Where and How to Buy Bitcoin

If you’re interested in investing in Bitcoin, one of your most pressing questions is likely where and how to buy them.

Fortunately, the process isn’t nearly as complicated as the perceived mystery around the currency may lead you to believe.

Today, there are plenty of options for purchasing Bitcoin, both online and off — so regardless of how you prefer to manage your finances, you’ll likely find an option that works for you.

What to know before buying Bitcoin

Before purchasing your first Bitcoin, there are two key things you’ll need to know.

1. What your country’s stance is on Bitcoin

The legal status of Bitcoin varies by country.

In the map below, green areas indicate countries in which it is legal. In yellow areas, it’s considered “contentious,” while in red countries it has been formally banned.

Areas shaded in gray have yet to address the subject.

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So before you invest in Bitcoin, it’s extremely important to know what your country’s stance is. Purchasing the currency in countries that are hostile to it simply isn’t worth the risk.

You can find more information on the subject in our Bitcoin Legal Guide.

2. You’ll need a wallet

When you purchase Bitcoin, you’ll need to store it in a digital wallet.

But there are a few different types of wallets available, including desktop, mobile, web, hardware, and paper.

So before making any transactions, it’s up to you to determine which type is best suited to your needs.

You can learn more about these types and the advantages to each in our resource on How to Store Bitcoin.

It’s important to note, however, that If you purchase your Bitcoin through an exchange, many of these platforms also offer wallet services.

This is a simple solution — but it’s also one of the least reliable ways to store funds. So while it may seem like an easy way to get started, it’s essential to determine what the potential risks are, and whether they’re worth the time you’ll save.

Where can you buy Bitcoin?

When you’re ready to buy Bitcoin, there are four main ways to do so.

1. Bitcoin exchanges

The most common way to buy (and sell Bitcoin) is through online Bitcoin exchanges.

As you start to research your options, you’ll quickly realize that there are many different sites offering this service. And while many of them offer similar features and interfaces, it’s essential to make sure that the one you’re using is reliable.

Today, the most popular option is Coinbase.

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As an established name in the industry, it’s a reliable place to buy. It’s trustworthy, easy to use, and offers advanced features like portfolio management and recurring buys.

Overall, it’s a great starting point for anyone new to Bitcoin.

Another option to consider is CEX.

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The site’s interface is even simpler than Coinbase — but what really sets it apart is that it’s one of the few exchanges that accepts payment with Visa and Mastercard.

Today, most exchanges require payment by bank transfer, meaning that if you aren’t comfortable with that option, CEX may be the right option for you.

2. Peer to peer (P2P) exchanges

If you want to avoid registering with an official Bitcoin exchange, purchasing them directly from other sellers is also an option.

There are many sites you can use to locate sellers, but today, the most popular is LocalBitcoins.

The site essentially operates like Craigslist, connecting users so that they can meet face-to-face and make a transaction. It also offers an escrow service to protect its users from fraud.

Some sellers on these platforms accept online payment, via PayPal and other platforms, but this involves a higher risk for both parties involved. As a result, purchasing Bitcoins peer to peer often requires an in-person meeting.

3. Bitcoin ATMs

One of the newest ways to purchase Bitcoin is through Bitcoin ATMs.

As the name implies, these are ATMs that dispense Bitcoin instead of standard currency. In most cases, they require cash payment and charge a commission of three to eight percent.

Buyers can insert cash, then either scan their mobile Bitcoin wallet or get a paper receipt with codes and instructions.

While they’re still a relatively new concept, they’re becoming more prevalent worldwide.

In fact, this Bitcoin ATM map currently lists 2,862 ATMs in 67 countries.

If there’s one near you, this could be an easy (and relatively inexpensive) way to purchase Bitcoin.

4. Gift cards

Another, slightly unusual, way to purchase Bitcoin is by trading gift cards.

This process is a fairly straightforward one.

Simply purchase a gift card for a mainstream retailer, then log onto a Bitcoin exchange that accepts them, like LocalBitcoins or Paxful.

From here, you’ll need to validate your card. Some sites may require you to provide photos of a physical copy, while others simply request a code.

Once your card has been validated, you can trade it for Bitcoin. So if you have any unused gift cards lying around, trading them could be an excellent way to add to your wallet.

Payment challenges with Bitcoin

If you’re new to Bitcoin, you might assume that purchasing it is as simple as any other online purchase.

But it’s important to know that some of the payment methods widely used for other online transactions won’t work for Bitcoin.

In fact, if you’re looking to use your credit card or PayPal account, you’ll have an extremely difficult time finding a platform that accepts them. Today, most exchanges require users to connect their bank accounts, and private sellers prefer cash.

This may seem like an antiquated limitation for a currency that operates fully digitally, but the reasoning is based on avoiding chargebacks.

If a user pays with a credit card payments or through a PayPal transaction, they can easily contact their credit card company or PayPal, file a claim, and have the transaction reversed.

Because Bitcoin transactions don’t provide receipts in the same way that standard transactions do, the buyer may get their money back — essentially stealing from the seller.

How to buy Bitcoin anonymously

If you’re concerned about sharing your identity to buy Bitcoins, it is possible to do so anonymously.

While you may have heard you need to submit identifying documents to buy Bitcoin, that’s not a universal rule.

Today, many trading sites require users to submit a series of documents, like copies of passports or utility bills. They might also extend to more unusual forms of proving your identity, like a selfie of you holding a custom message.

That’s because virtually every Bitcoin exchange is obliged by law to follow through with what’s known as “know your customer” protocol, or KYC.

And the logic here makes sense — knowing your customer is more secure than working with anonymous users.

These measures are designed to prevent cybercrime and money laundering, but they’ve met with controversy.

Some of the more philosophical leaders behind Bitcoin say the government restricts Bitcoin users because they gain too much economic freedom with anonymity.

And if you fall into this camp, you still have options. But you’ll need to exercise caution when seeking a place to buy Bitcoin without ID, and always be wary of the potential for identity theft or abusive practices by exchange operators.

Before we dive into buying Bitcoin anonymously, it’s also important to note that the vast majority of people who have cryptocurrency do so through normal verification procedures.

But if you’re simply not comfortable with this, it’s possible to stay anonymous — you’ll just need to be prepared to pay a higher cost.

Most sites charge premiums of 20% to 40% for customers without identification.

It’s also important to note that the process is often less convenient than the standard process.

Some sellers may require you to meet up in person, and others may require wait periods of up to three weeks before the digital assets are released from escrow to your wallet.

But not all anonymizing procedures are tiresome. So with that said, here are the best places to order Bitcoin and keep your identity private in the process.

1. LocalBitcoins

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LocalBitcoins was one of the first and currently the most popular person-to-person exchange platform. (Person-to-person means you won’t need to go through an exchange platform.)

You can buy with cash, Paypal, or bank transfer. Choosing cash purchases on LocalBitcoins is the most anonymous way to buy Bitcoin.

The process is similar to Craigslist in many ways. Just choose a well-reputed seller near your location and arrange to meet in a public space.

On meeting, you will give them the cash, and they will then instruct LocalBitcoins to release your cryptocurrency from escrow.

Be aware that if you choose to buy via bank transfer, then your name will be visible on the seller’s bank statement (but not to LocalBitcoins).

Some sellers may occasionally ask for a partially visible copy of your driving license. You can usually check this on the seller’s page or by asking them prior to ordering.

2. Coinmama

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Coinmama is a great platform for purchasing Bitcoins with no ID.

Unlike many of the sources of Bitcoin online, it’s not an exchange, but sells Bitcoin out of its own personal inventory — meaning you won’t have to wait long for your purchases to process.

Plus, you can buy up to $150 worth Bitcoin without uploading an ID or any other documents. All you’ll need to provide in order to make your first purchase is an email address and home address.

This greatly speeds up the process, making it fast (and anonymous) platform for buyers.

That being said, users do need to verify ID for purchases larger than $150.

It’s also worth noting that the other big advantage of Coinmama is that it’s one of the few exchanges to accept purchases with debit or credit cards.

So if you want to remain anonymous and buy coins with a credit card, Coinmama is one of the few platforms that supports this type of transaction.

3. Shifting between different sites

Shifting sites is a cheaper alternative than high-markup anonymous buying. To do this, you’ll anonymize Bitcoin you purchased with an ID.

This procedure is sometimes referred to as “altcoin shifting,” and it’s important to note that specialized blockchain forensics experts can sometimes follow coins that have been shifted.

Nevertheless, the coin shifting procedure is relatively simple.

  1. You buy Bitcoin on a major exchange such as Coinbase. Your ID is verified, and therefore these coins are “tied” to your name.
  2. The coins are withdrawn from the major exchange, onto a cryptocurrency-only trading site like Binance, Yobit, or Shapeshift. The exchange is not required to verify your ID.
  3. You then trade your Bitcoin for any other crypto asset and withdraw the new altcoin to your wallet.

Voila! Now only the second exchange website (like Binance) knows where those new coins came from. The first exchange only sees the coins being sent to the second exchange’s address.

Because the trading happens off-blockchain, it is very hard to trace what happened.

Any other crypto-only exchange can then be used to switch the user’s altcoin back into Bitcoin — completely anonymously.

This process can be repeated using a vast list of alternative trading sites, each time further anonymizing the coins.

How to protect your identity when buying Bitcoin

In our technology-focused age, your ID is scattered across dozens of sites around the internet.

And when it comes to Bitcoin, your identity is only as secure as the weakest link in the chain, which is why you should always be careful about which sites you choose.

If a web server gets hacked, then your files can be stolen and used elsewhere. Only use reputable, reliable exchanges, and follow best practices when trading on them.

One way to prevent identity theft is to water-mark any documents you submit. For example, some users like to write a message such as “for Coinbase only” on their passport copy.

This can prevent malicious actors from using your ID to open an account elsewhere.

Please note that in most cases your personal information is safe. Large exchanges are increasingly required to follow very strict safety measures and all store users’ files offline.

But when choosing an anonymous Bitcoin purchasing method, you can’t be too careful — and it’s important to take any measures you can to protect yourself from identity theft.

For more information on safely purchasing coins (and everything else you need to know about the currency), check out our Bitcoin 101 (Beginner’s Guide to Bitcoin).