Bitcoins are typically bought through a bitcoin exchange. A bitcoin exchange is like a stock exchange. People with bitcoin to sell list their asking price, and people with dollars list the price they are willing to pay. When there is a match on both sides, an exchange is made. I created an account on a U.S. based exchange called Bitfloor. To buy bitcoins I needed to fund my account. There are a variety of ways to get funds into your account, but many of them involve multi-day delays. I was hoping to take advantage of the recent bitcoin price drop and pick up some cheap before the price went back up, so I wanted a more immediate funding solution. I opted to use a service called LocalTill that allows you to deposit cash at any Bank of America location and promises the deposit (minus a service fee) will appear in your Bitfloor account in 30 minutes. It was a little unnerving anonymously depositing cash into an unknown bank account, but by the time I returned from the bank my Bitfloor account was indeed credited with my deposit.
Bitcoin prices were still falling when I decided to place a buy order at about $92, thinking they wouldn't stay under $100 long. My order was filled and I nearly doubled my bitcoin holdings. I could have done better however, as bitcoin prices continued to fall to a low of $50. But within a few days the price bounced back and I was happy with my hasty purchase.
Now that I had a bitcoin exchange account, I started thinking about how I might try buying and selling bitcoin for fun and profit! I'll tell that story in a future post.
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