How to Buy Bitcoin Legally
07 Dec 2020
Despite how popular Bitcoin has become in both the investment and financial world, many people still do not know how to buy it legally. You might be surprised to know that the process is very straightforward, and we are going to walk you through buying bitcoin legally if you would like to buy or invest in this cryptocurrency.
You Need a Wallet
To buy bitcoin, you will need a program known as a wallet. This is a digital wallet where you will store your coins after you buy them. The wallet will also be the place you store your private and public keys. Your private and public keys are long strings of letters and numbers generated through mathematical algorithmic calculations.
Your public key is where transactions happen, meaning it is what you use to receive and withdraw Bitcoin. It is also your digital signature and can be thought of like your username on social media. Your private key, on the other hand, is like the password you use to authorize transactions and is required to sell, buy or trade Bitcoin. Because of how important your private key is, it should not be shared and should be kept secret.
To protect your private key, you can encrypt your wallet using a strong password or use a cold storage option such as a USB drive to store it offline.
Depending on your location, you might need to verify your identity before buying or selling Bitcoin. This is an anti-money laundering measure. In many cases, you will need your driver’s license, national identification card or social security number if you are in the United States.
Secure Your Connection
When trading bitcoin online, you must do so on a secure network that you trust. Doing so on an insecure connection or public Wi-Fi puts you at risk of attacks from hackers.
Choose a Payment Method
Once you have the wallet, have submitted the documents required, and have a secure internet connection, it is time to decide what payment method you will use to buy Bitcoin. Some of the more common payment options include credit or debit cards as well as bank transfer. Some exchanges also let you buy bitcoin with PayPal or other online payment methods.
Remember that the payment options available to you will depend on your location and the exchange you choose.
Choose an Exchange
An exchange is where you actually buy Bitcoin. Exchanges are online marketplaces that are a lot similar to platforms you might use to buy stocks or other investment options. Exchanges give you access to the Bitcoin marketplace so you can buy Bitcoin or even exchange it for other assets such as gold or other currencies.
Some exchanges give you wallets that you can use to store your Bitcoin, but this is highly discouraged. You should move your Bitcoin to a secure wallet as soon as a transaction is complete as it is easier to control a wallet you own than one that is held by a Bitcoin Exchange.
Whether you are buying Bitcoin to make some money or as an investment option, it is important to do it the right way so that nothing goes wrong. The two critical things to remember are keeping your private keys safe and using a secure trusted internet connection to reduce the chances of getting hacked.