How to Buy Bitcoin in 2023 | The Ultimate Guide

Bitcoin has been one of the best-performing assets in history, so it’s no wonder why you might be wondering how to buy Bitcoin in 2023.

The “OG” cryptocurrency and still the leading coin in the entire crypto market, Bitcoin is a polarizing asset that’s talked about at all levels of society. What started in the wake of a global financial meltdown in an online forum of cypherpunks is now eminently recognizable and even part of US presidential strategy.

Many analysts suggest that Bitcoin’s price could climb orders of magnitude higher than it already is, while others insist that it has no fundamental value. With all of this ‘noise,’ how are you to sort the wheat from the chaff?

Well, we’ve got you covered! This article will tell you all about this ever-so-popular cryptocurrency, what gives it value, and how to buy Bitcoin effortlessly.

Read on!

History of Bitcoin

Bitcoin was created in 2008, with the bitcoin.org domain name being registered in August. The now-legendary Bitcoin whitepaper was then published in October by the equally, if not even more, legendary pseudonymous figure Satoshi Nakamoto.

Nakamoto launched the Bitcoin network on January 3, 2009, by mining its first block. Along with the block reward of 50 BTC, this genesis block had an embedded message referring to the headline of the UK’s The Times newspaper on the same day:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

The embedded text has been interpreted as both a timestamp and a commentary on fractional reserve banking. The latter is especially apt as, in 2023, many years later, history appears to be coming full circle as banking titans such as Credit Suisse bite the dust.

A few days later, on the 9th of January, Nakamoto released the first open-source Bitcoin client on SourceForge. The first ever Bitcoin transaction was made on January 12th, when programmer Hal Finney downloaded the client and was sent 10 BTC by Nakamoto.

Satoshi Nakamoto is estimated to have mined over 1 million BTC in the early days, but their involvement with Bitcoin didn't last. After handing the reins of the project over to developer Gavin Andresen, Nakamoto vanished from the public eye.

The first actual use of Bitcoin in a retail transaction came when Laszlo Hanyecz used 10,000 BTC to pay for two pizzas on May 22, 2010. This event is now commemorated annually as “Bitcoin Pizza Day.”

Who is Satoshi Nakamoto?

The answer to this question has puzzled professional and amateur sleuths alike for over 14 years, and no conclusive answers have emerged. Investigations were even carried out by The New Yorker and Fast Company, but neither turned up any compelling evidence.

Many believe that Satoshi is British, thanks to the use of The Times’ headline in the Bitcoin genesis block and the usage of British English spellings in their forum posts and the Bitcoin source code.

Here are some of the most often cited Satoshi Nakamoto candidates:

• Nick Szabo. The creator of “bit gold,” a Bitcoin predecessor, Szabo, is a noted figure in the world of cryptography. He coined the term “smart contracts” but has denied being Satoshi.
• Hal Finney. The late Hal Finney was the first ever recipient of BTC from Satoshi themself and is the second person to use the software, file bug reports, and suggest improvements. Finney also lived a few blocks away from and was reportedly acquainted with a gentleman named Dorian Prentice Satoshi Nakamoto.
• Craig Wright. An entrepreneur and computer expert, Bitcoin SV creator Wright has spent much time and money claiming that he is the real Satoshi Nakamoto. His one-time associate, David Kleiman, has also been cited as a top candidate.
• Adam Back. Founder of Bitcoin development firm Blockstream, Back was an active member of the cypherpunk movement and invented HashCash, which was cited in the Bitcoin whitepaper. He’s also British and has communicated with Satoshi via email but has firmly denied being the Bitcoin creator.

Does Bitcoin Have Value?

In March 2010, two months before the famous incident that resulted in Bitcoin Pizza Day, a BitcoinTalk forum user called “SmokeTooMuch” attempted to auction 10,000 BTC for $50 but couldn’t find a single buyer.

At that precise point, the argument that Bitcoin has no value would have held true. Hindsight shows that the seller’s asking price was a bit too high (on Pizza Day, 10,000 BTC would have traded for $41), but there wasn’t a field of buyers or a list of buying bids to meet.

13 years down the line, the story is very different. The fact that you can buy and sell Bitcoin on several highly liquid exchanges proves that the asset has value to buyers. That’s how a relatively free market works—BTC is worth something to many participants that make up the market, and trading occurs at high volumes 24/7.

Bitcoin is often compared to gold because it shares the characteristics of durability, divisibility, and rarity. A single Bitcoin can be divided into 100 million Satoshis; its rarity is guaranteed by a supply cap of 21 million BTC; and its durability comes in the form of a massively powerful, decentralized network. It’s also easy to transact and impossible to fake.

Those that criticize its viability as an asset often point to its volatility and the fact that it’s subject to violent bear cycles. On October 1, 2021, BTC traded at $61,300. Precisely a year later, it was at $20,400, a 67% decline.

Contrast that with Meta, formerly known as Facebook, considered by analysts to be a “blue chip” stock. Over the exact same dates listed above, Meta stock cratered from $323 to $93, or a plunge of 72%. Many other major shares plunged over this time frame, too, suggesting that, if anything, Bitcoin could well be correlated to major equities.

This, in turn, would suggest the finance industry itself and major investment players consider Bitcoin to have real value. They are referred to (by themselves) as ‘smart money'’ after all—although the term’s real origins in gambling may be more apt.

How to Buy Bitcoin

So, now that you’re familiar with Bitcoin’s value and rich history, how do you actually get your hands on it? Well, you don’t since it’s a digital currency, but you can buy it in a wide variety of ways.

#1. P2P Trading

Bitcoin was originally conceived as a peer-to-peer electronic currency, so P2P trading is definitely still an option. Buying Bitcoin today is a far cry from having to convince BitcoinTalk forum users to sell you some, and lots of peer-to-peer exchanges offer Bitcoin trading.

LocalBitcoins is a great example of a peer-to-peer trading venue, although it’s due to shutter its services in 2024.

#2. Centralized Exchanges

Given Bitcoin’s maturity as an asset, it should come as no surprise that specialized crypto exchanges are a dime a dozen and are most people’s preferred means to buy BTC. You can generally take your pick regarding CEX platforms and decide which to use based on whether they’re KYC’d, serve your region, or simply have better fee structures.

#3. Decentralized Exchanges

Bitcoin isn’t a blockchain that supports smart contracts and extensive dApp development (yet), so it isn’t as easy to buy BTC in a fully decentralized manner.

However, it is possible if you’re willing to put in a little legwork. Wrapped BTC, for instance, is an ERC-20 token that you can buy on an Ethereum-based DEX. You can then ‘unwrap’ your WBTC and claim the BTC that had been frozen to create the WBTC that you had bought.

#4. Bitcoin ATMs

If you’d prefer to go from cash straight to Bitcoin, you could try using a Bitcoin ATM. The main obstacle with these is actually finding one.

#5. Wallet On-Ramps

Many popular crypto wallet software companies try to integrate their services with financial providers that can facilitate crypto purchases within the wallet itself. This means that you can bypass exchanges, but just remember to keep an eye on what sort of fees these services charge.

Regardless, these wallet on-ramps are a great way to buy Bitcoin since they eliminate the stress and risk of moving it, such as withdrawing from an exchange and into your wallet.

#6. Neo Brokers

A lot of neo brokers, also known as zero-fee brokers, have capitalized on the interest in cryptocurrency by offering their clients the chance to buy crypto. However, you should be very careful with these platforms.

There is one simple question to ask: do they allow you to withdraw BTC (or other cryptos) from the platform and into your own wallet? If the answer is no, then they’re likely just taking your money and not actually buying the underlying asset.

These neo brokers often experience technical issues when assets rise. If they actually bought the assets with your money, they wouldn’t need to prevent you from selling them when you’re in profit unless the trade were notional and they themselves were the counterparty.

Remember, if a service is free, you’re the product.

How to Store Your Bitcoin

There’s a saying in crypto: “Not your keys, not your coins.” This is one of the main arguments against neo brokers and what many crypto yield chasers found out when platforms such as Celcius and BlockFi collapsed—letting someone else hold your crypto for you is generally a terrible idea.

The entire point of cryptocurrency is to eliminate intermediaries and corporate involvement, and its infrastructure is built around wallets. You can compare a blockchain wallet address to your place of residence—anyone can send BTC there if they know the public address, but only you can access it since the private key is only held by you.

#1. Hot Wallets

Hot wallets are very popular thanks to their convenience as pieces of software that connect to the internet. They are often found in the form of browser extensions or mobile apps, but a proper Bitcoin client could also count.

#2. Cold Wallets

Writing down your keys and recovery seed on a piece of paper would count as a cold wallet. These are offline and tend to be considered extra safe, although they don’t have the same convenience as hot wallets do.

#3. Custodial Storage

Not your keys, not your coins, remember? Still, you could store your Bitcoin on an exchange or with a custodian if you so choose. This is usually incentivized by yield, after all, and proponents will tout the convenience of it—just remember that crypto lost a lot of custodians last year, and some of them were actively and knowingly using your funds for their own ends.

If, after reading all of this, you’re still happy to let the likes of Sam Bankman-Fried (still not in jail as of March 2023) pay you 1% interest so that he can use your BTC on avocado toast, that’s on you.

How Does Bitcoin Work?

We’ve mentioned wallets and blockchain addresses, along with the importance of withdrawing Bitcoin into your own control after buying it. But how does any of this matter, and how is it even possible?

Well, the blockchain is wonderfully transparent. It’s a public decentralized ledger, which means that you can view all of the transactions that take place on the network because it’s upheld by thousands and thousands of independent nodes. In fact, you yourself could operate a node and add another increment to Bitcoin’s censorship resistance.

By storing a copy of the blockchain, node operators can confront malicious actors who try to censor or change the blockchain. The more nodes that have the same correct copy, the easier it is to defeat a malicious actor. This, in essence, can be regarded as the decentralized network reaching a consensus on what the truth is.

The nuts and bolts of this operation are carried out by special nodes called miners. They throw a lot of computational power at solving difficult cryptographic problems in something akin to a race or a lottery. The winner gets the privilege of gathering all of the network’s transactions in the last few minutes and writing them into a ‘block.’

The other miners can check their work and reach a consensus on its validity. The block is then added to the blockchain.

So, when you buy Bitcoin or move it from an exchange to your own wallet, you can actually view that transaction. Once the blockchain updates and your wallet is topped up, only you can control the coins within—assuming you haven’t shared your private key with anyone.

How to Sell Bitcoin

Selling Bitcoin is generally just the reverse of buying it, but there can be additional limitations depending on how you bought it and where you’re storing it. Here’s how to do it!

#1. Send BTC From Your Wallet to Off-Ramp

In this case, your off-ramp of choice could be any venue or means that allow you to sell, just as there are different ways to buy BTC. Whatever it is, you need to get your crypto from your own custody to that of the off-ramp service provider, whether that’s an exchange account or an ATM operator wallet.

Keep in mind that the off-ramp service provider needs to know that the BTC is somehow connected to you. This is usually done with some sort of ticket or receipt for Bitcoin ATMs or a reference code when it comes to exchanges. Pay very good attention to this because crypto transactions are irreversible.

#2. Choose the Right Sale Method for You

In some cases, such as with a Bitcoin ATM, you may not have much choice. You’re offered an exchange rate, which you can either accept or decline. On exchanges, though, you have more options. You can take the easy route and simply swap BTC for fiat or another crypto, or you can hop onto the exchange’s trading interface.

Limit orders tend to be a great idea for getting exactly the right price you want, and you’re generally not going to have much of a price impact unless you’re a bona fide whale. If you are, then an exchange’s OTC desk might be a better choice for you.

The Future of Bitcoin

Bitcoin isn’t going anywhere, but the emergence of Ethereum as a groundbreaking and fundamental technology for the development of blockchain has led many to anticipate the “flippening.”

While Ethereum’s market capitalization may indeed overhaul that of Bitcoin at some point in the future, thanks to sheer utility and constant development, it’s likely that Bitcoin will always have a place as the original.

The network effect cannot be understated, and Bitcoin truly possesses it. It’s regarded as a pristine asset for several reasons, and it’s notable that newer blockchain projects aren’t trying to copy BTC or be the next Bitcoin, as they were a few years ago.

Key Takeaways

Bitcoin is a revolutionary asset, but newcomers tend to be inundated with often misleading information on how to buy it. From Google Ads scams to blog content sponsored by questionable trading venues, it’s difficult to know where to go.

Luckily, household investors have plenty of great choices when it comes to buying Bitcoin. Most investors choose centralized exchanges because they’re easy to use and tend to have familiar (and powerful) trading tools. Bitcoin ATMs are great when you can find them, too, and some wallets have baked-in on-ramp functionality.

Once you buy some BTC, remember to put it in the safest possible storage. For many, this means a wallet under your control. Just remember to keep that recovery phrase to yourself and store it in a safe spot!

Buying Bitcoin FAQ

• Can you buy less than 1 Bitcoin?

  Yes! Bitcoin is divisible into 100 million units called Satoshis. The lower limit on how much you can buy is generally decided by your on-ramp of choice—an exchange might have a minimum purchase limit of $10, for example.

• What currency can I buy BTC with?

  As the most popular cryptocurrency in the world, it’s possible to buy BTC with practically any currency. Your exchange of choice will define what fiat currencies you can use, but it’s also possible to trade BTC with practically any stablecoin or other cryptocurrency on an exchange.

• Where can you buy Bitcoin?

  You can buy Bitcoin on an exchange, in peer-to-peer trading, via a wallet on-ramp, or using a Bitcoin ATM.

• Can I use my credit card to buy BTC?

  It depends on where you’re buying BTC and which country you live in. Many, if not most, regulated crypto exchanges do accept credit cards.

• Do I need a wallet?

  No, but it’s very strongly recommended to have and use your own wallet to store Bitcoin. That way, nobody else can use it for their own ends, and your Bitcoins will remain yours even if every exchange under the sun goes down.

• How do I sell Bitcoin?

  The same way you bought it, generally. Just make sure it’s possible with your local Bitcoin ATM or wallet on-ramp, though, because some of them are still one-way.

• Can I buy Bitcoin with PayPal?

  This depends on your region, but even if so, treat PayPal like a neo broker and make sure they allow you to withdraw into your own wallet. Even if you don’t want to pull your BTC, you shouldn’t consider a vendor who forces you to stay on-platform legit.