By
Cloudbet

Last updated 28th October 2021

Buying bitcoin and Ethereum has always been cheaper through the established exchanges, but providing KYC, funding your account and processing bank transfers can take between a couple of days to an entire week depending on your bank and your country. Whether you are trading or betting at Cloudbet, delays can be the difference between making a loss and coming away with profit.

Buying bitcoin or ethereum is the easiest way to join the biggest economic revolution since the invention of paper money. Fortunately, gone are the days when purchasing your coins required expert-level IT skills and weeks of waiting.

Bitcoin and Ethereum are the two most valuable cryptocurrencies in the world. They are also the most widely accepted as means of payment - so much so that most other cryptocurrencies are indexed and accessible only via bitcoin trading.

There are two ways you can get bitcoin/ethereum: mining newly minted coins, or buying them in the open market. Mining can be an expensive and complicated process, so it’s recommended that you start by buying your first coins. This article will focus on the ways you can turn your money into bitcoin/ethereum to help you start betting in no time.

Turning your fiat currency (USD, Euro, etc) into BTC or ETH (their tickers within the crypto exchange ecosystem) used to be a challenging endeavour, but its ever-growing popularity means there are new, friendlier options popping up every day. It only takes three steps:

  1. Setting up a wallet: don’t worry, we’ll explain everything.
  2. Choosing where to buy: this will depend on the availability in your country and your general preferences regarding anonymity, price, speed and security.
  3. Choosing a payment method: this will depend on your options and will have an impact on your anonymity levels.

Let's dig into each of these steps.

Step 1: Choosing and setting up a wallet

Choosing and setting up your bitcoin or ethereum wallet of choice is the first step to getting your coins. Much like your bank account, a wallet is necessary in order to receive or send funds across the bitcoin and ethereum networks. And much like your bank account, they come in many flavours, depending on your needs.

For bitcoin beginners we recommend Copay - a free, open source wallet that holds both bitcoin and bitcoin cash, with the added bonus of allowing you to sync the same account throughout all major platforms - Windows, Mac, Linus, iOS and Android are all supported. For ethereum newbies Argent is our suggested option.

Just download the software to your preferred platform (desktop and/or mobile) and follow the installation instructions. Make sure you create a strong password, perform a backup and most importantly, follow the recovery guidelines carefully. In case you need more details on how to do that, follow our guides to choosing your wallet, as well as to how to set it up and start transacting right away - Bitcoin or Ethereum.

Even if some online services boast their own web wallets, it’s good practice to always keep your funds in a wallet for which you control the private keys, preferably not online, to mitigate the risk of losing your money to a hack or bug in the third party’s servers.

After getting yourself acquainted with yours, it’s time to move onto buying your bitcoin or ethereum.

Step 2: Choosing where to buy Bitcoins and Ethereums

Choosing the best place to buy bitcoin or ethereum depends primarily on the country you live and the legal status in your jurisdiction. Although legal in most countries, crypto regulation is still in its infancy, and the resulting uncertainty means some providers may be unable (or unwilling) to offer their services in certain countries.

The main places you can buy are directly from Cloudbet via a credit/debit card, exchanges, dedicated OTC (over-the-counter) marketplaces, unmediated P2P (peer-to-peer), and ATMs. Options vary greatly according to your preferences, so apart from availability you might want to consider user-friendliness, payment methods, costs/fees, security and anonymity.

Buying direct from Cloudbet with your credit/debit card is by far the easiest option. Though the fee-to-transaction ration is high they are our recommendation for beginners. Exchanges and verified vendors on OTC platforms are cheap and safe places to go but require some account set up. In exchange for this convenience and security, they usually require identity verification to comply with local and international laws - which makes them less-than-anonymous entry points.

If you are a more advanced user or if your focus is on privacy (and you don’t mind paying a little extra for that), then you can look up the closest ATM, or explore the more private methods on OTC platforms.

Lastly, going directly P2P is very risky, and it’s not for the inexperienced or the faint hearted. However, it’s the most flexible and anonymous choice, going straight from wallet A to wallet B. If you’re new to crypto, we strongly discourage you from taking this approach unless you personally know and trust the seller.

Exchanges

Cryptocurrency exchanges are the most common way to buy bitcoin or ethereum. They work as an intermediary between buyers and sellers, taking commission for the service. You may already be familiar with betting exchanges, who function in a similar way by bringing together a backer (someone wanting to bet) and a layer (someone wanting to take a bet).

Factors you might want to consider when choosing an exchange are security features, history, fees (deposit, withdrawal and trading commission), trading pairs, accepted funding methods and requirements to open an account. Generally, buying through a regulated exchange is not really anonymous, as you must submit documents and go through a verification process (KYC) in order to fund your account.

Note that not all exchanges accept fiat money, and are thus unfit to start. Some of them are crypto-only, meaning you effectively need some digital token to start trading.

If you would like to start at an exchange, we recommend using Bitstamp one of the first licensed platforms, with a proven track record of security, is fully compliant, and with the most competitive fees.


Bitstamp Logo

Once you have completed (a necessary evil) and funded the account through a bank transfer or using a debit/credit card through the Bitstamp app, you simply have to select the pair you wish to trade (1), carefully choose the order type (2), type in the amount to be bought (3) and execute the trade (4).

Buying Strategy

Now unless you have a magic crystal ball that can predict when the price of bitcoin will rise, it is worth using a Dollar Cost Averaging strategy, which consists of splitting the capital into several fractions and purchasing an asset regularly over days, weeks or even months. Rather than buying an asset as you get disposable capital, the purpose of dollar cost averaging is to lower the average entry price.

Dedicated OTC (over-the-counter) marketplaces

The alternative to buying bitcoin from an exchange is to use what is called an over-the-counter service. An OTC will put you directly in touch with sellers offering their coins. Once you take an offer, the coins will be held in escrow until you submit proof of your payment. The seller will then proceed to release your bitcoins to your wallet.

The best thing about these marketplaces are that they offer access to resource if there are any problems with the transaction. The most well-established OTC platform, and one that Cloudbet recommends, is Localbitcoins as it has the most extensive options for buying bitcoins. They offer bank transfers, online wallets, Paypal, prepaid debit cards, cash by mail, Transferwise and a host of other payments. They don't, unfortunately, offer the ability to buy ethereum, but you can purchase bitcoin and send to your wallet and simply exchange it (especially if you have followed our recommended Ethereum wallet).

Here's a video of how to use the website to deposit bitcoin.

As you can see, purchasing bitcoin here is simple and straightforward. You need to register an account, which comes with a Localbitcoins web wallet. Make sure you take advantage of two-factor authentication for extra security, choose your preferred region/currency then navigate to the main menu where you will find different sellers offering bitcoin at slightly different prices which will vary in relation to the payment method offered.

Reputation and trade history are the first key factors to consider when choosing a seller. We recommend that you start by trading with reputable sellers and always use the platform for communications and deposits, in case you should ever need to create a dispute.

Alternative options: OTCBTC, WallofCoins, Paxful and BitQuick

Unmediated P2P

WARNING

This option involves meeting strangers in real life, and you may be risking not only your funds, but also your life. Our suggestion is, if you are a beginner, don’t take this path. However, if you’re still reading this it means you are seriously considering it, so at least take all the necessary precautions. Always meet in a crowded, public place and try to bring a friend or two along.

P2P trading can take place both online and in real life (IRL), and you can find traders pretty much anywhere you can find people chatting: friends who already own bitcoin, Telegram and Whatsapp groups, Facebook pages, specialised forums like Bitcointalk.org, and probably even down the proverbial dark alley.

Online P2P-direct transactions are the bread and butter of hackers, scammers and Nigerian princes. Sending money (or anything else) to a stranger online without an escrow is a leap in the dark, since you are effectively trusting them to not disappear with your funds, but at least your wallet is the only thing in danger. Always remember the golden rule: if an offer is too good to be true, it’s because it probably isn't.

To reduce that risk, both parties can agree to meet IRL, where money gets exchanged in person while two complete strangers sit uncomfortably in a Starbuck’s booth waiting for a bitcoin transfer to clear. The pros are, P2P direct transactions are anonymous (unless one of you is being followed) and there are no fees involved. However, that level of privacy offers little comfort if you end up with a knife to your neck in a shady part of town, so avoid that if possible. The bottom line is, watch out for scams and don’t ever compromise your security.

There are some decentralised services where you can actually rely on a reputation-based system, like Mycelium wallet's Local Trader (Android only) that matches buyers and sellers locally through the wallet app. But since they still require you to trust or meet with a stranger, it can be less-than-safe. We can’t vouch for this method, since they depend on who you trade with, so if you absolutely must, do so at your own risk.

Alternative options: Bisq, CryptoBridge

Bitcoin ATMs

These are, perhaps not surprisingly, ATMs where you can buy or sell bitcoin and ethereum. Being new kids on the block(chain), these machines are still very thinly spread (mostly restricted to major urban cities), so you should count yourself among the lucky few if you have one near you.

ATMs are an easy, convenient and potentially private way of buying bitcoin (if you pay in cash instead of a card). On the flip side, they usually charge high fees (8.18% in average). These being machines, don’t expect to haggle down the price. Also, they usually have a low daily limit for anonymous transactions (anywhere from 250 to 5,000 dollars).It’s worth noticing that distribution is very uneven, with almost 75% of active ATMs deployed to the US and Canada and 21% to Europe. Still, with an average of five installations per day, keep your eyes open; one of these may pop up close to you in the near future.

Another thing to keep in mind is, since there aren't that many of them, they may offer an easy target for criminals and surveillance, so it doesn’t hurt to take a look at your surroundings before using one.

You can check here if chance has put one close to you.

Step 3: Choosing a payment method

After checking your available options, you’ll need to take into account the accepted payment methods for each category of the marketplace. Different payment types have different implications for security, anonymity, price and transaction time. As a rule of thumb, the more anonymous your choice is, the higher the price and the uncertainty level you’ll get.

Let’s take a look at the options.

Bank transfers

Favoured by most exchanges, bank transfers are an easy and secure way to have your money turned into bitcoin. You can also pay by bank transfers in OTC marketplaces (straight into the seller’s account) and in P2P direct transactions. Being traceable, bank transfers are unsurprisingly not anonymous.

When transferring to an exchange, the transaction may take anywhere from a few minutes to over a week (for international wire transfers). Fees are not always transparent and tend to add up, so it’s better to check with your bank before sending any money abroad.

✅ Pros: Easy to use, Secure

❌ Cons: Can be slow, Not anonymous, Can be expensive

Verdict: use this if anonymity isn’t a problem and you don’t mind waiting a bit.

Credit/debit card

Cards are an easy, quick and secure way to pay for your bitcoin, though they aren’t as widely accepted as good old bank transfers. This convenience comes at a cost, of course: places that do take them usually add a considerable commission to the final price tag. Adding insult to injury, some credit card issuers will consider these transactions to be a cash advance, incurring in even higher fees. Yes, they can be really expensive. Also limits are usually very low, so if you’re looking for larger amounts, this is probably not your best choice.

You can use your card in exchanges such as Bitstamp, buy straight from brokers such as Coinmama and Changelly, with some vendors on OTC marketplaces, and in some ATMs.

✅ Pros: Easy to use, Secure, Fast

❌ Cons: Very high fees, Not anonymous, Fewer choices and low limits

Verdict: use this if anonymity and price aren't a problem and you’re buying small amounts.

PayPal, Neteller and other online payment platforms

While some exchanges may accept the odd digital payments platforms as a funding option, these are not widespread. PayPal is mostly restricted to OTC marketplaces or P2P, due to risks of scams from its chargeback policy plus the irreversibility of BTC transactions.

Since using it is basically adding another intermediary, they often cost more than a simple bank transfer. Depending on how the banking system of your country works, this may mean less sellers are willing to use digital systems, although this may not be true for places where banks are more hostile towards bitcoin.

✅ Pros: Easy to use, Fast, Secure (for buyer) 

❌ Cons: Expensive, Few options, Uncertainty (for seller)

Verdict: better off using traditional bank transfers, unless that is not an option.

Cash/gift cards

One of the appeals of bitcoin is that, much like cash, it can allow for a high degree of anonymity. However, that anonymity depends on following some best practices and avoiding associating your physical identity with your newly acquired bitcoin, and the first bottleneck is your entry point.

If you would like to keep your purchase anonymous, then you should choose an anonymous entry point: either cash or gift cards. Bear in mind that this choice will impose a big restriction your market options, and also incur in substantially inflated prices.

Regulated services like exchanges or brokers have to comply with anti-money laundering laws, so don’t expect them to take either. Bitcoin ATMs do take cash, though many also require some form of identification, and as bitcoin continues to go mainstream, this trend is likely to continue.

That leaves us with OTC marketplaces, such as Localbitcoins, and P2P direct. Cash can either be sent (by mail or bank deposit) or exchanged in person. If sent, cash confirmation may take a couple of days, so don’t expect fast transactions.

If you decide to go for an in-person transaction, please be aware that it can be a risky deal, especially if you have never met your seller before. Take some time and read our warning on the P2P direct section above.

✅ Pros: Highly anonymous

❌ Cons: Expensive, Fewer choices, Can be unsafe

Verdict: use it if you value anonymity and don’t mind paying more for it; be careful if meeting in real life.

That’s it!

Congratulations, you now have all the tools to become a proud owner of bitcoin or ethereum.

If your coins were sent to a web wallet on a third party service, make sure you withdraw it to the wallet you set up. Now you can simply hold onto them (crypto is a great store of value), trade it for another cryptocurrency, of spend it on goods and services.

Alternatively, you could open a Cloudbet account and start betting on a huge range of sports markets or playing in our exciting bitcoin casino, where your initial investment could turn into something much greater.

It must also be noted that whilst this guide should be of universal help to you bitcoin buyers out there, some countries do have have their own peculiar ways in which one can buy bitcoin or ethereum. Here at Cloudbet we strive to keep you updated, so if you're from one of the following countries, check out these articles for a more localised approach:

Posted 
Jul 14, 2021
 in 
Crypto 101

More from 

Crypto 101

View All