How To Buy Bitcoin Safely
Bitcoin is an internet-based alternative currency system that works as a form of digital money. This guide walks through the practical ways to buy it, and the precautions that matter before you do.
You can use Bitcoin as an investment and as a way to pay for goods and services, and it is promoted as a way to do that without involving any third parties. Despite its growing popularity, most businesses still do not accept Bitcoin, and its usefulness as an investment is highly questionable and can carry real risk.
Before you start buying Bitcoin, it helps to understand which purchase methods are available in your country. In the Arab world there are essentially two: the first is exchanging and trading, and the second is buying one-to-one from a seller. In European and some developed countries a person can also buy and exchange Bitcoin through ATMs, exactly like ordinary cash. Since our focus here is Arabic-region readers, this article covers the two methods available in the Arab world.
Exchanging and trading Bitcoin
First: choose a trusted online exchange or wallet service. Getting Bitcoin through an exchange platform is the simplest route. An exchange works like any other currency-exchange system: you sign up and convert your currency into Bitcoin. There are hundreds of exchanges online, and the best option depends on where you are located. Some of the better-known services include:
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- Cryptaw: a Singapore-based wallet service that lets users trade Singapore dollars for Bitcoin. The company currently has a web platform only, and it is also mobile-friendly.
- CoinBase: this well-known wallet and exchange service trades US dollars and euros for Bitcoin. The company offers web and mobile apps to make buying and trading Bitcoin easier.
- Circle: this exchange service lets users store, send, receive and exchange Bitcoin. Currently, only US citizens can link their bank accounts to deposit funds.
- Xapo: offers a Bitcoin debit card, a wallet, and fiat-currency deposits that are then converted to Bitcoin in your account.
- Some exchange services also let you trade Bitcoin, while others work as wallet services with limited buy-and-sell capabilities. Most exchanges and wallets will store amounts of digital or fiat currency for you, much like a regular bank account. Exchanges and wallets are a good option if you want to trade regularly and do not need full anonymity.
Second: provide proof of identity and your contact information to the service. When you register with an exchange or trading service, you will need to give the service personal information to create an account. Most sites are legally required to collect this from any individual or financial system using a Bitcoin exchange service, in order to meet anti-money-laundering requirements. Keep in mind:
- Although you are required to prove your identity, exchanges and wallets do not offer the same protection that banks do. You are not protected here from hackers, and you will not be compensated if the exchange or platform stops operating.
Third: buy Bitcoin using your own bank account. Once your account is set up through a Bitcoin exchange and trading service, you will need to link it to your own bank account and arrange to move funds between it and your new Bitcoin account. This is usually done by bank transfer and involves a fee. It is important to know:
- Some exchanges let you make a deposit into their bank account in person. This is done face to face, not through ATMs or online.
- If you are asked to link a bank account to use the exchange service, it will likely accept only banks from the country where the exchange is based. Some exchanges let you transfer funds to external accounts, but the fees will be much higher and there may be a delay in converting Bitcoin into the local currency.
Buying one-to-one from a seller
First: find sellers on Local Bitcoins. This is the main site used to make face-to-face, one-to-one deals with a local seller. You can arrange a meeting and negotiate Bitcoin prices. The site also has extra protection measures for both parties.
Second: use Meetup.com to find sellers. Use Meetup.com to search for a group of Bitcoin sellers. You can then decide to buy Bitcoin as a group and learn from the experience of other members who have used sellers to buy Bitcoin through this site before.
Third: negotiate the price before the meeting. Depending on the seller, you may pay a premium of around 5-10% above the exchange rate for a one-to-one trade. You can check current Bitcoin exchange rates online before agreeing to the seller’s price. Always remember:
- You should ask the seller whether they prefer to be paid in cash or through an online payment service. Some sellers may let you use a PayPal account to pay, though most sellers prefer irreversible cash payment.
- A reputable trader will always negotiate the price with you before you meet. Many will not wait long to meet once the price has been negotiated, in case there is a sharp swing in the value of Bitcoin.
Fourth: meet the seller in a busy public place. Avoid meeting in private homes. You should take every precaution, especially if you are carrying cash to pay the seller for the Bitcoin.
Fifth: access your own Bitcoin wallet. When you meet the seller one-to-one, you will need to access your Bitcoin wallet through your smartphone, tablet or laptop. You will also need internet access to confirm the transaction is complete. Always make sure the Bitcoin has been transferred to your account before you pay the seller.
Risk disclaimer: This article is for educational purposes only and is not investment advice. Bitcoin and other cryptocurrencies are highly volatile and their value can fall sharply, so you may lose part or all of the money you put in. Exchanges and wallets do not offer the same protection as regulated banks. Do your own research and consider consulting a licensed financial adviser before buying any digital asset. Some links on this site may be affiliate links; if you use them we may earn a commission at no extra cost to you.
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