How can I buy bitcoins?
Now you’ve realized bitcoin is the way of the future, the next step is to get some bitcoins. But how? This guide will help you. You can buy bitcoins from: regulated exchanges, or directly from other people selling them. You can pay for them in a variety of ways, ranging from hard cash to wire transfers, depending on who you are buying them from and where you live.
Surprisingly, it’s nearly impossible to buy bitcoins with your credit card or PayPal. This is because such transactions can easily be reversed with a phone call to the card company (ie: ‘chargebacks’, one of the problems bitcoin is here to solve). Since it’s hard to prove any goods changed hands in a transfer of bits, exchanges avoid this payment method and so do most private sellers.
First: Get yourself a ‘wallet’ You will need a place to store your new bitcoins. In the bitcoin world they’re called ‘wallets’ but you could also think of them as like a bank account. The two main options are: (1) A software wallet stored on the hard drive of your computer, or (2) an online, web-based service. Both have their vulnerabilities: if you store it all locally on your computer make sure you back up your hard drive regularly in case it crashes; and online web wallets employ varying degrees of security, from quite good to quite poor. It’s up to you which one you trust the most.
Exchanges/Online Wallets The range of options here seems to grow by the week, with new businesses coming online to cater to new markets. Some are full-blown exchanges for trades between paper fiat currencies and multiple other digital currencies, while others are simpler wallet services with a more limited range of trading options. Many will store amounts of digital and/or fiat currency for you, much like a regular bank account.
Exchanges/wallets are the best option if you want to engage in regular trading and speculation, don’t need total anonymity, and don’t mind lengthy bureaucratic setup procedures that usually involve proof of identity and supplying detailed contact information. This is the law in most countries and no regulated exchange can get around it, as any company interfacing with the current financial system must meet ‘know your customer’ (KYC) and ‘antimoney laundering’ (AML) requirements.
Once you’ve set up your account, you’ll probably need to link an existing bank account and arrange to move funds between it and your new exchange account via wire transfer. This usually entails a fee. Some exchanges allow you to make a deposit in person to their bank account (via a human teller, not an ATM).
While people in most countries can transfer money to overseas accounts, fees are much higher and you may face more long delays changing your bitcoins back into fiat currency (should you still wish to do that). If you are required to link a bank account to use the exchange, it may only admit banks from that country
Warnings about exchanges, wallets and banks Despite the proof of identity requirements, remember exchanges and wallets are not regulated as banks otherwise. There is no insurance for your account if the exchange goes out of business or is robbed by hackers. Bitcoin does not (as yet) have legal status as a currency in most of the world, and authorities usually do not know how to approach thefts. Some larger exchanges have replaced customer funds after a theft from the exchange itself, but at this stage they are not legally obligated to do so. And if a theft from your personal wallet occurs due to a security or password lapse on your part, you do not have any guaranteed way to recover your funds.
Some existing banks see digital currency as a threat to their business model and have been known to discriminate against anything related to bitcoin. Their responses have ranged from refusing transfers to specific exchanges, to unilaterally closing accounts of anyone mentioning bitcoin, without explanation. Check this list first to see if your bank is one of them and, for your protection, open an account with a bank known to be more bitcoin-friendly.
Sources: http://www.coinsetter.com http://www.coindesk.com/information/how-can-i-buybitcoins/