Bitcoin Exchanging Guide
Bitcoin buying and selling has become quite the phenomenon these days – and why wouldn’t it be? When something new comes along and receives so much hype, it’s bound to become big with the masses. It took Bitcoin a couple of years to significantly increase its value, but in doing so, it remains as the first and most popular cryptocurrency in the world.
While it was initially only able to be acquired through mining, it wasn’t long before it became available on currency exchanges as well. It is this buying and selling of the cryptocurrency that has seen it fluctuate in value so much throughout the years. Bitcoin exchanging has several factors to it, and if you’re interested in participating in the exchanging of such, here’s some information that you may want to read about.
What Is a Bitcoin Exchange?
To put it simply, a Bitcoin exchange works as a sort of digital marketplace. It provides traders with the ability to both buy and sell Bitcoin using different fiat currencies or altcoins. Essentially, it’s the intermediary between buyers and sellers of the Bitcoin cryptocurrency. So, your money goes into the exchange, and you receive Bitcoin out of it. That’s as easy as the description is.
There are multiple platforms online that operate as Bitcoin exchanges. These match buyers with sellers in the same way as a traditional stock exchange. Traders can then opt to buy and/or sell Bitcoin. Without these exchanges, Bitcoin wouldn’t be in as vast circulation as it is today. Bitcoin exchanging provides an easier and quicker way of acquiring the cryptocurrency, as mining is a longer process.
Can You Exchange Dollars for Bitcoin?
The great thing about obtaining Bitcoin is that you can receive it by exchanging standard fiat currency as well as alternative cryptocurrencies for it. With this being the case, traders are able to utilize US dollars as a currency for purchasing Bitcoin at an exchange. In the same way, you have the ability to sell your Bitcoin for dollars as well.
If you’ve ever traveled abroad for a vacation, it’s quite normal to pick up some alternative currency from an exchange, right? You take several hundred dollars to an exchange and request the currency of the location that you’re visiting. The exchange then takes your dollars and provides you an amount of foreign currency, with the amount that you receive depending upon an exchange rate.
This is exactly the same kind of operation that a Bitcoin exchange utilizes. Bitcoin has an exchange rate relating to all popular fiat currencies, such as US dollars and Euros, as well as other cryptocurrencies, like Ethereum and Bitcoin Cash. Therefore, in this instance, you simply need to decide upon an amount of US dollars that you would like to exchange and find out what the exchange rate is for Bitcoin at your chosen online exchange. If you see that it’s not quite a rate that you want to exchange your dollars for, then you have the option of seeking out an alternative Bitcoin exchange.
As in real life, swapping your currency for a foreign one will see different exchanges provide different rates for buying and selling. The same is exactly true of a Bitcoin exchange, meaning that you have the option of “shopping around” when it comes to trading the cryptocurrency.
What Are Some of the Best Bitcoin Exchanges?
Today, there are numerous online Bitcoin exchanges that you are able to utilize for the purchasing and selling of Bitcoin. Different ones will appeal to different traders, although they all have the same prime focus – the buying and selling of Bitcoin. However, for some of the better Bitcoin exchanges, we’ve gathered a collection below.
Coinbase is perhaps known as one of if not the biggest Bitcoin brokers in the world. It covers a vast portion of Europe, as well as the United States, Canada, United Kingdom, and Singapore. Anyone wishing to trade at this exchange is able to purchase Bitcoin with a connected bank account, a credit or debit card, iDEAL, SEPA transfer, or multiple other payment methods. Some of them are very country-specific, so it also depends upon where you’re located.
If you’re looking for an exchange that focuses all of its services on the US market, then BitQuick is perhaps the best one to go for. The great thing about this exchange is that it also allows its traders to buy Bitcoin with cash money, which works by you making a cash deposit. Yet this is the only way that you can purchase the cryptocurrency, so it’s fairly limited for other payment methods.
The Gemini exchange is another one that has a massive following, being run by the Winklevoss twins – former Olympic rowers and now venture capitalists. The platform is licensed and operating in 42 US states, as well as in Canada, Hong Kong, Singapore, South Korea, and the United Kingdom. Since the start of its operation, the Gemini exchange has grown considerably in popularity, placing it as one of the top exchanges to exist today.
LocalBitcoins is a P2P Bitcoin exchange where buyers and sellers agree on trade terms using the LocalBitcoins site as escrow. It provides one of the more private forms of purchasing Bitcoin, and in some countries, it is the sole exchange that is available for buying such. Alas, one downside of using this site is that if you choose to buy with cash, the fees can be slightly high.
Finally, you may want to check out GDAX as well. This exchange is owned by Coinbase, although it’s a bit more of an advanced option to go for. Therefore, if you’re more of an experienced cryptocurrency trader, the GDAX exchange is probably right up your alley.
The most prominent perk about this exchange is its low fees, ranging from as little as 0.1% to 0.25%.
Which Payment Methods Can I Use for Buying Bitcoin?
Ultimately, the payment methods that an online exchange accepts will differ from site to site. Some will only accept one or two options, while others provide traders with a plethora of payment possibilities. That being said, there are some very popular and well-known payment methods that you’re able to use for purchasing Bitcoin.
Perhaps the biggest option to use is a credit or debit card from a well-known provider, such as Visa or Mastercard. Transactions using cards are instant, and because these are used every day by people, they make for a simple option. Naturally, this requires you to enter your credit or debit card details, insert the amount that you would like to exchange for Bitcoin, and proceed. It’s basically like placing an order via an e-commerce website, except you receive your Bitcoin pretty much instantly.
As an alternative to using a standard payment method, you may also be able to utilize altcoins at some exchanges. Altcoins are all other forms of cryptocurrencies, so if you possess some Litecoin, Ethereum, Bitcoin Cash, or anything else, you have the ability to exchange these for Bitcoin, too. In this instance, you need the address of the wallet that your cryptocurrency is stored in, and again, you just need to enter the amount that you would like to exchange for Bitcoin.
Bank wire transfers are considered to be a great option to use when it comes to trading Bitcoin. This is mainly due to the hardness (non-reversibility) of both Bitcoin and the bank wire transfer payment method. They match up a lot more in this respect. The issue with bank wire transfers is that they generally take longer to process through than a card or altcoin purchase, meaning that you’ll be waiting for a longer period of time to receive your Bitcoin.
Furthermore, it’s recommended that bank wire transfer purchases are utilized when exchanging larger amounts of money.
As another alternative, you can utilize an e-wallet, such as those offered by PayPal, Neteller, and Skrill. The best part about using an e-wallet is that it’s generally a very swift transaction. As long as there are funds in your chosen e-wallet to utilize for the purchasing of Bitcoin, then you shouldn’t have any problems with this. Furthermore, it provides an extra level of anonymity that using a card doesn’t offer. The fees for doing so, though, can be fairly high. This is perhaps the biggest let-down of using e-wallets for purchasing Bitcoin.
Buying Bitcoin in Cash
Something that may be a bit more surprising is buying Bitcoin in cash. In this instance, you don’t need to possess an e-wallet or a bank account. Instead, you can utilize a sort of person-to-person exchange. There are two separate ways to involve yourself in this activity, too. They are:
- Using a Bitcoin ATM
- Meeting someone and swapping your cash for their Bitcoin
While the fees for purchasing Bitcoin by this method are higher than by bank transfer, it provides a higher level of anonymity than anything else. This option is frequently selected when traders do not want to identify themselves in order to purchase the cryptocurrency. However, for larger purchases, cash transactions aren’t quite as convenient as other payment methods.
If you opt to meet with someone in order to exchange Bitcoin for cash, then you will obviously have to go to a physical location in order to complete the transaction. This isn’t as simple as processing a purchase through the internet.
On the other hand, if you decide to make use of a Bitcoin ATM, then you insert the cash amount that you want to exchange. Then, it sends the amount of Bitcoin to your chosen wallet address. While this is also usually quite anonymous, not all ATMs have this feature. Some of them do require you to submit identification of yourself.
Is There One of These Ways to Exchange Bitcoins That Is Better Than the Others?
In short, there isn’t a definitive answer to this question. Generally speaking, you’ll need to locate an exchange that works the best for you. This relates to both the type of payment method that you want to utilize and the value of the exchange rate on offer.
It’s a good idea to look through a number of different exchanges to find out what sort of payment methods they accept and what their exchange rates look like. That way, you should be able to find one or two that work as great options for you as a trader. Afterward, you simply need to register at the exchange, and if you don’t already own a wallet, make sure that you get one. From there on out, you can utilize your preferred payment method to buy Bitcoin as you please.
And should you ever come to the point of wanting to sell some or all of your Bitcoin, the procedure is just as simple. These are simply taken from your Bitcoin wallet and then sent to the exchange, with you receiving whichever altcoins or fiat currency you prefer for them.