As the popularity of Bitcoin increased across the globe, the price of the world’s first cryptocurrency surged, breaking new records. The price of a single Bitcoin is now measured in tens of thousands of dollars, and so buying a whole Bitcoin requires a sizable capital.
Crypto beginners may find the soaring Bitcoin prices quite intimidating, worrying that they missed their opportunity to invest in the digital asset. However, you don’t have to buy a whole BTC in order to invest in Bitcoin. In fact, Bitcoin is a very divisible cryptocurrency, and investors can easily buy a fraction of Bitcoin for small sums of money. We will help you understand how this works in this article.
How Divisible Is Bitcoin?
Bitcoin is divisible up to 8 decimals, meaning one whole Bitcoin can be divided into many small pieces. Just as 1 USD is worth 100 pennies, a whole Bitcoin is worth 100 million satoshis. A satoshi is the smallest unit of Bitcoin and can be bought at a much smaller price than a full Bitcoin.
Buying a fraction of Bitcoin can easily be done through cryptocurrency exchanges and other methods. However, Bitcoin transactions always cost a network fee, in addition to a variable trading fee, depending on the exchange you are using. Therefore, buying a single satoshi will cost you more in exchange fees than the actual asset. If you want to start investing in Bitcoin without breaking the bank, make sure to check out exchange fees and minimum buying limits. Most exchanges have a minimum buying limit between 20 and 50 USD.
Satoshi – The Smallest Fraction Of a Bitcoin
If the name Satoshi sounds familiar to you, that is probably because you’ve heard it before. Satoshi Nakamoto is the pseudonym of the mysterious founder of Bitcoin and the blockchain technology that powers it. In their honour, the smallest Bitcoin decimal got the name satoshi.
One Bitcoin equals a thousand millibitcoins, one million microbitcoins, or a hundred million satoshis. Technically, the smallest amount of Bitcoin you can buy is one satoshi, but a single satoshi is so cheap (costs less than pennies) that many cryptocurrency exchanges won’t let you buy it. While you don’t have to purchase huge amounts of Bitcoin, many exchanges have minimum limits, such as 50$ worth of Bitcoin.
How to Buy Bitcoin on Cryptocurrency Exchanges
You can buy Bitcoin and fractions of a Bitcoin through many different platforms. While some cryptocurrency platforms allow you to pay for Bitcoin with fiat currency such as AUD, USD, GBP or CAD, others only accept cryptocurrency deposits. If you don’t own any digital assets yet, you can start buying Bitcoin with fiat currencies.
Cryptocurrency exchanges are one of the easiest and most popular ways to purchase Bitcoin and altcoins like Bitcoin Cash (BCH), Litecoin (LTC), Ripple (XRP) or Ethereum (ETH). Cryptocurrency exchange platforms allow people to buy and sell cryptocurrencies for the best prices, 24/7. Using a cryptocurrency exchange is quite simple, and you can start trading digital currencies right away once you open an account.
Each crypto exchange has an order book where buyers and sellers list their orders. Crypto exchanges with high traffic have the advantage of fulfilling the orders in the order book more quickly than others. Using a crypto exchange with high daily traffic and trading volume is generally considered a good idea when you are picking a crypto exchange, as they have better services, but that is not the only criteria you should be looking at. Make sure the platform you pick is trustworthy and enjoys the community’s trust. You can also check whether it’s regulated or not, as regulated exchanges are way safer.
Some of the best crypto exchanges, such as Gemini, Coinbase Pro, Binance and Kraken, serve customers across the globe, and anyone can use them with ease. Of course, each crypto exchange has its own policy when it comes to trade fees and other important issues, so make sure you check out how the exchange works and how much it charges for transactions before you start depositing money.
How to Open an Account and Pick a Payment Method
Different Bitcoin exchanges have different requirements but opening an account is usually as simple as typing in your email address and password. Some crypto exchanges also require identity verification to prevent scams and money laundering, as per KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations.
It is usually very easy to verify your identity on a crypto exchange but you may have to provide personal details, including your name, address, and an official photo ID.
Once you open an account and complete the ID verification, you can start buying BTC on the trading platform. Most platforms offer multiple methods for purchasing crypto on the exchange. You can use debit cards, credit cards, or bank transfers. Bank transfers are usually the cheapest option and most crypto exchanges allow you to connect your bank account to your exchange profile. Some platforms also accept PayPal transfers and Amazon gift cards.
Once you have an account with your preferred crypto exchange, you can easily start buying BTC. You don’t have to worry about whether you have the funds to buy a whole Bitcoin either; you can just buy a fraction of a Bitcoin according to your budget.
Crypto exchanges allow you to select how much fiat money you want to invest in Bitcoin and manually set your buying price. The price of Bitcoin on a given exchange constantly shifts depending on the fulfilled orders in the order book. So, when you want to buy Bitcoin, all you have to do is match a sell order on the book. Crypto exchanges automatically match your order with the best (lowest) sell offer. You just need to enter how much fiat currency you want to spend on Bitcoin and confirm your transaction.
The exchange shows how many satoshis you will receive before you complete your transaction, as well as how much you have to pay in trading fees. Your BTC will show up in your BTC wallet in a few seconds or minutes.
Your Cryptocurrency Wallet
Since Bitcoin is a digital asset, you can’t just keep it in your regular wallet. Bitcoin and other cryptocurrencies exist on blockchains, i.e. digital online ledgers kept by the whole community. When you purchase or sell Bitcoin, you are essentially making changes to the data on the blockchain. In order to access your funds on the blockchain, you need a crypto wallet that can interact with the blockchain through a set of cryptographic keys, known as private keys and public keys. A cryptocurrency wallet produces and stores these keys for you.
Crypto wallets come in many different shapes, and you can transfer your digital assets easily from one crypto wallet to another. Cryptocurrency wallets are either connected to the internet, such as online wallets, desktop wallets or mobile wallets. Apart from hot wallets (as they’re all called), there are also cold storage methods, or cold wallets, which keep your keys offline. Cold wallets are divided into paper wallets and hardware wallets.
Most cryptocurrency exchanges offer their own wallet service, and you automatically get a crypto wallet when you open your account. When you confirm your BTC transaction, your BTC show up in your Bitcoin wallet. Afterwards, you can transfer your BTC to another Bitcoin wallet of your choice. Since exchange wallets are hot wallets (connected to the internet) and can be targeted by hackers, keeping large amounts of Bitcoin on an exchange wallet is generally considered unwise. Purchasing a hardware wallet might be a safer alternative.
Others Ways of Buying Bitcoin
Another way to buy Bitcoin is to join a peer-to-peer exchange. Unlike centralized cryptocurrency exchanges, peer-to-peer platforms don’t automatically match users’ offers. Instead, everyone can advertise their offer to buy and sell Bitcoin and contact the people they wish to negotiate with.
On a peer-to-peer platform, you can state how much Bitcoin you want to buy and the price you are willing to pay for it, and wait for a seller to contact you. You can also browse through existing sell offers to see if there is a deal you want to shake on. Peer-to-peer platforms usually offer more payment options, depending on the buyer and seller’s choices. LocalBitcoins and Paxful are two of the most popular peer-to-peer platforms for buying and selling BTC.
Buying Bitcoin Face-to-Face
A relatively less popular method is buying Bitcoin directly from another person and paying in cash. However, this can be dangerous since you are meeting a stranger with whom you need to exchange a significant amount of money. If you already know someone who is willing to sell you Bitcoin for cash, this could be great. Otherwise, you have to use social media to find a seller and make sure they are not scamming you. If you decide to go through with buying BTC face-to-face, make sure you bring a friend along or arrange to meet in a public spot.
Finally, you can always use a Bitcoin ATM to buy BTC. The reason why Bitcoin ATMs are not a popular choice for most people is their high fees. Bitcoin ATMs can charge you anywhere from 5% to 15% on your Bitcoin purchase, depending on the operator. If you are not worried about transaction fees, Bitcoin ATMs can be a good choice because you don’t have to talk to anyone or sign up for anything: you can withdraw BTC just like you would withdraw fiat money from a regular ATM. Of course, you won’t have any physical bitcoins after a visit to the Bitcoin ATM. Instead, what you’ll get is a QR code that can be scanned to transfer your funds to a crypto wallet. You can use Coin ATM Radar to check if there are any Bitcoin ATMs near you.
What Is the Minimum Amount of Bitcoin You Can Buy?
If you are buying Bitcoin on a crypto exchange, the minimum amount of Bitcoin you can buy varies depending on their minimum purchase limits. Most exchanges allow you to purchase Bitcoin once you deposit at least 10$, but the amount can be higher depending on the exchange.
You don’t have to spend a fortune on Bitcoin, but buying the lowest possible amount might not be a good idea either. Cryptocurrency exchanges take cuts from your purchases, and the transaction fees for a 10$ purchase may be disadvantageous. Of course, you shouldn’t purchase a large amount of Bitcoin just because of the fees. As you may already know, Bitcoin and other cryptocurrencies are speculative and risky assets, so being sensible is a must when you are investing.
In the end, each investor should decide how much they want to invest in Bitcoin, depending on their budget. Just know that you don’t have to be rich in order to start with Bitcoin.
A Few Words Before You Go…
You can easily buy a fraction of Bitcoin through many different methods. A whole Bitcoin is made of 100 million satoshis, the smallest units of Bitcoin, and the price of a single satoshi is astonishingly low. Buying satoshis is a great way of investing in BTC, as you can simply decide how much you want to invest based on your budget.
The most popular and easiest way of buying Bitcoin is through online cryptocurrency exchanges. Most exchanges have a minimum limit for buying Bitcoin, but this limit is usually very low. You can also use peer-to-peer exchanges and Bitcoin ATMs or facilitate an in-person BTC sale, as long as you take the necessary precautions to protect yourself from scammers.