Buying Bitcoin: A Guide for Americans
How to purchase Bitcoin as an American.
Future guides will explain how to use Bitcoin to buy other cryptocurrencies, as well as buying options in other countries.
BUY WITH BANK ACCOUNT
Coinbase.com was founded in June 2012 and provides three main services.
- Bitcoin Purchasing and Selling
- Bitcoin Storage
- Merchant Services
Coinbase is located in San Franscico and was launched through the YCombinator startup incubator. It has received investments from well known VC's including Andreessen Horrowitz, Union Square Ventures, and Ribbit Capital. They have an outstanding reputation and are considered to be one of the most legitimate companies in the industry. They currently do not serve customers outside of the United States.
Buying Bitcoin through Coinbase is as simple as making an account, and linking your bank account.
After you have done that, you are ready to go. There are two types of purchases you can make, an instant purchase and a regular purchase.
- An instant purchase is exactly what it sounds like. You click buy, Coinbase initiates a bank transfer, and you receive your Bitcoin instantly.
- In a regular purchase, it is the same process, however, you do not receive your coins instantly. You get locked in at your purchase price, then a bank transfer is initiated, but you don't receive your coins until the bank transfer is finalized, which usually takes about three days.
- Both types of purchases have weekly and daily limits, with instant purchases having much lower limits.
- After thirty days, if you go through an automated identity verification process, you can move up to "Verification Level 2" which gives you higher purchase limits.
Once you've purchased your coins, they are automatically stored on Coinbase's hosted wallet.
It is not a Bitcoin wallet in the traditional sense because they control your private key. This means that if the Coinbase website goes down, or if Coinbase locks your account, you will have no way to access your coins. At the same time, this means that you no longer have to worry about losing your private key or having it stolen. Coinbase stores and protects your coins for you and they take security very seriously. You can read about their security practices here.
If you want to control your own private keys, you can always send your coins to a different Bitcoin address that you control. If you plan on storing your coins for awhile, then it is probably best to move them to a password protected paper wallet.
BUY WITH CASH
Mycelium is a powerful android based Bitcoin wallet and decentralized exchange all in one.
The Local Trader part of the app allows you to find people near you that are selling Bitcoin for cash or other cryptocurrencies. If you wish to sell Bitcoin, then you can also list it through the app.
They have a reputation system, and your username is tied to a locally stored Bitcoin address. Mycelium won't let a seller list coins for sale if there is not enough Bitcoin in the connected address. Once you initiate a purchase from a listed seller, the app will launch an encrypted chat so the buyer and seller can coordinate the transaction.
You can find Mycelium's own step by step guide to Local Trader here.
Unfortunately Mycelium isn't currently available for iPhone. However, you can always purchase a Moto G or a Nexus 5 unlocked directly from Google, for $179 and $349, respectively. You don't even have to use it as an actual cell phone.If you plan on buying a large amount of coins, and don't want to change from the iPhone, then it could be worth it to just use the Moto G/Nexus 5 as a dedicated Bitcoin device using the WiFi.
Disclaimer: This post is intended solely to provide information. As I have no knowledge of individual circumstances and technical level, readers are expected to complete their own due diligence before proceeding with anything mentioned in this article. The topics discussed in this post are advanced and readers proceed at their own risk. Readers are expected to complete their own due diligence before purchasing or selling anything mentioned or recommended.