocurrency with your credit card, you’ll need to choose an exchange that allows this kind of transaction. Not all exchanges accept credit cards for security reasons—and even if they do accept them, they may charge higher fees for such transactions in order to reduce fraud risk and deception attempts from malicious actors (known as “chargebacks”). If possible, try using another payment method instead—like debit or wire transfer—to avoid these additional charges and save money in the long run.
