Bitcoins can be obtained in numerous ways, each of which are entirely different from one another. It is important to note that bitcoins are incredibly easy to send. As a result, they take the form of a highly transferable commodity. This is important because, although this guide will walk through the common ways to get bitcoins, there are actually countless ways to get them as they can be sent in exchange for anything the other party is willing to accept.
Is A Whole Bitcoin Really “Too Expensive”?
Bitcoin is divisible by nine decimal places. As a digital currency, one of bitcoin’s biggest attributes is its ability to be sent in increments called “satoshis.”
As a result, bitcoin can be bought, sold or exchanged in increments much smaller than an entire bitcoin. For example, if one whole bitcoin is $10,000, a smaller amount of bitcoin — represented as 0.01 BTC, for example — would cost just $100.
In Bitcoin’s early days, and we mean really early, the practical way to obtain bitcoins was by mining. Mining is the process by which newly minted bitcoins are released. Back then, the difficulty of the network was low enough that regular computers’ processing units (CPUs) and graphic processing units (GPUs) could mine bitcoins at very little cost.
Today, the landscape around Bitcoin has matured into an industry worth billions. As a result, the methods around acquiring the digital currency have evolved to more than just mining. Nonetheless, mining is still possible.
The incredibly low-cost days of mining bitcoin, which only lasted a couple years, were days where one bitcoin was so cheap that it financially made sense to mine them at a very low cost instead of buying them. For context, the first exchange rate given to bitcoin was in October 2009, 10 months after the first block was mined. The rate, established by the now-defunct New Liberty Standard exchange, gave the value of a bitcoin at US $1=1309.03 BTC. It was calculated using an equation that includes the cost of electricity to run a computer that generated bitcoins. This was the period of time where bitcoins, which were looked at as little more than a newly created internet novelty, could be mined in large quantities using an average computer.
Today, mining bitcoin is still a viable option, but different measures need to be taken in order to mine properly with the current level of difficulty.
Mining requires special hardware that performs the extremely rapid computations necessary to mine bitcoins. The hashrate, or the total power of all miners, is so substantial that hardware found in average computers (or any computers, for that matter) cannot perform mining calculations fast enough to produce any meaningful results. This specialized hardware is called an ASIC, or Application Specific Integrated Circuit.
Exchanges are by far the most common way to get bitcoin. Exchanges are platforms that allow users to purchase cryptocurrencies for a different medium of exchange, usually fiat currency. Exchanges do this through an order book, or a ledger, that matches instructions to buy or sell. These instructions are called “bids” and “asks,” respectively.
Whenever referring to the price of Bitcoin as it relates to fiat currency, the price being discussed is almost certainly an aggregate average of the price across various exchanges’ order books. Because bids and asks are instructions executed at a certain price, a large market buy would fill through several orders at incremental price levels and subsequently move the price of bitcoin up or down.
There are many well-known exchanges in most developed countries. Exchange usually require the use of a debit card or bank account in order to transfer funds over to the exchange.
One of the main purposes of using an over-the-counter (OTC) desk is to avoid affecting the price of bitcoin. In a practical sense, an OTC desk acts as a middleman for buyers and sellers to complete bitcoin transactions of custom sizes outside the operations of an exchange’s order book.
Instead of using an order book, OTC desks connect buy and sell orders directly between people. Desks are most commonly used for buying or selling incredibly large quantities of bitcoin, often surpassing millions of dollars in value. Some OTC desks even require a minimum trade value. Often, they are used specifically because a purchase or sale of such a large quantity need not affect the order books of exchanges. If a large order were to be filled on an exchange’s order book, it would significantly move the price of bitcoin. This is sometimes unfavorable for someone looking to buy or sell bitcoins without shifting the market price or without drawing attention to the transaction (OTC desks are not required to publicly disclose purchases).
Earning bitcoin in exchange for goods and services is just as feasible an option as mining or investing in the digital currency. There are businesses that allow people to earn bitcoin in exchange for services, including some freelance job listing sites where people are paid in bitcoin, as well as businesses accumulate bitcoin by accepting it as a payment method.
In some cases, earning bitcoin is the most practical option for someone if their business is already operating. There is no real transition most businesses need to undergo in order to earn bitcoin: It is as simple as providing the option for people to pay with it with services like BTCPay or BitPay. You can even just add a BTC wallet address to an invoice.
Earning bitcoin in this manner has some variables associated with it, like whether the business is accepting bitcoin directly or through Lightning micropayments. Options like this are important to consider for a business owner for reasons surrounding ease of use and level of privacy (Lightning micropayments are much more private and cheaper than transactions settled directly on the Bitcoin blockchain).
Bitcoin ATMs (BATMs) are kiosks that look similar to traditional ATMs, but instead of connecting to a bank account, they connect to the internet and allow for cash and credit card transactions for bitcoin. Some BATMs offer bi-directional functionality, which allows users to both purchase and sell bitcoin using the kiosk. Most BATMs now require some sort of KYC/AML identity verification prior to finalizing a transaction, so users need to be prepared to scan their IDs into the machine. Common locations for BATMs include retail stores, shops, bars, restaurants, malls and airports.
In exchange for the convenience of using a BTAM, transaction fees charged by BATMs can be higher than the rates on exchanges — up to 7 percent higher, according to the Consumer Financial Protection Bureau.
How To Buy Bitcoin In Europe
By Jamie Holmes
If you want to buy bitcoin in Europe, there are four ways you can do so:
- Through bitcoin exchanges like Kraken, Coinbase Pro and Bitstamp;
- Through decentralized (or peer-to-peer) exchanges, which offers users more privacy, e.g., Bisq, LocalBitcoins and HodlHodl;
- At Bitcoin ATMs, which are a convenient way to buy bitcoin;
- At retail stores. These are webshops or physical shops where you can buy bitcoin as you’d buy a lottery ticket or credit for your mobile phone.
Bitcoin exchanges are the most popular method to acquire bitcoin (BTC), which is not surprising since it is the cheapest way of buying cryptocurrency.
Buying bitcoin on an exchange is a relatively simple and user-friendly way to acquire bitcoin in any amount.
- Create an account on the exchange.
- Verify your identity, typically through linking your bank account, uploading identification, or linking a credit card. (This often takes a day to complete.)
- Once you’re approved, simply make your purchase and the bitcoin is transferred to your account once the transaction is complete.
Most exchanges these days offer ways to set up re-occuring purchases. This makes it easy to set up daily, weekly or yearly purchases in manageable denominations and is a painless way to grow your bitcoin holdings.
These exchanges, however, are vulnerable to hacks and other security issues. Any bitcoin you leave on the platform is technically not yours, until you withdraw it to a wallet you control. If the exchange get hacked, they’ve potentially lost your bitcoin. You are also required to submit personal information and documents as evidence.
So it is best to get your funds via bank transfer into the exchange, buy your bitcoin, and then withdraw it to a wallet that is safe and allow you to hold your private key under your control.
Below is a short list of the most popular exchanges where you can exchange euros (EUR) or pounds (GBP) for bitcoin.
- Kraken is the premier European exchange. Actively trading since September 2013, Kraken has high standing in the cryptocurrency community, and the largest volume for BTC-EUR of any exchange. It provides secure purchasing through the exchange of multiple currencies, (U.S. & Canadian dollars, the euro, and the Japaniese yen).
- Coinbase Pro has the second largest BTC-EUR volume after Kraken. It is also one of the longest-running bitcoin exchanges. Once your account or credit card is linked to Coinbase Pro, you can easily schedule reoccuring purchases on a timer. Want to buy $50 a week? Coinbase makes that simple!
- Bitstamp is a bitcoin exchange located in Luxembourg. It allows trading in USD and Euro (among other currencies) with bitcoin, ether, and litecoin. The exchange also has added Ripple and other cryptocurrencies to its roster. The company was originally founded to offer an alternative to Mt. Gox in Europe.
- Bitfinex boasts the third-largest trading volume in the world. It allows you to leverage up to 3.3x your trading power by providing traders access to the peer-to-peer funding market.
- Binance Jersey, an extention of Binance in the U.S., opened in 2019 and offers access to bitcoin using euros and British pounds.
Decentralized, or peer-to-peer, exchanges are different from regular exchanges as they allow you to control your funds throughout the entire experience, they do not require identification to buy bitcoin, and you can transact with different methods such as cash.
Think of these exchanges as a giant swap meet where regular people can exchange their bitcoin for fiat in a person to person exchange. These markets allow the sellers to set their own price and decide which types of payments they will accept. These exchanges act as more of a matchmaking service than a typical exchange like the ones above.
- LocalBitcoins is perhaps the best-known peer-to-peer bitcoin marketplace. It facilitates over-the-counter trading of local currency for bitcoins. Users post “ads” on the site where they set the exchange rate and their stock. Users can then connect with these sellers to make the purchase.
- Mycelium wallet’s P2P Marketplace also lets you meet in person to buy bitcoin.
- Paxful’s platform offers users the ability to trade in a peer-to-peer fashion online.
- Hodl Hodl is another decentralized exchange where you can buy bitcoin. It imposes fewer restrictions on buyers and sellers globally compared to LocalBitcoins. You can buy bitcoin from one of the sellers on these platforms either online or in person. There is a premium on the price you pay, as every seller adds their own markup on the price of bitcoin. But, generally, it is a good way to acquire bitcoin if you are conscious about privacy.
- Bisq (formerly known as Bitsquare) is another noteworthy decentralized exchange. It allows users to control their own funds and buy bitcoin through a peer-to-peer network. Founded in 2014, the company is committed to Bitcoin and open-source software. You will have to download the desktop software to access the Bisq marketplace. After configuring your payment method details for euros or pounds, you will have to browse the order book to find existing offers. Then you can buy bitcoin as you normally would on a regular exchange.
Bitcoin ATMs in Europe
Bitcoin ATMs are a novel way of buying bitcoin and are generally suitable for small purchases, but these machines are usually confined to metropolitan areas.
While ATMs are a more expensive way of buying bitcoin, there are a handful in Europe that do not require identification. Most will ask for some sort of verification, usually your mobile number, and may ask for more depending on local regulations and the size of the transaction. Bitcoin ATMs are also the quickest way of converting cash or money in the bank to bitcoin, unless you live in a rural area.
As of mid-2019, the supportive regulations of Austria, the U.K., the Czech Republic, Spain and Slovenia have resulted in the highest densities of bitcoin ATMs in these countries and their capital cities. Even smaller nation states like Albania, Latvia and San Marino have at least one bitcoin ATM.
Finally, the Swiss federal railways SBB have used its existing infrastructure to install hundreds of bitcoin ATMs across its network in 2018.
If you live in Europe, check out CoinATMRadar’s map to see if there’s a bitcoin ATM near you.
There are also physical stores where you can buy bitcoin.
- At the time of this writing, in Austria there are over 4,000 stores where you can buy vouchers that contain bitcoin, called Bitcoinbon.
- Across France, there are tabacs that have started selling bitcoin vouchers as recently as January 2019.
And in London, U.K., there is a growing list of stores working with Cashin to provide an easy way to buy bitcoin via the Lightning Network. You simply download the app, choose the amount you want to buy and then display the QR code on your phone to the teller. On receipt of your QR code, you can then exchange your cash for bitcoins. With Cashin’s app, you can buy just under £600/€670 worth of bitcoin without having to provide identification.