Taking part in something new can be fun and thrilling. However, new engagements also require cracking the books, and the same goes for entering the world of digital currencies. When people think of buying bitcoin, they don’t realize it’s not a whole entity, its very divisible and you can buy any small amount of bitcoin.
A typical question we get from newcomers is, “How to make my first bitcoin investment?” A lot of people tend to think that in order to acquire BTC, you have to buy in whole numbers. That’s a common misconception. For those who are new to the crypto community, there’s great news—you can buy any fraction of a single bitcoin!
Bitcoin’s smallest unit is called a “satoshi.” It represents one hundred millionth of a bitcoin, or 0.00000001 BTC, and is named after Bitcoin’s anonymous creator, Satoshi Nakamoto. These smaller units pave the way for acquiring small chunks of bitcoin, which means you can buy in extremely small denominations.
Here’s a quick step-by-step guide that will help you understand how to buy a small amount of bitcoin easily and securely:
Choose your buying platform wisely
When dealing in cryptocurrencies—whether it’s buying or selling—you must carefully choose a trading platform that best suits the transaction. There are two ways to trade digital currencies—either through a regular exchange or a peer-to-peer platform.
Regular exchanges vs. peer-to-peer platforms
To further understand these two options, let’s start with regular cryptocurrency exchanges. These are the companies or centralized entities that collect, buy, and sell orders from people and match them. These exchanges will pair you with a trade partner and facilitate the safe transfer of your cryptocurrency or fiat into bitcoin and vice-versa.
On the other hand, peer-to-peer (P2P) platforms don’t operate with a third party. While there is still an order placed, P2P platforms match the people behind those orders instead of matching the orders first. If you can’t find satisfactory trade offers, you have an option to create your own “buy order.”
These platforms connect the buyer with the seller to allow them to transact directly, while the escrow service assures that the BTC is safe. Third-party arbitrators will only intervene if there is a dispute filed. Other than that, there will be no other human involvement in the trade.
Buying bitcoin and other cryptocurrencies are much costlier in regular crypto exchanges as compared with P2P platforms. The prices are commonly set in dollars or euros, and using other fiat currencies will often be accompanied by a fee.
Some exchanges charge up to a 6 percent fee on each purchase. Charges in P2P platforms, however, vary per vendor, the payment method, and the platform itself. On Paxful, the buyer won’t need to pay a fee– the fee is assimilated in seller’s escrow fee which is 0.1% for Bank Transfers and 1% for every other payment method excluding gift cards.
Another thing to look out for is the minimum purchase amount. Some regular exchanges allow 100 dollars or euros as the smallest amount you can buy. On P2P platforms, you can set the amount or open a trade for the amount you wish to pay. It can range from small amounts like 1 USD, 10 USD, 50 USD, and goes up from there.
In terms of operation fees, regular exchanges often have higher costs because they’re operated by people who have to be paid for processing the trades. P2P platforms, however, work with the use of pre-programmed software that doesn’t require any human involvement.
Since regular exchanges are managed and regulated by people, there is also a higher likelihood of stricter compliance restrictions, as they trade in higher volumes and are more sensitive to anti-money laundering (AML) laws. Meanwhile, P2P platforms do not have any central point of authority, which makes them invulnerable to government interference.
First things first
Before anything else, you have to create an account. Creating an account on Paxful entitles you to a free wallet in an instant. Check the upper right corner of the website and click on “Create Account.”
Let the buying begin
Now that you have your account and digital wallet, you can proceed to look for offers that will best fit your needs. To start, click on the “Buy Bitcoin” button on the Paxful homepage.
Indicate the amount of bitcoin you’re buying
Type in the amount of bitcoin you’d like to buy. When you are buying small amounts of bitcoin, it’s important to always be mindful of the minimum trade amount. You can go from 10 USD, 20 USD, 50 USD, and up. On Paxful, the smallest amount of bitcoin you can buy is 10 USD or the equivalent in other currencies, while the smallest amount for selling is 0.001 BTC.
Select a currency
Specify the currency you are using to buy bitcoin. If you ever forget to indicate one, it will be automatically selected based on your location with 99% accuracy.
Choose your payment method
Clicking on the “Buy Bitcoin” button redirects you to a dropdown where you can choose your desired payment option. On Paxful, there are over 300 payment methods that you can choose from. Among the most popular are via bank transfers, cash deposits; various online wallets such as PayPal, Skrill, and Neteller; iTunes and Amazon gift cards, cash in person; and through altcoins like Ethereum, Litecoin, Ripple, and many more.
Note that these payment methods affect the price of your transaction. Bank transfers and other typical payment methods usually have lower fees as compared to the less common ones.
Scout for your desired offer
After completing all the necessary details, you can click the “Search” button. This will direct you to a list of offers available on the platform.
There are hundreds and even thousands of offers to choose from. The first column shows you the seller’s information, followed by the payment option. The third column indicates the minimum and maximum amount you can buy from the seller, while the fourth states the worth of bitcoin you will get with 1 USD.
Before you click buy
Once you’ve found your desired offer, don’t forget to check every detail and read all the offer terms set by the vendor. This will help you know which offer you can comply with. When you are good with the terms and happy with the offer, you can click on “Buy.”
Start your trade
Clicking “Buy” opens the trade with the instructions and the chatbox. After completing the trade instructions—sending all the necessary documents and files—and the payment, click the “Mark as Paid” button. If you don’t click this, the trade will expire and bitcoin will be released from escrow back to the seller.
Once the trade begins, the seller’s bitcoin will automatically be transferred to Paxful’s secured escrow. At this point, the trade cannot be canceled by the seller. Only the buyer can cancel the trade at any time. If the buyer cancels the trade, that’s the only time that the seller’s bitcoin is transferred from escrow back to the seller’s wallet.
If the buyer fails to make their payment and mark it complete within the payment window time frame, the trade will be automatically canceled and the bitcoin will be moved back to the seller’s wallet.
You’re done purchasing bitcoin! After the transaction, you can provide the vendor with feedback. The vendor’s reputation is displayed in green with a plus sign. If the transaction went smoothly, you can give the vendor a good feedback score, otherwise, you can choose between a negative or neutral score.
Buying the minimum purchase amount of bitcoin is easy. Check out some great offers and buy bitcoin on our Buy Bitcoin page today.