In this article we introduce you to the world of Bitcoin. Bitcoin is a Peer-to-Peer electronic cash system. It allows you to send digital money to others without the need of a bank or central processor. Bitcoin was invented by Satoshi Nakamoto, whose identity remains unknown, in 2009. Since then, Bitcoin has increased greatly in value and gains popularity and acceptance every day.
What do I need to buy Bitcoin
First of all, a lot of money. One single Bitcoin is valued at approximately 7000 US$ right now.
I’m just kiddin’. Every Bitcoin can be divided in 100 million so called Satoshis. A Satoshi is the smallest possible fraction of a Bitcoin. This means, theoretically, you can start buying fractions of a Bitcoin with as little as 0.00007 US$ at the moment. Of course this doesn’t make much sense either.
So where can you buy your first Bitcoin now? Of course, you can just create a wallet and find a friend who already owns Bitcoin. You give him some cash, he sends the Bitcoin to your wallet. It’s easy, right? Yes, you can do it that way. The more common way is to join an crypto exchange. This is basically an online site, which arranges deals between Bitcoin sellers and Bitcoin buyers, a digital marketplace.
There are literally hundreds, if not thousands of coin marketplaces, but keep in mind that not every one of these allows you to send US$ directly to your account. Moreover, some of them are shady ones, have been hacked in the past, or have the outright intention to steal your money.
This brings us to Kraken, an exchange platform for digital assets, that we recommend for beginners.
Why Kraken?
Kraken is one of the leading and most trusted platforms for trading digital coins and FIAT money like US dollar or euro. It is available in dozens of countries around the world and offers an easy to use graphical user interface. Kraken is an American company with it’s headquarters in San Francisco, USA.
In addition to Bitcoin (XBT), it offers trading pairs for
– Ethereum (ETH),
– Ripple (XRP),
– Monero (XMR),
– Bitcoin Cash (BCH),
– Dash (DASH),
– Litecoin (LTC),
– Stellar Lumen (XLM),
– Ethereum Classic (ETC),
– Augur REP tokens (REP),
– ICONOMI (ICN),
– Melon (MLN),
– Zcash (ZEC),
– Dogecoin (XDG),
– Gnosis (GNO),
– EOS (EOS) and
– the stable coin Tether (USDT).
Besides it offers several tools for improved security like two-factor-authentification (2FA).
The registration process
Creating an account on Kraken is easy. Just launch the website https://www.kraken.com, enter your details, checkout out Kraken’s terms of service and privacy notice and you are good to go.
Kraken then leads you through the authentication process which varies a bit, depending on your citizenship. This may take you from a few days to a few weeks. But the good thing is, it ain’t complicated at all, it just takes some time.
Brief introduction to the Kraken user interface
Let’s get to it now. On the Kraken homepage you’ll see a login button in the upper right hand corner. Click it and it takes you to Kraken’s login page. Enter your username, your password and, if enabled, your 2FA-code. Then press “LOG IN”.
If everything went alright, you’ll find yourself on the Kraken dashboard.
Please note that all of our personal data is hidden behind red bars. We’ll go through the different sections of this page now, to give you a basic understanding how Kraken works.
On the top, right beside the Kraken logo, you find your current balance both for Bitcoin (XBT) and US$.
The “ACCOUNT” button takes you right to the dashboard from wherever you are. That’s where we are right now.
In the “CHARTS” section you will find some basic graphical representation of the development of prices for different trading pairs as well as some additional data.
The “HELP” section should be self-explaining. You’ll find a FAQ subsection there as well.
On the very right, you see your username as well as the date of your last login. You can use this to check if anyone has accessed your account since the last time you have logged in.
The black bar below that section is important. There are two buttons on the left side. With the right one of these you can choose the trading pair, you want to deal with. Because we want to buy Bitcoin with US$ in this guide, we choose XBT/USD.
Once you have selected your trading pair, you can get a graphical representation of the price development by clicking on the left button.
The rest of the black bar is used for showing information about your selected trading pair. The most important one for beginners is the section “LAST” where you see the current price of one Bitcoin in US$.
Right below, you can see the main menu of Kraken.
It contains the sections Trade, Funding, Security, History, Get Verified and MtGox Claim. We’ll give you a brief introduction to each of them right now.
– Get Verified: You probably got to know this section during the registration process. It shows you an overview of the different tier levels and the requirements for each of them. Moreover you can see how this effects your daily and monthly limits.
– Funding: This section allows you to deposit or withdraw FIAT money (like US$) or cryptocurrencies from or to other accounts. This includes traditional bank accounts, other crypto exchange platforms or crypto wallets. Actually we are going to use this functionality to transfer US$ from your bank account to Kraken later.
– Trade: The trade section, first of all gives you an overview of your current balances, both fiat and crypto. Also it lets you create new orders, which is exactly what we are going to do later. Additionally it allows you to inspect all of your orders, positions and trades. We’ll get to that later.
– Security: In this section you can change your password, enable two-factor-authentication and more.
– Settings: Here you can adjust your account settings and update your notification settings.
– History: It gives you a thorough overview of all your past activities on the Kraken platform.
– MtGox Claim: This is not relevant for crypto beginners.
How to transfer FIAT money like US$ to your Kraken account
Before we can actually buy Bitcoin, we need to send FIAT money like US$ to our Kraken account first.
1) When you are on the Kraken Dashboard, click “Funding” and then click “Deposit”
2) On the next page, a menu appears at the left of the screen. Choose “USD” here.
3) On the right side of the page you will now see a blue section, where your limits are listed. Of course this depends on the tier level, you have registered for. Please make sure you don’t exceed those limits when you are sending money to your account.
4) At the center of the page, you can now select between different deposit methods. This may vary, depending in which country you are. However you will see a thorough explanation for every method.
5) Keep in mind that it may take several hours, if not days until the money is credited on your Kraken account. Once Kraken has received the money it appears in the balances section of the Trade/Overview part of the site. You are now ready to buy your first Bitcoin.
How to buy Bitcoin on Kraken – step by step
1) Once you’ve logged in to the exchange you’ll find yourself on the Kraken Dashboard. Click “New Order”, a subsection of the “Trade” section.
2) Make sure you have selected XBT/USD as your trading pair.
3) Make sure you have selected the “Simple” trading interface and have selected “Buy” at the Buy/Sell switch.
Next enter the amount of Bitcoin you want to buy. As explained earlier you can even buy a fraction of a Bitcoin here. In the screenshot below I have chosen to buy 0.01 Bitcoin. After that look at the Market/Limit switch. We recommend you to always choose a Limit order. This enables you to set a fixed price at which you are willing to buy in the field to the left. In the screenshot we chose to buy at a maximum price of 6,715 US$ per Bitcoin. In our case this leads to an estimation of 67.15 US$ you will spend on your 0.01 Bitcoin.
If you are happy with your inputs, click “Buy XBT with USD”.
4) The next page shows you a nice overview of your order and lets you quickly check if all inputs were made to your satisfaction. Please note the “XBT to receive” line, the first green circle in the screenshot below. It states that you are going to receive zero Bitcoin. Don’t worry. This is just a little bug in Kraken’s software when dealing with small fractions of a Bitcoin. Indeed you will exactly get the 0.01 Bitcoin you have ordered. If something else is wrong, just click “Back” and adjust your inputs. If you’re happy with everything, click “Submit Order” to place your order on the marketplace.
5) If everything went well, you now see a message that your order has successfully been created. Press “View Orders”.
6) This takes you to the “Orders” subsection under the “Trade” section. If your limit price is still lower than the current market price of Bitcoin (which you can see in the black bar), your order is listed under “New & Open Orders”. If this is the case you can cancel your order by clicking the red “X” on the right hand side, if you don’t want this order to be fulfilled anymore.
Once the order has been executed, you’ll find it in the “Closed Orders” section.
7) Once your order has been executed, you can go to the “Overview” subsection under “Trade” and will see your 0.01 Bitcoin appear in the “Balances” section.
How to send Bitcoin to your wallet
We generally don’t recommend to leave your digital coins on the Kraken exchange platform unless you are going to day-trade. In our opinion it is much safer in the long term to send it to a separate wallet. You can learn about wallets in our ultimate cryptocurrency wallet guide. If you want to create a paper wallet, check out our how to create a Bitcoin paper wallet article.
Once you have created a Bitcoin wallet, follow these steps to transfer it from Kraken.
1) On the Kraken Dashboard, click on “Funding”.
2) Click on “Withdraw” next.
3) Choose “Bitcoin (XBT)” on the left hand side.
4) On the next page we strongly recommend you to read the explanation Kraken gives. You can see it in the screenshot below. Basically it asks you to double-check the address you are sending your assets to and to not exceed your withdrawal limits. You can see them in the blue section on the right.
5) Once this is done scroll down and click “+Add address”.
6) Now we are creating a new Bitcoin withdrawal address. Enter the name of this address (like “MyBitcoinPaperWallet”) and the public address of your Bitcoin wallet. You got the public address when you were creating your Bitcoin wallet. Then press “Save address”.
7) You probably get an e-mail now with the request to confirm your newly created address. Be careful! Once you’ve sent your Bitcoin to a wrong address, there is no way back.
8) Once you have confirmed the public address, Kraken allows you to select the Bitcoin address like in the screenshot below. Moreover you have to enter the amount of Bitcoin you want to transfer. This page also shows you the fee you have to pay for this transaction. It will automatically be subtracted from the transaction amount.
9) Next click “Review Withdrawal”. Kraken gives you an overview of the transaction now, confirm it and you’re done.
Summary
In this article we gave you a brief overview of Bitcoin and the way crypto exchanges work. We introduced the popular and easy to use platform Kraken to you and listed the digital assets it supports. Moreover we explained the Kraken registration process and the Kraken Dashboard. Last but not least, we offered a thorough step by step guide of how to buy your first Bitcoin and send it to a wallet of your choice.
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