Written By
Ted Stevenot
Facilitating the trading of cryptocurrencies by matching buyers and sellers, exchanges typically offer both novice-friendly and expert-ready interfaces. Most make a wide variety of cryptocurrency trading pairs available—with all offering bitcoin.
Exchanges are accessible to wide audiences, have low fees, and allow bitcoin withdrawal. But they usually require the provision of personally identifying information, are subject to order book imbalances, and can expose you to custodial risk.
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These act as an intermediary between you and a cryptocurrency exchange or OTC desk/liquidity provider. Cryptocurrency brokers tend to cater to traditional financial services customers that have limited or no experience with cryptocurrency.
First-time buyers can often use existing accounts. But they have varying fees, require providing personal information, and rely on exchanges (and their custodial risk). Most importantly, withdrawal of bitcoin is usually limited or unavailable.
These services help you make payments while bypassing legacy payment channels like credit cards, bank wires, or checks. Payments apps offer some of the most user-friendly of all the ways to purchase bitcoin with low minimum purchase requirements.
They're user-friendly and first-time bitcoin buyers can often use an existing account. That said, payments apps have varying fees that may be hidden in spreads, require personal information based on volume, carry custodial risk, and may or may not permit bitcoin withdrawals.
Work just like two parties exchanging directly in a bitcoin trade—with the two parties being an individual (or institutional) buyer/seller and the trading desk. OTC trading offers you higher liquidity, fixed-price negotiation, and direct settlement terms.
OTC desks offer more personal service due to a smaller client base, fees and spreads are low, and some offer you the option to have funds sent directly to self-custody (like Unchained). They’re not for beginners though—minimum purchase amounts, in particular, are usually high.
Work just like two parties exchanging directly in a bitcoin trade—with the two parties being an individual (or institutional) buyer/seller and the trading desk. OTC trading offers you higher liquidity, fixed-price negotiation, and direct settlement terms.
P2P purchases go straight to self-custody, and buyers normally provide minimal personal information. Sellers may command a premium for bitcoin, but fees are usually low. Trades can take longer, and you’re dependent on reputation systems to determine counterparty reliability.
A convenient way to trade cash for bitcoin via tens of thousands of kiosks worldwide. Bitcoin ATMs are easy to use—their UIs mimic traditional ATMs, which most users are already familiar with.
Bitcoin ATM purchases generally go straight to self-custody, a bank account is normally not required, and personal information collected is based on transaction volume. Unfortunately, fees can be high and care must be taken for physical security at machine locations.
Resemble "pay-as-you-go" mobile-phone vouchers and are used for buying small amounts of bitcoin—up to around $1,000. Available from thousands of locations, vouchers are redeemable in minutes by scanning the QR code on the voucher.
Vouchers are easy to redeem with little or no personal information required, and redemptions go straight to self-custody. Vouchers are best for small purchases, fees may be high, and they must be redeemed within a specified timeframe.
While not “buying bitcoin,” exposure to bitcoin’s price action can be had through financial products such as trusts, derivatives, and ETFs. They’re popular for people and organizations that want exposure via more traditional market mechanisms.
Bitcoin by proxy is easy to acquire through traditional brokerage accounts—even with retirement funds. Fees and expenses are high, personal information is required for brokerages, and there are multiple layers of counterparty risk and no way to withdraw the underlying asset.