How to Buy Bitcoin: NEW Step-by-Step Guide [2021]

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Today I’m going to show you exactly how to buy Bitcoin for beginners.

In this step-by-step guide I’ll cover:

  • What is Bitcoin
  • Where to buy Bitcoin
  • How to store your bitcoin
  • Bitcoin investing strategies
  • Lots more

So if you want to start investing in Bitcoin and set yourself up for potential 3-digit gains, you’ll love this guide.

Keep reading.

Sneak Peek: Best Bitcoin Platforms


Best Platform for Beginners 
👇

Best Platform with Multiple Purposes 👇

Best Wallet 👇

What Do you Need to Buy Bitcoin?


Before you start investing in Bitcoin, you’ll want to prepare a few things first, so that you won’t have any issues setting up your Bitcoin trading account. 

Below are 4 typical items you’ll want to have prepared:

  • Bank routing number
  • Bank account number
  • Secure internet connection
  • Personal ID card (like a driver’s license)

You will need to supply your personal information if you’re investing with some of the common platforms. 

However, this article does not explore ways to buy Bitcoin without ID and rather how to buy Bitcoin on some of the most popular trading platforms.

how to buy bitcoin in 5 steps

How to Buy Bitcoin for Beginners


Buying Bitcoin is not as hard as it seems.

I’ve broken down this process into 5 actionable steps that you can take today.

Let’s get started.

how to buy bitcoin step 1

Step #1: Join a Bitcoin Exchange


Before you even open a Bitcoin trading account, you need to figure out which exchange (or trading platform) you want to use. 

Honestly, there are many Bitcoin trading platforms today, so you’ll have to do your own research to figure out which one you like best. 

Personally, I’ve taken a liking to Coinbase.

Coinbase is one of the largest cryptocurrency exchanges in the world, with over 56 million verified users as of Q1 2021. 

According to Coinbase, the exchange has never been hacked and Coinbase insures its cryptocurrency that is held in storage (which is 98% of its currency).

Because of these extra security measures, I feel confident with Coinbase. 

Recommended reading: Coinbase Review

BlockFi is another up-and-coming crypto exchange platform, where you can buy, sell, and trade Bitcoin. 

In addition to trading cryptocurrency, with BlockFi you’ll get additional features like borrowing against your cryptocurrency (which I don’t recommend) and applying to its recent BlockFi Rewards Visa Signature Card (which offers a 1.5% back in Bitcoin on any purchase). 

Recommended reading: BlockFi Review

To save you some trouble and time, I’ve compiled a quick comparison between Coinbase and BlockFi, below:

coinbase logo white blockfi logo white

Currencies

66

8

Security

- 2-factor authentication

- FDIC insurance of up to $250,000 in USD

- Cold storage of 98% of cryptocurrencies

- Insurance against theft

- Bug bounty program

- 2-factor authentication

- Cold storage

- Hot storage insurance

- Bug bounty program

Fees/Transactions

More complex fee structure, ranging from 0.50% to 4.5%

Up to 1% per trade

Account Minimum

$2

$0

Customer Service

Difficult to Contact

Responsive – and can be reached by phone

International Use

40+ countries

Interest accounts are available worldwide

Additional Features

- Manage your portfolio

- Mobile app

- Learn and earn

- Coinbase Pro

- Vault protection

- Recurring buys

- Use your own wallet

- Take loans against your crypto

- Bitcoin credit card

- High interest crypto account

- You can use your own wallet

In addition to Coinbase and BlockFi, other exchanges exist as well, including:

  • Kraken
  • Gemini
  • Binance

As always, it’s important to do your research first, before you commit to an exchange. 

how to buy bitcoin step 2

Step #2: Determine Where to Store your Bitcoin


After you’ve decided which Bitcoin exchange platform to use, the next step is to determine where to store your bitcoin. 

This can be either in a “hot wallet” or “cold wallet”.

If you are skeptical of hackers and cyber-attacks, then you’ll probably want to consider getting a cold wallet.

Below is the difference between a hot wallet vs a cold wallet:

Hot Wallet Cold Wallet

Your cryptocurrency is stored online, typically by your exchange platform.

Your cryptocurrency is stored offline, typically on a physical flash drive.

Hot wallets are convenient but might not offer the most security, since they store your cryptocurrency online.

One of the most popular – and safest – types of cold wallets are known as the Ledger Nano X.

The Ledger Nano X provides maximum security and control over your crypto. The Ledger Nano X keeps your coins offline and protected.

Since a cold wallet is stored offline, away from a hacker’s reach, this is typically the safest route if you are concerned about security breaches.

To store your cryptocurrency in a hot wallet, you virtually don’t have to do anything aside from buying your Bitcoin (or other cryptos) from an exchange like Coinbase.

how to buy bitcoin step 3

Step #3: Link your Bitcoin Wallet to a Bank Account


After setting up an account with a crypto exchange and determining whether you want a cold or a hot wallet, it’s time to connect your bank account with your crypto wallet. 

You could either link your bank account with your cryptocurrency exchange platform – and platforms like Coinbase have made this a very simple, 5-second process. 

Thanks to advancements in FinTech, you also have the option to link your cold wallet to your bank account.

Now, all you have to do is place an order for Bitcoin and execute your trade!

how to buy bitcoin step 4

Step #4: Execute your Bitcoin Order


The physical act of purchasing Bitcoin is very simple – all you have to do is select how much money you wish to invest in Bitcoin and then execute your order. 

Thanks to technology, there is practically no minimum (aside from your crypto exchange platform’s purchase minimum, which is $2 with Coinbase). 

How much Bitcoin should you buy? 

That’s a very difficult question to answer, especially because I’m not familiar with your personal situation and I don’t know you. 

However, below is a short checklist of items that you may want to consider before hitting the “purchase” button on your crypto exchange platform:

  • Do you have an emergency savings fund?
  • Have you paid off your high-interest debt?
  • Are you comfortable with volatility and taking risk?
  • Are you taking advantage of any employer matches? 
  • Are you saving for retirement in other investment vehicles?

Make sure you can answer these questions confidently before moving money into cryptocurrency. 

how to buy bitcoin step 5

Step #5: Oversee your Bitcoin Investment


The last step in this process is to oversee your Bitcoin investment – which could mean a bunch of different things.

You could:

  • Use your Bitcoin as an actual currency to buy things online
  • Hold your Bitcoin for the long term and hope it appreciates in value
  • Become a day trader and try to take advantage of daily ups and downs

The good news is that cryptocurrency exchanges will give you the necessary tools to properly manage your cryptocurrency.

What is Bitcoin?


Now that you know how to buy bitcoin, let’s take a step back and explore the question “what is Bitcoin?”

Let’s break down this definition into plain English:

Bitcoin Jargon Explanation

Anonymous

Bitcoin owners are NOT identified by their account numbers, names, social security numbers, etc.

Decentralized

There is no middle man to regulate the currency (no bank, government, financial institution, etc.)

Digital Currency

There are no physical coins or bills, everything is online

Blockchain Technology

A form of digital technology that is theoretically unhackable

Bitcoin Mining

Bitcoin “miners” use computers to solve complex mathematical problems to create new Bitcoins

Whenever I read the definition of “Bitcoin,” I feel like I’m starting to learn a new language!

Want to know a fun fact?

Bitcoin is the Number 1 most traded cryptocurrency in the world, according to the website CoinMarketCap.

cryptocurrencies with highest trading volume july 2021

Source: CoinMarketCap

In fact, about 17% of American adults, or roughly 46 million individuals, own at minimum 1 share of Bitcoin – and they’re continuously adding to their cryptocurrency portfolio.

So, without a doubt, Bitcoin is a very popular cryptocurrency.

But, let’s take a closer look into the history of Bitcoin, which is only 12 years old, to see how far the mother of all crypto has come in the past decade.

Year Significance

2009

Bitcoin became the first cryptocurrency fully available to the public

2010

First time someone used Bitcoin to buy 2 pizzas for 10,000 Bitcoins

2011

The anonymous creator of Bitcoin, Satoshi Nakamoto, shared the source code and domains of Bitcoin

Unfortunately, not much is known about the true creator of Bitcoin. 

Some say that “Satoshi Nakamoto” (which is the pseudonym used for the Bitcoin creator(s)) is 1 person, while others say it’s a group of people. 

In fact, some believe that “Satoshi Nakamoto” is a combination of several words:

  • Samsung & Toshiba = Satoshi
  • Nakamichi & Motorola = Nakamoto

There is one truth that remains firm: No one knows who the founder(s) of Bitcoin is/are.

What is Bitcoin used for?


Bitcoin is a cryptocurrency – which means that you can utilize Bitcoin as a form of payment for products and services. 

There are over 100,000 companies that currently accept Bitcoin, including:

  • Gyft
  • Subway
  • Pizza Hut

Keep in mind that you may incur fees and additional charges when paying with Bitcoin as opposed to paying with cash or by credit card.

Bitcoin & Blockchain: How does this work?


Bitcoin uses blockchain technology to record all Bitcoin transactions. 

Here’s why blockchain technology is beneficial:

  • Improved efficiencies
  • Transactions are traceable
  • Transactions cannot be changed 
  • Transactions are handled much faster
  • Cuts costs by removing the middleman
  • The blockchain is not governed by 1 entity

Since blockchain transactions cannot be altered, this technology also lowers the risk of fraud or other illegal activity. 

This network of miners – or computers – uses mathematical processes to verify the transactions.

Remember, once a transaction is recorded on the blockchain, it becomes unchangeable.

Bitcoin Pros & Cons


There are some general pros and cons when it comes to investing in Bitcoin, which I’ve listed out below:

Bitcoin Pros Bitcoin Cons

Potential for 3-digit returns

Your returns often depend on timing the market

Increased popularity of Bitcoin

Extremely volatile

Potential for long-term returns

High-risk investment

Increased diversification

Cyber hacking is a risk

Immediate transactions

Potential for large losses

Whether Bitcoin is the right investment for you, it really depends on your personal situation.

Strategies to Invest in Bitcoin


Believe it or not, the strategies to invest in Bitcoin are very similar to the strategies used to 
invest in the stock market.

There are 3 main strategies investors have used for Bitcoin in the past:

  • Day trading
  • Hold for the long-term
  • Use Bitcoin as an actual currency

Let’s take a look at what these strategies would mean for you. 

Investing Strategy Strategy Defined

Day trading

Trade Bitcoin based on daily market volatility

Hold for the long term

“Buy and hold” Bitcoin for the long term in the hopes that Bitcoin will appreciate

Use as an actual currency

Buy Bitcoin to buy products or services

If you’re willing to invest in Bitcoin, just make sure that you are comfortable weathering the ups and the downs of the cryptocurrency market.

I’ve read horror stories of people taking out loans and dumping their life savings into Bitcoin (and other cryptocurrencies).

Please make better choices.

FAQs on How to Buy Bitcoin

How to Invest in Bitcoin for Beginners:

  • Join a Bitcoin Exchange
  • Get a Bitcoin Wallet
  • Link your Bitcoin Wallet to a Bank Account
  • Execute your Bitcoin Order
  • Manage your Bitcoin Investment

If you are a consumer and simply want to buy 1 Bitcoin, then you’ll want to look at the daily price of Bitcoin, which fluctuates.

As of July 2021, the price of 1 Bitcoin equals about $33,849.90 USD. 

However, if you are more advanced and mine Bitcoin, then it costs between $7,000 to $11,000 USD to mine 1 Bitcoin. 

Yes, you can buy Bitcoin for $10. Thanks to the high-tech advancements of crypto technology, you can buy Bitcoin for virtually any price, although most crypto exchanges enforce a minimum order.

In Coinbase’s example, the minimum amount of cryptocurrency you can purchase is $2. 

There is no minimum investment for Bitcoin. The only minimum that’s imposed on your Bitcoin investment will be from your online trading platform.

The key when it comes to investing in Bitcoin is to invest only as much as you feel comfortable losing. 

Of course, no one is happy with losing money, but then again, without risk there is no potential for a gain.

There is no set minimum to start investing in Bitcoin. Although you may be limited by your cryptocurrency trading platform.

Bitcoin has created millionaires in the past. But, past performance does not indicate the same will happen in the future. 

If you’re looking for a get-rich-quick scheme, then Bitcoin is not your path to riches because it’s so volatile.

The worst case scenario is that you invest everything you own into Bitcoin and due to the market’s volatile nature, you lose your investments.

Only invest in Bitcoin as much as you are comfortable with. 

Buying Bitcoin: The Bottom Line


If you’re looking to 
grow your money through alternative investments like cryptocurrency, then Bitcoin is likely your most popular digital currency. 

Bitcoin is the first cryptocurrency of its kind, with over a decade of life, Bitcoin is becoming more and more popular every day. 

However, it’s important to note the risks when buying Bitcoin:

  • It’s risky
  • It’s volatile
  • It’s not SIPC insured
  • It’s not FDIC insured
  • It doesn’t have a proven track record

As you can see, there are some downsides associated with buying Bitcoin.

However, there are many benefits you can reap from buying Bitcoin as well, and Bitcoin has made millionaires in the recent past. 

Some of those pros could include:

  • It’s diversification
  • It has a finite supply
  • It offers high returns
  • It has a low risk of inflation
  • It’s not regulated by the government

The good news is that you can buy Bitcoin for virtually any amount. 

You’ll only be limited by the minimum trade order of your cryptocurrency trading platform. For example, if you trade with Coinbase, your minimum investment is $2.

Do you plan on buying Bitcoin? Let me know your thoughts in the comment section, below!

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Fiona Smith
Fiona Smith
The Millennial Money Woman was founded by Fiona Smith. She holds her Master of Science Degree in Personal Financial Planning and has co-founded a local non-profit community teaching financial literacy to young professionals.

2 thoughts on “How to Buy Bitcoin: NEW Step-by-Step Guide [2021]”

  1. Great read!
    However, you did not talk about the cost of transactions at Coinbase, in and out…Please address

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