If you’re intimidated by the price of a single Bitcoin, and you’re wondering whether you’re too late to the game to purchase some digital gold for yourself, don’t worry. You don’t have to shell out tens of thousands of dollars to buy a single BTC. Bitcoin is incredibly divisible: the smallest unit of Bitcoin, a satoshi, still costs less than $0.001.
Technically, the smallest amount of Bitcoin you can buy is a single satoshi, but in practice, it’s probably closer to 100,000 satoshi. That’s because purchasing a single satoshi would be too expensive in trading fees to justify the purchase.
In this article, we’ll explain how you can buy Bitcoin and the minimum amount you can purchase in more detail.
The Smallest Fraction of a Bitcoin
One whole Bitcoin can be divided into almost infinite units: 1 BTC equals 100 million satoshis – the smallest fraction of Bitcoin. As you can guess, the price of a single satoshi is incredibly low. Even when Bitcoin was at its highest, a single satoshi’s price never exceeded $0.000484.
Of course, that doesn’t mean you should buy a single satoshi. This is generally not advisable because buying Bitcoin can cost a lot of money due to its blockchain structure. As the most popular digital asset in the world, Bitcoin’s blockchain receives a lot of traffic, and the transactions require a huge collective effort to be verified.
Millions of mining nodes on the network race each other to verify transactions and collect mining rewards, including the transaction fees you must pay to make your transaction. So basically, you have to pay a brokerage fee on top of your purchase when you buy the virtual currency. If your transaction fee is too low, your transaction may never get picked up by the miners and remain forgotten on the perpetual edge of the blockchain.
So if you’re going to pay the transaction fee anyways, it’s a good idea to at least buy a sensible amount of Bitcoin. Otherwise, it’s like paying 20 dollars to ship a single penny to a friend. To avoid these scenarios, most crypto exchanges set a minimum purchase amount for Bitcoin. For example, the minimum purchase amount on Kraken is 1$ worth of Bitcoin or $15 on Binance.
What Is a Cryptocurrency Exchange?
If you have never bought Bitcoin before, the easiest method is to open an account on a cryptocurrency exchange and proceed from there. Crypto exchange platforms are basically markets for various cryptos. Sellers and buyers list the prices they’re willing to buy and sell BTC in an order book, and the marketplace automatically matches the orders.
Many crypto exchanges also offer instant buy options and match your order instantly, so you can buy BTC as swiftly as you want. Of course, the trading fees for instant orders are a bit more expensive, but you can also buy BTC through the regular order book pretty fast once you figure out the platform’s interface and get a cheaper deal. All you have to do is to pick a popular exchange with high liquidity, like Coinbase.
There are thousands of Bitcoin markets online, and of course, it’s important to pick a reputable exchange with good practices. You can check out our list of best exchanges in Canada and choose the best place to start.
When picking an exchange, consider its regulatory status, past conduct, security, and popularity, in addition to its trading fees and liquidity. The crypto ecosystem is still in its infancy in many ways, and it’s a good idea to invest in financial security and pay a bit more in the beginning to avoid the offers that are too good to be true.
How to Buy Bitcoin on a Crypto Exchange?
Once you pick a good crypto exchange, you can get on with your first BTC purchase. Coinbase and eToro are great options for beginner traders since they are easy to navigate and very beginner friendly, not to mention well-reviewed overall.
Most crypto exchanges offer a wallet service that lets you store your digital assets on their servers. While it’s not the safest practice to store cryptocurrencies in online wallets like these, it might be okay for small amounts of Bitcoin. You can check out your wallet and storage options if you decide to make larger purchases in time.
Once you open an account on a trading platform, buying BTC is quite simple. Most regulated exchanges allow you to buy Bitcoin with fiat currency (USD, CAD, EUR, and so on) through different methods. All you need to do is to pick and add a payment method.
If the exchange allows instant buying, you can be done with your first Bitcoin purchase in a matter of minutes. Even if the exchange interface is a bit more complicated, you can be done within 30 minutes after exploring your options.
Let’s look at these steps in more detail to know what to expect.
Registering on an Exchange
The first and most time-consuming stage is the registration. Once you pick a platform, you’ll have to sign up with your email and, most likely, complete an identity verification check.
The crypto exchanges that let you trade cryptocurrencies with fiat money are mostly regulated entities. In recent years, exchanges that operate in Canada and the US started to enforce Know Your Customer (KYC), and Anti-Money Laundering (AML) protocols to comply with crypto regulations states are adopting with increasing speed.
Often, this simply means you’ll be asked to provide some proof of ID during the sign-up process. Submitting your full name, phone number, address, and a government-issued photo ID is usually enough to complete the verification.
Picking a Payment Method
Different crypto exchanges might offer different payment methods. If you’re on a regulated exchange, you’ll probably be able to fund your account with fiat money via bank transfer. Other options include credit card/debit card payments, PayPal, ApplePay and similar third-party payment facilitators.
Each payment option has a different fee on most exchanges. Most exchanges let you connect your bank account to your platform account. Wire transfers are usually the cheapest method and might even be free, depending on the exchange. Debit and credit card purchases often cost extra, around %4 to %5 of your total purchase.
Deciding on a Cryptocurrency Wallet
When you open an account on a crypto exchange and purchase BTC, your funds are automatically sent to a Bitcoin wallet hosted by the exchange. The wallet’s private key (in other words, a password for your Bitcoin holdings) is protected by the exchange, and you don’t directly control the wallet.
These are also known as custodial wallets since the platform works as a custodian for your assets. This is extremely beneficial for crypto beginners, as it allows you to simply invest in the crypto market without having to figure out everything on your own.
However, online exchange wallets are a frequent target for hackers and scammers. You might have heard about several crypto exchange hacks over the years. Unfortunately, that’s a risk commonly associated with online wallets.
Storing a large amount of cryptocurrency in an exchange wallet is generally considered a bad idea, especially if the crypto in question is very valuable, like Bitcoin. If you are only buying 20 dollars worth of BTC, it might not be a priority for you to choose a secure storage option, but if you’re planning to invest more, then this is a step worth more research and planning.
You can invest in hard wallets or use non-custodial software wallets you can access from your computer or phone. Different wallet types have different benefits and disadvantages, so it’s a good idea to educate yourself on the basics.
Start Buying BTC and Other Cryptocurrencies
Most Bitcoin exchanges also offer markets for other cryptocurrencies, or altcoins as they’re called. Some of the most popular altcoins you might be interested in are Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), and Ripple (XRP).
A Few Words Before You Go…
The price of Bitcoin might ricochet up and down the charts, but don’t let the price volatility turn you off. You don’t have to spend a huge fortune to invest in Bitcoin. No matter how expensive it gets, you can buy small fractions of Bitcoin (and other digital currencies) for relatively cheap.
If you’re a crypto beginner interested in trading Bitcoin, you can buy a small amount of BTC on an exchange platform to test the waters and start your crypto journey.