Bitcoin is the most popular crypto-currency currently, which can not only be attributed to the press coverage it gets, but also to the exchange rate it is currently traded in. A single bitcoin is currently traded for about $1100 -- fluctuations are common and can occur in a matter of minutes -- which is a lot if you consider that its exchange rate was around $200 at the end of October.
If you are interested in bitcoin, how would you go about it and buy some? There are no banks that let you do that, at least as far as I know, which means that you have to rely on other means to trade coins for money.
I'd like to present you with a couple of options to do so.
Note: I'm not suggesting that you should buy bitcoin right now. That's entirely up to you. Knowing how to do it on the other hand is not a bad thing, especially if those crypto-currencies are here to stay. It is not clear yet if that will be the case though.
There is no official exchange for bitcoin. There are however sites and services that are respected and therefore lower risk than services that are newer or not as established yet.
MtGox is one of the established services. You can create an account with them to buy and sell bitcoin on site, and transfer funds from and to a bank account.
One of the advantages of bitcoin is that there are not any opening hours. You can buy and sell the currency 24/7 on any day.
Note: If you create a new account on the site, you are required to verify the account by supplying a valid photo ID and residence proof for some site functionality (withdrawals and deposits).
So, if you want to purchase bitcoin on the exchange, you need to verify your account in order to do so.
To buy or sell bitcoin on Coinbase, you need to verify a bank account and phone number. The bank account verification works in the following way: Two small deposits are transferred to the selected account which you need to verify on site.
Once that is out of the way, you can start to buy and sell bitcoin on the site. It is interesting to note that it may take days before you get your bitcoin, but that the exchange rate itself is locked to the date and time you made the purchase order.
While it is still necessary to verify your phone number and bank account, the process itself is less strenuous as the one that MtGox requires of you.
Note: Transactions can be cancelled at any time until the bitcoin arrive in the wallet from the transfer history page.
The risk associated with the BTC-E service is higher, which is reflected in the exchange rates as they are lower than those on other sites.
There is virtually no verification in place, other than email, which means that you can start depositing funds right away using services such as OKPay, Perfect Money, or bank transfers using SEPA or comparable services.
Instead of depositing Euro, USD or YEN into the account, you can also deposit crypto-currencies in it. If you have bitcoin, litecoin or namecoin, you can transfer them to your account or withdraw them again.
One of the advantages of using the service, besides lower purchase prices, is the fact that you can buy other crypto-currencies here as well.
Local Bitcoins offer an interesting alternative to currency exchanges. The service brings local buyers and sellers together.
Trades can either be made online, buy making payments directly to sellers who in turn transfer the currency to your wallet, or by meeting locally.
It is advised to be cautious if you select the meet in person option, as you will have cash on you to make the purchase if you are the buyer.
It is probably best to meet in public places, and even have someone with you during the exchange to make sure you are not ripped off.
You do need a wallet application on your mobile phone or mobile computer to make the transfer of the currency during the exchange. Android users can use something like Bitcoin Wallet for their device.
Tip: LocalBitcoins uses a reputation system that helps you find reputable buyers and sellers. Check the feedback score and feedback from past transactions).
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Ghacks is a technology news blog that was founded in 2005 by Martin Brinkmann. It has since then become one of the most popular tech news sites on the Internet with five authors and regular contributions from freelance writers.