How to Safely Buy Bitcoin, LTC, Ethereum, and Altcoins

How to Safely Buy Bitcoin (BTC), LTC, Ethereum, and other Altcoins in the USA.

Believe it or not, most people (65%) still don’t know ANYTHING about Digital Currency.  Some have heard about Bitcoin.  Very, very few have heard about AltCoins.

Still, some people ask how to get coins, how do they safely buy Bitcoin/BTC, Litecoin/LTC and AltCoins? Where and who can you trust? What about mining? Can I purchase with a credit card? Can I purchase with Paypal to buy Bitcoin and altcoins (yes, see below)? In other words “how can I exchange fiat money for bitcoin“? Fiat is government issued currency that’s not backed by actual gold or other physical commodity, like the US dollar.

Buying and trading digital currency works like buying and trading stocks.  Remember, Digital currency is not a stock, I’m just using that example because you place buy and sell orders against a fiat currency or against another digital currency when buying and selling.

You may have had the same questions. Generally you need to purchase Bitcoin and then exchange for whatever alt coin you’re interested in (or if the altcoin you’re interested in trades against Litecoin, you can usually buy Litecoin and avoid the transaction fees of converting BTC to LTC). Generally, in the USA, exchanges do not accept credit cards or PayPal, you have to either send them a check, or use electronic transfer from your checking account (ACH). If you search for buying Bitcoin, you get some shady and questionable places as results. I’ll tell you the one place that I trust, you can find others, but just do your due diligence.

You can search on eBay and find people selling various crypto currencies, however, if you check their prices against some exchanges, you’ll see they are exorbitant (usually). The other issue with eBay is that purchasing crypto currency falls outside of Paypals terms of service… and as such, it’s risky to the seller (which is why they charge so much) because all the purchaser has to do is request a refund or register a buyer’s complaint and the seller looses their money… and the buyer keeps the coins.

Paypal has made some comments that indicate they may support crypto currency in the future, but so far they do not as far as I know.

In addition, if you’re in the USA, most credit cards do not support the purchase of crypto currencies either.

To purchase bitcoin in the USA, you have to use ACH to do an electronic transfer from your bank account. This takes 4 to 6 business days.

Avoid buying crypto from places in Russia, China, or most anywhere like that (and avoid funding an account with a payment processor located there)… some crypto currency exchanges have crypto to fiat markets – meaning you can deposit fiat money such as US dollars and then buy bitcoin, and some altcoins such as Litecoin directly. However, they usually offer either ACH electronic from your bank account to fund your exchange account (which is fine if you trust them and you have the 4 to 6 business days to wait), or, for credit cards they use a 3rd party processor based somewhere I’d rather avoid.

You may be thinking “why is so hard to buy this stuff with credit cards“… and if so, you’re probably in the USA… it’s basically against the credit card company’s terms of service to purchase currency with credit cards. I think that outside the USA it’s dependent on the area in which you live if credit cards allow this or not. The same would be true for a stock exchange: if you wanted to fund your account at a stock broker in the USA I don’t think you could use a credit card for that either – you send them a check or ACH transfer.

My Recommended Exchange for Purchasing Digital Currency

I have tried a few services where you can buy crypto for FIAT(USD) and like Coinbase.

• • Coinbase is the most popular and you can fund from your checking or bank account. Not sure about using credit card accounts at Coinbase, I think, if you’re in the US, that it’s a state by state decision.  I have purchased Bitcoin at Coinbase and they are reliable and trustworthy.  Currently Coinbase will give you $10 in BONUS BITCOIN when you signup and buy or sell at least $100 of Bitcoin.  GDAX (now Pro Coinbase) Hint: If using Coinbase to purchase digital currency using FIAT(USD), use their Exchange (owned by Coinbase) to exchange the fiat to digital currency.  Simply transfer the USD from Coinbase to GDAX (no fee to do so) and then make the exchange there.  You can then transfer the digital currency back to Coinbase if needed to xfer to another exchange.  This will save you money!
  • Last time I checked, Coinbase will do an instant funding of your account if you put a credit card on file:
    • This may vary state by state.
    • They only accept Visa and Mastercard for this and the limits (amount you can purchase) is lower.
    • I’m not sure, but they may require an ACH account to be setup and verified before the credit card option will work (they use to be this way and since my account is setup and not a new account I’m not 100% sure).
    • I have used Coinbase and found them to be trustworthy and honest… however 4 to 6 days seems like forever!
  • Binance is reported to soon support purchasing digital currency with FIAT (USD).
  • SouthXchange SouthXchange uses Paypal (NOTE as of 4/16/2018 it looks like SouthXchange NO LONGER uses Paypal to transfer funds in or out, nor do they plan on restoring that functionality anytime soon) to deposit or withdraw USD, however they put a 90 day hold on the funds (you can purchase coins with it, but not remove that amount from their exchange until the 90 days is up: if I understand their policy correctly), and their fees are high.  They can do this because they are outside the USA.  From all I can tell, they are a trustworthy exchange.

• Disclosure – these are affiliate links, I will get a little credit when and if you create and fund an account from the link I’ve provided – it does not cost you any extra.
• Note: A lot of exchanges and sites use multiple security techniques.  Some of these are to protect against DDOS (Distributed Denial of Service) attacks… I normally use Google Chrome as my browser, but for some sites I switch to Firefox.  Chrome is very aggressive at caching (saving portions of pages locally to speed up browsing) and that was causing errors.  So if you get gateway errors try a different browser. 

Verification – It’s a hassle but necessary.
Most exchanges require you to upload a photo of yourself holding a photo ID, as well as a copy of the photo ID. Verification can take a couple of days. Most require you to upload a photo of yourself holding your credit card (some require a video of you holding your credit card). This may seem like a hassle, however, the crypto currency world has been fraught with scams and rip offs… like exchanges suddenly collapsing and the owners making off with all their client’s coins (billions of dollars), or, people purchasing coins and never getting them, or, people selling coins never getting paid, etc. At first I balked at this requirement, however, I decided to give it a try and the exchanges I’ve used have proven to be what they say they are – fast, efficient, and honest.

Understanding “Decentralized”…
Unlike using credit cards, or even a check, crypto currency is not issued from a central institution, it’s “decentralized” (this is the whole point of it by the way). This means, that in the event things don’t turn out like you planned (i.e. you get ripped off), you can’t call your bank and have them give you your money back or file a complaint with anyone. This is another reason that some reasonable level of verification is warranted by exchanges and places you’re purchasing or selling crypto currency.

How to Purchase Bitcoin and Altcoin Crypto Currency

• Open an account at one of the exchanges I listed above, or another similar business
• Get verified
• Deposit Funds in Your Account
• Make a Bitcoin Purchase (or Litecoin)
• At this point you have digital currency in an online “wallet” and can spend it directly from there, or, send it (transfer it) to your local wallet (highly recommended) or somewhere else
• If you want to purchase a particular Altcoin such as Verasity or Crystal, then you’ll need to open an account at an exchange that trades in the coin you’re after (find the coin’s website and it should list exchanges it’s traded on).  Send your Bitcoin or Litecoin (or whatever) to that exchange, and then make a trade by putting in a buy order.
• After your order is filled, you can send your altcoin to your local wallet, or, an online wallet, or spend it.
• You can see the current value of most digital currencies here: CoinMarketCap
• Keep in mind that exchanges make their profit by charging a small % of purchases and transfers.  So if you’re purchase x number of a coin for a particular purpose and need an exact amount you will need to purchase a little more than your target amount.  Rates vary from exchange to exchange.

Exchanges
Here are few exchanges, you can search for more…

• Cryptopia
• CoinExchange
• NovaExchange
• SouthXchange
• Binance
• GDAX (update 3/2019 now “Pro Coinbase”, owned by Coinbase, )
• Disclosure – some of these are affiliate links, I will get a little credit when and if you create and fund an account from the link I’ve provided – it does not cost you any extra.
• Note: A lot of exchanges and sites use multiple security techniques.  Some of these are to protect against DDOS (Distributed Denial of Service) attacks… I normally use Google Chrome as my browser, but for some sites I switch to Firefox.  Chrome is very aggressive at caching (saving portions of pages locally to speed up browsing) and that was causing errors.  So if you get gateway errors try a different browser. 

Wallets
Each digital currency has wallet software you can load on your computer, some also have smart phone wallets available. Be warned that loading a wallet can be tricky at times and that they must “sync” with the distributed network that is created by all the online wallets. You can, sometimes, download a recent database for some coins so that this “syncing” does not take days (you do need to be a little “tech savvy” for this). Keeping your coins in your own local, encrypted wallet is the safest place for them. You should also make a backup. Don’t leave large amounts of coins on exchanges or services where you buy and sell fiat… it’s just asking for trouble.  I’ll post another article soon on loading a wallet.

If you’re nervous about giving your info out for verification, you can open a separate bank account with its own debit card to use for this type of thing.

Remember, if you’re learning and using digital currency then you’re ahead of the curve. In a recent poll, 65% of people had never even heard of bitcoin! Being ahead of the curve gives you a big advantage!

Accept Bitcoin and Digital Currency on Your Website, etc.

It’s easy to accept digital currency online, as simple as adding other payment services such as Paypal to your website.  Look in my right-hand column for the donation button and you’ll see where I’ve added it.  Simply go to CoinPayments and signup for an account and start accepting digital currency!

Until next time,
Fred

P.S. Exchanges usually have referral programs and in the spirit of full disclosure, several of the links I’ve provided are referral links.