How to Buy Bitcoin (BTC) in USA: A Step-by-Step Guide

Bitcoin (BTC) guide
Thu, 05/30/2019 - 10:59
George Shnurenko

The first thing that you have to do in order to trade Bitcoins is to create a wallet that would allow you to securely store your crypto.

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Creating a Wallet

The first thing that you have to do in order to trade Bitcoins is to create a wallet that would allow you to securely store your crypto. There are numerous kids of wallets (online, software, hardware and even paper wallets). For security purposes, money has to be kept simultaneously on multiple types of wallets. It is not recommended to use online wallets for storing big amounts of money because they are frequently subjected to phishing attacks. But no matter what kind of wallet you choose, never keep Bitcoins on exchanges (so-called “hot wallets”). Even the biggest exchanges are not immune from shutting down due to hackers, FBI intervention or any other reason.

Purchasing Bitcoins

Those who want to buy Bitcoins have to use the aforementioned cryptocurrency exchange services. Be careful not to get lost in the plethora of exchange platforms (however, you will be lucky to have at least one or two if you live in certain regions). While choosing the right service you have to pay attention to its level of security, reputation and money limits. The two most reputable exchanges are Coinbase and Bitstamp. Moreover, they are considered to be the oldest exchanges on the market. Coinbase and Bitstamp are both top-tier platforms, so there is no need for comparison. However, European users may consider going with Bitstamp because it would be easier to deposit fiat money via SEPA. Each exchange service charges a certain fee for withdrawal and trading. 

Pay attention to the fact that you have to provide the scans of your ID (and most probably the proof of your address) for your account to be manually verified. Some exchanges allow buying a limited sum of Bitcoins without verification, but this obviously won’t be enough for investment purposes. Such a policy helps to prevent money laundering. 

There are three major ways of depositing money on your account:

  • credit card payment; 
  • wire transfer; 
  • PayPal transfer (only selected exchange services are compatible with PayPal).   

After the payment has been deposited to your account, you can proceed with buying Bitcoins. Then you can simply withdraw crypto directly to your wallet. 

Is it possible to buy cryptocurrency with cash? Yes, there is a service which is called LocalBitcoins that allows its users to look for people who are willing to trade paper money for Bitcoins. There must be a “Bitcoin guy” in your city who makes a living exchanging crypto.  

WallofCoins also allows buying crypto with cash by simply depositing the desired amount of money into the bank account. Before that, you have to meet with the merchant, choose the bank and specify all the payment details.

Coinatmradar shows you a Bitcoin ATM map. Bitcoin ATMs (which are usually located in check cashing centers) are still rather rare, but they allow to withdraw cash in a matter of minutes – just wait until your QR code is scanned by the ATM. Comparatively high charges are the major drawback of Bitcoin teller machines, and that explains why they are not commonly used and rarely found.

Top 10 Richest Bitcoin Addresses: Here’s Everything That We Know About Their Owners

Bitcoin Trading Basics

If you already own a specific amount of BTC, you may consider further investing in Bitcoin (long-term investment) or become involved in active trading. Short-term trading has more advantages from beginners since it presupposes fewer risks and doesn’t require hedging. Bitcoin active trading has numerous pluses compared to other means of trading: 

  1. It is worth to reiterate that BTC is a highly volatile currency. Of course, that means that its market value may suddenly plunge, but at the same time you can expect huge gains if prices go up. You will not be able to instantly gain a huge profit with any other trading instrument.    
  2. Bitcoin holders are able to trade 24/7. There is no such thing as “trading hours” when it comes to cryptocurrencies.  
  3. As of now, Bitcoin trading charges are rather low, so you can try your luck without losing too much. 
  4. Bitcoin trading platforms have looser requirements for providing personal information (it applies only to Bitcoin transactions).   

Choosing a reputable exchange service is vital for successful short-term trading. Use any of the prominent exchanges (Coinbase, Kraken, BitFinex) for trading purposes. For binary options, consider using BTC Oracle. In order to monitor the recent trends you will also need a charting site (Bitcoin Wisdom or Cryptowatch) which graphically indicates the fluctuation of the Bitcoin’s value.

Brief Review of Bitcoin Exchanges

Failing Exchange Services

Mt. Gox

Exchanges are an inseparable part of the cryptocurrency world, so there are also naturally volatile. A few years ago, Mt. Gox was the biggest player on the market with more than 70% of all Bitcoin-Dollar transactions going through this exact exchange service. Despite the fact that the site’s rise to a monopolistic status had been accompanied by hacking attacks, legal issues with the US government and numerous lawsuits, the news about its bankruptcy in 2014 truly shocked the whole crypto community since Mt. Gox had been widely considered the most reputable exchange service. Numerous investors failed to withdraw their money from this exchange, and only four years later they are finally going to get their money back after the court approval. 

Mt. Gox wasn’t the only big player that disappeared from the market. There are two more prominent examples – Cryptsy and BTC-e. These were two major Bitcoin exchanges before went out of business. 


Cryptsy was a service that could be used for exchanging Bitcoin as well as other cryptocurrencies (it allows to exchange more than 200 kinds of crypto). This exchange was also based in the US, but this time in Florida. While this exchange platform had been steadily rising over up to 2016 (it was established in 2013) and significantly increasing its BTC trading volume, there also was a place for controversy. After numerous lawsuits that accused the company of mishandling funds it eventually became the victim of a hacker. Among the securities features one can distinguish TFA, encryption, and the usage of hard wallets for storing funds. Unfortunately, it didn’t help to protect this currency from the hackers who stole around 10,000 BTC and made the CEO declare bankruptcy.    


This Bulgarian exchange platform appeared on the market in 2011 and thrived during the whole Mt. Gox fiasco. Users simply couldn’t withdraw their money from the closed exchange, so they were looking for an acceptable alternative to trade crypto. As of now, the BTC-E is currently unavailable after the FBI took it down. However, it is expected to be brought back online in the nearest future.  

BTC-e stands out among the rest because of a big number of trading options with four available currencies that include Russian Roubles (RUR). There were also seven digital currencies that could be traded. BTC-e exchange was the best option for Russian investors since its website is fully translated into Russian. Rumor has it that BTC-e is actually based in Russia since the creator of this exchange platform opted to remain anonymous.

Top 10 Richest Bitcoin Addresses: Here’s Everything That We Know About Their Owners

Best Exchange Services in 2018

Today’s leading Bitcoin exchanges have surely learned their lessons since they place a major emphasis on the security of their users. While some of the most famous platform have already been mentioned, you can read a more detailed description of the leading cryptocurrency exchange services below.


Bitstamp is a Slovenian exchange platform that appeared on the market in 2011 as a local alternative to then-omnipresent Mt. Gox. Since 2013, Bitstamp is based in the UK. Bitstamp allows the execution of instant orders for USD/BTC pair (other currencies can be also exchanged into Bitcoin). This cryptocurrency exchange has great connections in the industry working very closely with another dominant exchange platform Coinbase. It also managed to attract the attentions of investors from Pantera Capital. The success of the given exchange is secured by an effective audit trail and strict adherence to laws and regulations. 

In order to purchase Bitcoins with Bitstamp you have to create an account and verify it. It takes about 2 hours for your account to be verified after sending all the required documentation. You have the ability to trade currency without verification, but any withdrawals are forbidden. 

When it comes to fees, Bitstamp charges 0.90€ for SEPA withdrawal (the minimum sum for SEPA withdrawal is fixed at $10,00) while international wire transfers have 0.09% fee. The minimum fee for trading is fixed at 0.5% if the trading volume doesn’t exceed $500. 


Bitfinex is another great exchange service for digital currency traders that is compatible with Bitcoin and numerous other altcoins. Founded in 2013, it has the largest trading volume of Bitcoin against USD. This platform mainly focuses on security issues while providing its customers with TFA, storing almost all of its assets in cold storage (instead of hot wallets) and sending all of their achieved databases to numerous hardly traceable locations. Such drastic security measures were implemented in response to the major security breach (“Betfinex hack”) which resulted in stealing more than $70 million. 

Bitfinex trading fee is fixed at 0.20% for those who make less than $500,000 dollars in a month. At the same time there is 0.1% fee for both withdrawal and deposit.   


Coinbase is one of the leading Bitcoin exchange services on the market which is currently available in 32 countries after being launched in San Francisco in 2012 by Brian Armstrong. Among the main advantages of Coinbase one can point out a high level liquidity, impressive exchange limits and fast off-chain transactions. It is also worth mentioning that Coinbase is a very safe platform which is subjected to numerous strict US regulations contrary to foreign exchanges with much looser regulations. Coinbase (similarly to Bitfinex) stores about 98% of its funds on cold wallets (hard and paper wallets) that are stored in numerous vaults around the world. The remaining 2% that are kept online will help to ensure that the users get their money back in case of a hacking attack. 

One of the major disadvantages of Coinbase exchange is a limited number of payment options. There are only two possible methods – wire transfer and credit card. If you choose wire transfer, you will have to send a small sum of money to your account as a means of verification. ACH transfers aren’t suitable for daily trading because they usually take up to 4 days to be completed (1-2 days for SEPA transfers). At the same time credit card transactions are conducted almost instantly. Linking PayPal account is possible, but it cannot be used a payment method.


Kraken, a US-based trading platform, is an amazing tool for traders. For those who didn’t have any trading experience Kraken offers detailed guidelines that would allow beginners to significantly improve their skills. Another major advantage is a great variety of numerous trading options like margin, leverage, advanced orders or automated trading.  

Kraken currently works with 7 currencies and more than 40 markets (North America, Japan and the majority of European countries). This web site has 27/7 support, but the bad quality of its customer service has been widely criticized by the online community.   


BTCChina is one more huge platform for exchanging Bitcoin that appeared on the market as early as in 2011. The obvious drawback is that is supports only US dollars (along with the official Chinese currency). Withdrawal fee is fixed at 0.38%. It is worth mentioning that BTCChina is quite legitimate in China and officially accepted by the Chinese government which partially ensures its stability on the market.      


Bisq is an example of a relatively new exchange service that appeared on the market in 2014. This exchange stands out among the rest as a completely decartelized system. Because of the fact that Bisq is a blockchain-based exchange, it is extremely hard to hack it. Furthermore, the system does not have access to your personal data since it is fully controlled by users. Users are also the ones who control all the coins. Among other advantages of this newly established exchange platform one can point out a big number of available currencies and payment methods.

All in all, there are about 60 Bitcoin exchanges that are currently available for users. The above-mentioned services are the most popular options for trading Bitcoin, but you are free to choose any other service paying special attention to its reputation, trading instruments, available currencies. The examples of Mt. Gox, Cryptsy and BTC-e prove that even the biggest players on the market can be taken down. No matter what cryptocurrency exchange you prefer, remember to withdraw your money to a wallet.

Selling Bitcoin

If you know how to purchase Bitcoins, you already know how to sell it – these procedures are practically the same because all the methods that can be used for purchasing currency are also suitable for buying it.   You will need to find an exchange and simply choose a desirable trading pair. Along with the aforementioned online method of selling Bitcoin you can consider using an ATM with bi-directional functionality that enables both purchasing and selling Bitcoins. It is also possible to find an individual who is willing to trade paper money with crypto. Let us consider each of these options in details.

Top 10 Richest Bitcoin Addresses: Here’s Everything That We Know About Their Owners

Online Trading

Every single exchange service allows you to both purchase and sell any cryptocurrency (although some exchanges like Gemini mainly focus on large orders from investors). There is no need to mention any specific exchanges since their detailed description is presented above. Just make sure that the site works in your country. Also, do not forget to report any profit to your corresponding tax authority.  

Using an ATM

 In order to sell your coins with the help of an ATM machine, you have to follow the following guideline: 

  1. Go to to see the list of all available ATM machines after typing in your address. The worldwide map includes thousands of teller machines while Coinatmradar lets you find the closest ATM for conduction a transaction. 
  2. Find the nearest ATM machine and press “Request Withdrawal” button. If you want to proceed with your transactions, you have to type in your telephone number. Be aware of the fact that the majority of Bitcoin teller machines also require an ID for verification if you want to trade Bitcoins for more than $1,000. 
  3. After that you have to specify the amount of paper money that you would like to get (just like with an ordinary ATM). 
  4. A newly generated QR code has to be scanned with the help of your smartphone (of course, it presupposes that you have already installed an app that given you access to your Bitcoin wallet). Make sure that the amount of BTC that you send corresponds to your order (including a usually high fee), because otherwise the transaction will simply be invalid. 
  5.  Now the ATM machine simply dispenses cash or shows you a redemption code that can be used to withdraw money at a suitable time. 
  6. Selling to Individuals 

Using such services as LocalBitcoins allows you to seek for individuals who want to privately trade cash for coins (no need for KYC and AML compliance). You personally meet your trading partner, ask him to show the agreed amount of cash, send him the corresponding amount of BTC and wait till the transaction gets verified (it usually takes about 10 minutes for each block to be created, but block time may differ from transaction to transaction). Needless to say, one has to remember about numerous safety precautions when dealing with online trading. It is useful to follow these recommendations: 

  • Always choose public places for all your meet-ups. 
  • Bring another person with you for additional safety. 
  • Agree on the conditions before the meeting. If that’s impossible, be sure to check the current price of BTC since all cryptos are subjected to volatility and their value can significantly change at any moment.

Top 10 Richest Bitcoin Addresses: Here’s Everything That We Know About Their Owners

Buying Goods or Services

If you don’t need fiat money, you can simply purchase something on the Internet with Bitcoins. As of 2018, more and more retailers opt to accept Bitcoin despite its major drawbacks like high transaction charges and constant volatility. These are the services that are completely compatible with Bitcoin: 

  • PizzaforCoins (ordering pizza right to your house); 
  • Expedia (booking hotel rooms); 
  • APMEX (buying gold);   
  • BitGive (donating to numerous start-ups); 
  • Dish (paying for TV). 

Users are attracted to cryptocurrencies because of the anonymity of transitions, but it is frequently used by crooks to sell drugs, weapons or other kinds of illegal goods. According to one Australian research, near half of all Bitcoin transactions are connected to trading illegal items and services. Nevertheless, one has to remember that government agencies still have enough capabilities to track down such illegal transactions even when privacy coins like Bitcoin are involved (numerous reports about people who got arrested for buying drugs with Bitcoin confirm it).

Selling Large Sums of BTC

Bitcoin holders may want to eventually cash out their coins by participating in the OTC market. You may consider itBit's OTC desk which focuses on large Bitcoin trades (more than 25 BTC). Genesis is another reputable OTC broker which compliable with SEC and FINRA regulations. The company has recently made headlines by trolling Warren Buffet with billboards in front of his office that urge the investment genius to change his opinion on Bitcoin’s future. 

Pay attention to the fact that both Genesis and itBit are not usually willing to deal with individual sellers. Thus, you may consider simply using an exchange service instead (unless you are a Bitcoin millionare). For example, Binance allows you to sell up to 100 BTC per day. Kraken used allow to withdraw $100 000 per day, but this exchange is out of business now. 

These limits are imposed because all prominent exchanges have to comply with a number of regulation imposed by the government. As mentioned above, the majority of exchange services store more than 90% of their funds on cold wallets as a security measure. The sum, which is currently stored on a hot wallet, may be smaller than the amount of BTC you want to sell. Thus, it is impossible to quickly withdraw astronomic sums of money from exchanges.

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Bitcoin and Taxes

It is clear that Bitcoin is an independent currency which is not controlled by central banks, but are they subjected to tax? Bitcoin transactions are regulated differently across the globe. For the example, in the US the IRS made it clear that every Bitcoin transaction (no matter how small it is) should be reported. However, the taxation of cryptocurrencies is a very complicated matter (partly due to the constant price swings). 

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About the author

George Shnurenko is a Bitcoin and cryptocurrency enthusiast, financial analyst and writer. He's majoring in history but he believes that the digital currency which has taken the world by storm will bring about change to all us humans. 

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