What’s The Cheapest Way To Buy Bitcoin?

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What’s The Cheapest Way To Buy Bitcoin?

With a market cap currently exceeding $710 billion, Bitcoin is, by far, the most significant and valuable cryptocurrency in existence. This digital currency offers a variety of uses. For some, Bitcoin is a convenient payment method, whereas to others, it is an investable asset which can provide a genuine return. Whatever your reason for wanting to buy Bitcoin, it is always a good idea to shop around. This guide will show you how to find the cheapest way to buy Bitcoin.

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Why is Finding the Cheapest Way to Buy Bitcoin Important?

The sale price of Bitcoin can vary, sometimes significantly, depending on which platform you buy it from. In many cases, the overall cost of the cryptocurrency also varies depending on the payment method you have selected to pay with. The difference in cost might seem insignificant at first, especially if you are seeing its value in fiat currency.

However, you need to remember that Bitcoin’s price is extremely volatile, and a difference of a few dollars today can result in hundreds of dollars in the future. If you have trouble understanding this, imagine that you bought Bitcoin in July 2016, when the coin’s price hovered around $600. Overpaying for Bitcoin by just $1 would translate in December 2017, as an overpayment of almost $33 per coin.

Now, imagine repeating this over-payment across several different trades and with larger volumes. You’d end up losing hundreds of dollars simply because you didn’t buy Bitcoin in the cheapest way.

What Costs are there When Buying Bitcoin?

bitcoin spreads

Generally, there are four primary costs linked to buying Bitcoin on an exchange platform:

  1. Trading fees
  2. Payment method fees
  3. Spreads
  4. Instant-buy fees

Trading fees and spreads are charged by most exchanges and it is difficult to get away from them. However, you can opt to use a payment method which does not incur additional fees, such as a bank transfer over using credit cards. You should also resist the temptation to request instant-buys.

Why is Bitcoin Cheaper on Some Platforms?

Since Bitcoin is a decentralised cryptocurrency it does not depend on any central authority for its value. Instead, the coin’s price is a result of the market’s demand and supply ratio. This ratio is, similarly, not calculated equally across the world. Instead, it is calculated on every exchange. In addition to this ratio, the platform’s owner would add a cost to cover its overheads, which can include security, functionality, and profit.

It is, therefore, not uncommon to find new cryptocurrency exchanges offering Bitcoin at a considerably lower price than established platforms. This does not automatically mean that newer exchanges provide the cheapest way to buy Bitcoin.

Cheap Bitcoin Assets vs Fee Savings

When considering where to buy your Bitcoin from, you mustn’t only look at the coin’s current price. Have a look at the fees charged by the particular platform, and calculate whether you will truly be saving money by using it over an alternative platform.

For example, imagine that you are buying 1 Bitcoin with a 10% additional cost. Immediately, the value of your purchase has decreased to 0.9 BTC. In a similar scenario, consider an alternative platform which only charges 0.5% additional costs. Now, your 1 Bitcoin investment is still worth 0.995.

When viewing this, calculating over just one transaction it may not seem significant. However, if you buy and sell Bitcoin more frequently, the charges can quickly start to add up.

Is it Possible to get Bitcoin for Free?

A common question by crypto traders is whether it is still possible to get Bitcoin for free. Perhaps surprisingly, this is still possible, however, it does involve some effort from your end. One of the best ways to get Bitcoin for free is to use a BTC faucet, which is a portal that rewards you with a fraction of a coin when you watch an advertisement or fill in a survey.

Another way to get your hands on Bitcoin for free is to participate in Bounty Programs, where you earn the cryptocurrency after completing certain tasks, such as content creation or photo editing.

With the price of Bitcoin skyrocketing in recent weeks it has become less likely to get free coins. This means, however, that finding the cheapest way to buy Bitcoin is more important than ever. Any saving, however, small, can lead to a significant value increase if the currency’s price continues to rise.

Be Vigilant for these Risks

bitcoin safety

While fees and rates should help you choose the cheapest way to buy Bitcoin, you should keep in mind the following risks.

Security

A growing number of cryptocurrency exchanges are licenced or regulated in various jurisdictions. These and others invest in security features which protect their network, their users and their funds. All of this costs money, which the platform needs to recover from its users through fees. You should, therefore view exchanges which state to charge little or no fees for buying Bitcoin will scepticism. It might be possible, but how secure is it?

In between the hundreds of professional and reputable exchanges, there are a few which are simply covers for major scams. By offering special offers or unbelievably low Bitcoin prices, they hope to lure their victims to transfer cash without receiving anything in return.

Surprise Fees

There are several ways in which cryptocurrency exchanges can suddenly slap you with surprise or hidden fees. Before you process a transaction, make sure that the price is final and that the platform didn’t include any sneaky charges

You should also consider that while a platform might not charge you any surprise fees, it might be making money off you, by selling your data to third parties. While users in the EU should have GDPR protection in this respect, users from other jurisdictions are less protected.

Accessibility

The price that an exchange charges you to buy Bitcoin may also depend on the level of service it intends to offer you. Brokerage platforms tend to charge higher fees but are the simplest and most convenient method for novice traders to buy Bitcoin. Once you gain some experience, it might be a good idea to move on to professional platforms which offer lower fees, but also less handholding.

The Smallest Amount of Bitcoin You Can Buy

With the price of a single Bitcoin reaching $41,000 at the start of 2021, it is unlikely that you will be buying entire coins. Instead, in most cases, buyers opt for a fraction of one coin. Doing this does not affect the cheapest way to buy Bitcoin and allows you to own cryptocurrency without breaking the bank.

The smallest amount of Bitcoin you can buy varies depending on the platform you choose. Exchanges normally set the minimum value according to fiat currency. In the case of Coinbase, the minimum is $2 or €2.

In theory, it would be possible to buy 1 Satoshi, which equates to 0.00000001 BTC. However, this value is so insignificant that no exchange lets you buy a single Satoshi. Even when Bitcoin reaches its highest value, 1 Satoshi would have been worth around $0.00041.

Buying Bitcoin At A Discount

In this guide on the cheapest way to buy Bitcoin, we’ve already covered the main way to buy or receive BTC online. If you are patient and persistent, you could even succeed to get the coin at discounted prices. In order to do this, you must follow the principles of Bitcoin-cost averaging.

This principle is derived from dollar-cost averaging used for decades in traditional market exchanges and seeks to take advantage of price volatility. Bitcoin and other cryptocurrencies are well-known for experiencing sharp increases and decreases on an almost hourly basis. This can work to your advantage.

Trying to time the moment when the price will start to increase or decrease is practically impossible. Instead, to get the benefit of price fluctuations you should seek to purchase Bitcoin using an equal value of fiat currency periodically. This could mean buying $100 worth of BTC online every first of the month or week. Over time, you are likely to see that you managed to buy Bitcoin at a discount when compared to trying to guess the best time to buy.

Understand Your Priorities

Before you start buying Bitcoin it’s a good idea to consider what you plan to do with it. Understanding this upfront will avoid missed opportunities in the future. Possible reasons include:

  • Being part of the crypto community – By owning Bitcoin you are essentially an early adopter of a new currency. The coin has only been around for a few years. Bitcoin owners today are like some of the first people to get paid with dollars in the US in 1792.
  • Protecting your identity – One of Bitcoin’s advantages is that it provides a certain degree of anonymity to its users. When you buy with Bitcoin you are not divulging any information to your bank. Users to opt to pay in Bitcoin normally buy significant amounts when the price is low, and if you’re one of them, you will certainly benefit from knowing the cheapest way to buy Bitcoin.
  • Looking for an easy global currency – Cross-border transactions or money transfers can quickly get complicated or expensive, especially if they involve multiple national currencies. Bitcoin is borderless and independent, and transferring coins from one wallet to another does not require any banker intervention.

Top Platforms to Use

Based on extensive research and testing, the following cryptocurrency exchanges have been identified as offering some of the lowest Bitcoin prices combined with a trustworthy platform.

eToro

eToro is a very popular online trading platform and exchange with users in 140+ countries. When you use eToro to buy Bitcoin you are presented with a user-friendly platform which does not charge any fees for deposits, even when using PayPal. The platform supports a variety of currencies, including USD, EUR, and CHF, and a comprehensive list of payment methods.

eToro generates income from its spreads, with secondary income channelled through withdrawals, which are subject to a fixed, $25 fee. The platform does not charge any trading fees but nevertheless generates sufficient revenue to provide a highly secure and versatile trading platform.

75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Cryptoassets are highly volatile unregulated investment products. No EU investor protection.

Coinbase

Coinbase and its associated brands are popular amongst both cryptocurrency newbies and experienced traders. The North American exchange offers a convenient way to buy Bitcoin online using credit cards or bank transfers. In addition, it also offers limited access to sell Bitcoin with PayPal.

Using Coinbase to buy Bitcoin involves fees ranging between 0.5% and 4.5% depending on the selected payment method and your country of residence. In addition to Bitcoin, the platform offers over 30 different coins, and all can be stored in the free, in-built wallet provided by the exchange.

Coinbase is an online brokerage service which makes it very easy to buy Bitcoin. This convenience comes at a cost, so some advanced traders might prefer alternatives, such as Binance. Although Binance charges a significant fee for credit card payments, it offers some of the lowest cryptocurrency conversion fees. In addition, Binance gives you access to over 100 different coins and tokens.

As a regulated and reputable cryptocurrency exchange, Coinbase requires user verification. Moreover, the platform provides insurance in certain instances of loss of funds as a result of fraud. However, users looking for a more anonymous option might prefer Changelly. The Czech exchange allows users to buy cheap Bitcoin using just an email address. If you intend to use a credit card you will also need to provide a mobile number.

Instead of Coinbase, the cheapest way to buy bitcoin may sometimes be to use Kraken. This is especially true if you are confident not to require the additional support offered by the brokerage service. Kraken does not offer a free wallet, so before you buy Bitcoin you will need to get hold of safe storage. The advantage of using Kraken is getting access to higher limits and a handful of additional coins.

Coinbase Pro

If you are relatively new to cryptocurrencies you might have not yet heard about Coinbase Pro. This is a sister company of Coinbase and features the attraction benefit of not charging maker fees. In simpler terms, this means that you do not pay any fees when buying, making Coinbase Pro the cheapest way to buy Bitcoin.

In order to start using Coinbase Pro, you must first open a Coinbase account. You can then transfer funds between the two exchanges for free. Since Coinbase Pro is not a broker like Coinbase you will need to create a buy order which doesn’t already exist. Doing this might take some time, but when the order is filled you’ll receive your coins.

If you are a high volume trader, choosing Coinbase Pro can lead to significant trading discounts, especially when selling Bitcoin. These discounts are only available if you trade upwards of $10,000 over 30 days, with the best prices reserved to those who trade more than $50,000.

CEX

CEX is a versatile cryptocurrency exchange which offers a range of services to both its novice users and its experienced traders. The platform, which is registered in the UK and is licenced as a Money Service Business (MSB), accepts a variety of fiat currencies, including EUR, GBP, and USD. Since its establishment in 2013, CEX has proven to be a user-friendly and safe exchange platform.

Across the board, CEX offers a competitive fee structure. For starters, the platform does not charge any withdrawal fees, which is highly unusual and certainly popular. Trading fees can be as low as 0.25%, although if you opt to use the Instant Buy fee you will be charged an additional 7%.

CEX accepts a variety of convenient payment methods, including debit and credit cards and bank transfers. As with most exchanges, depositing with a Visa or Mastercard will result in an additional deposit fee of 3.5%. You can, however, opt to deposit via bank transfer, which is absolutely free.

Consider using a P2P Platform

P2P platforms allow you to buy and sell Bitcoin directly from other users, without dealing with the platform’s owner. In exchange for a percentage commission, the platform allows sales between parties to be negotiated online before a transaction is processed. If you are a good negotiator, this channel provides the cheapest way to buy Bitcoin.

LocalBitcoins is one such P2P platform, and it allows users to trade Bitcoin paying a fixed, 1% fee. Since the parties of the transaction are dealing directly with each other, LocalBitcoins does not need to provide resources to carry out the transaction or ensure that payments are safe. This considerably lowers the platform’s overhead costs, allowing it to charge simple and low fees.

An additional advantage of using peer to peer buying platforms is that they give you an opportunity to buy with dollars in cash. It is also possible to find sellers willing to accept payments with PayPal.

Factors Influencing An Exchange’s Location

Over time, more countries and authorities are embracing the concept of cryptocurrencies. Whilst there are still nations who ban Bitcoin, a significant majority allow some form of crypto trading. In addition, some countries, such as Malta and Singapore, have taken it one step further and offer a cryptocurrency-friendly approach.

Having an exchange based in one country instead of another can make a difference in the cost of buying and selling coins. As a simple example, wages in the US are generally high than those in Malta, so an exchange based in the Mediterranean island would likely have lower overheads. It makes sense, therefore, to look at the platform’s location as this can help you find the cheapest way to buy Bitcoin.

Clearing Up BTC Misconceptions

As you learn more about cryptocurrencies you might come across incorrect or misleading statements. Such misconceptions often include:

  1. All exchanges are legal/illegal – Some countries require exchanges to be registered whilst others do not. As long as an exchange complies with local laws it is likely operating legally. 
  2. Bitcoin storage is expensive – There are a variety of wallets which securely store your coins. Whilst hardware wallets are the safest and normally cost between $50 – $200, you can find free software wallets easily. In addition, many reputable exchanges provide you with a free, in-built wallet. If you are worried about the cost of storing Bitcoin why not consider buying BTC CFDs?
  3. It’s not possible to buy Bitcoin with cash – Although it might sound unlikely, there are still ways to buy the world’s biggest cryptocurrency with cash or with PayPal.
  4. Bitcoin ATMs no longer exist – On the contrary, there are currently over 16,000 BTC ATMs around the world, with 245 located in the UK.

How Easy Is It To Sell Bitcoin?

So far in this guide, we’ve covered the cheapest way to buy Bitcoin, but another important topic is selling Bitcoin. If you are a speculative trader or simply own some coins and want to convert them, it’s important that you understand your options.

The most straightforward way to sell your Bitcoin is through an exchange. In most cases, you will be able to use the same platform which you used to buy cheap Bitcoin in the first place. Some platforms allow you to give a sell order option, selling your coins only when the selling price matches your instructions. Once sold, you will receive the equivalent fiat currency in your designated account.

Alternatively, you can choose to convert your Bitcoin to another cryptocurrency. Once again, most exchanges will offer this service, although platforms such as Binance are known to provide the cheapest option.

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