How to buy your first bitcoin safely: a step-by-step checklist

Buying bitcoin for the first time is easy. Buying it safely takes a few more minutes: choosing a legitimate platform, understanding what you’ll pay, avoiding the scams that target newcomers and keeping the records you’ll need at tax time.

This checklist walks through each step, with the official rules for the US, the UK and Canada. It isn’t a recommendation to buy bitcoin or any other cryptoasset; that decision is yours.

Step 1: Decide how much you can afford to lose

Start with the amount, not the platform. In the UK, every crypto promotion has to carry a risk warning set by the FCA, and it’s good advice anywhere:

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.

Practical rules of thumb:

• Use money you won’t need for bills, debt payments or emergencies.
• Don’t borrow to buy, and avoid leverage. See crypto leverage and derivatives rules.
• Consider buying gradually rather than all at once. See dollar-cost averaging.

Step 2: Choose how you want to own it

There are two broad routes:

• Buying bitcoin itself on a crypto platform. You own the asset and can withdraw it to your own wallet.
• Buying a fund that tracks bitcoin, such as a spot bitcoin ETF in the US or Canada, or a crypto ETN in the UK, through an ordinary investment account. You don’t handle keys, but you pay fund fees and can’t send the bitcoin anywhere. See bitcoin ETFs explained and, in the UK, crypto ETNs.

The rest of this checklist covers the first route.

Step 3: Check the platform is registered where you live

This is the most important step. Fake platforms and apps are one of the most common ways newcomers lose money.

Search for the legal name of the company, which you’ll find in the terms of service, not just the brand name. Our guide to checking whether a crypto exchange is registered explains each register in detail.

Remember what registration doesn’t mean:

• FinCEN says inclusion in its search is not a recommendation or endorsement, and it doesn’t vet the information.
• The FDIC says deposit insurance doesn’t apply to crypto assets and doesn’t protect against the failure of crypto exchanges, custodians or wallet providers.
• In the UK, registered crypto firms don’t bring FSCS or Financial Ombudsman protection.

See is your crypto insured?

Step 4: Get the app or website the right way

• Type the address yourself or use the link from the official register, not from an ad, a search result you’re unsure of, a social media message or a text.
• Download the app only from your phone’s official app store, and check the developer name matches the company.
• Turn on two-factor authentication with an authenticator app or security key rather than text messages if you can. See SIM swap attacks and two-factor authentication.

See fake crypto apps and phishing for the warning signs.

Step 5: Expect identity checks and, in the UK, a waiting period

A legitimate platform will ask for proof of identity before you can buy. That’s anti-money-laundering law, not a red flag. See why your exchange wants your ID.

In the UK, the FCA’s rules for crypto promotions, in force since 8 October 2023, add some deliberate friction. According to the FCA, platforms must:

• give new customers a cooling-off period of at least 24 hours between asking to see the offer to invest and being shown it;
• check that you’re certified as a restricted, high net worth or sophisticated investor; for ordinary retail consumers, the FCA says this means investing no more than 10% of their net assets in high-risk investments, including cryptoassets;
• run an appropriateness assessment to check the investment suits your knowledge and experience;
• not offer “refer a friend” bonuses or other incentives to invest.

In Canada, platforms that operate while seeking registration give undertakings to the CSA that cover, among other things, an account appropriateness assessment, investment limits and a risk statement.

If a “platform” skips identity checks entirely or offers bonuses to invest quickly, treat that as a warning sign.

Step 6: Understand the fees before you buy

The price you pay is more than the bitcoin price. Look for:

• Trading fees or commissions on each purchase.
• The spread, the gap between the buying and selling price, which some “zero-fee” services use instead of a fee.
• Deposit fees, especially for card payments.
• Withdrawal fees when you move bitcoin out.

Compare the total cost of a small purchase across platforms. See crypto exchange fees explained and, if you’ll place orders yourself, crypto order types.

Step 7: Make a small first purchase

• Fund your account from your own bank account in your own name.
• Start with a small amount and go through the whole process once: buy, check your balance, look at the transaction history.
• Use a limit order if you want control over the price, rather than buying at whatever the market price is.

Step 8: Avoid the traps aimed at newcomers

Most losses for first-time buyers come from scams, not from price moves. Walk away if:

• Someone contacted you first and is guiding you to buy, whether a new online friend, a “broker” or an “account manager”. See pig butchering scams.
• Someone tells you to buy bitcoin and send it to them, especially through a bitcoin ATM. See bitcoin ATMs: risks and scams.
• You’re promised guaranteed or unusually high returns.
• A website or app asks for your seed phrase. No legitimate service needs it.

If something has already gone wrong, see crypto scams and where to report them.

Step 9: Decide where to keep it

You have two options:

• Leave it on the platform (custodial). Simple, but you depend on the company. If it fails, you may become a creditor waiting for a share of what’s left. See what happens if an exchange goes bust.
• Move it to your own wallet (self-custody). You control the keys, but you’re responsible for backing up your seed phrase and sending correctly. See hot vs cold wallets and seed phrase security.

If you move it, send a small test amount first and check it arrives. See how to send crypto safely.

Step 10: Keep records from day one

Buying bitcoin usually isn’t taxable in itself, but selling, swapping or spending it later can be, and you’ll need to know what you paid.

• Save the date, amount, price and fees of every purchase.
• Download your transaction history regularly, because platforms can close or lose data.
• US: Form 1040 asks every filer a digital asset question. See US crypto tax.
• UK: HMRC expects you to keep your own records for its pooling rules. See UK crypto tax.
• Canada: keep records for at least six years. See Canada crypto tax.

The short version

1. Only invest what you can afford to lose.
2. Choose between owning bitcoin and owning a fund.
3. Check the platform on the official register.
4. Reach it through a link you trust and turn on two-factor authentication.
5. Expect ID checks and, in the UK, a 24-hour wait.
6. Know the fees.
7. Start small.
8. Ignore anyone who contacts you about crypto.
9. Decide on storage and test transfers.
10. Keep records.

New to the basics? Start with what is bitcoin? and how to choose a crypto exchange.