How Buying Bitcoin Works

The mechanics of buying Bitcoin are simpler than the concept of Bitcoin.

Here’s roughly how it works on most major exchanges:

Step one: create an account. Name, email, password. Basic stuff.

Step two: verify your identity. Upload your ID document, sometimes a selfie. This usually takes a few minutes to a couple of days depending on the exchange.

Step three: add a payment method. Most exchanges accept bank transfers, debit cards, or credit cards. Bank transfers usually have lower fees. Cards are faster.

Step four: buy. Enter an amount in your local currency — say $20 — and the exchange shows you how much Bitcoin that converts to at the current price. Confirm, and it’s done.

The Bitcoin shows up in your exchange account, usually within seconds for card purchases or a few days for bank transfers.

A few things worth knowing:

The price changes constantly. The amount of Bitcoin $20 buys at 9am is different from what it buys at 9pm. This is normal.

Fees vary. Most exchanges charge somewhere between 0.5% and 2% per transaction. On small amounts this is a few cents. Worth knowing but not worth stressing about early on.

You don’t have to buy a round number of Bitcoin. Most people buy a dollar amount, and the exchange calculates the sats automatically.

That’s it. The technology behind it is sophisticated. The process of buying is not.

Tomorrow: sats revisited — now that you’re about to actually own some.

— The Daily Bit