Bitcoin is a global cryptocurrency that can be used as an alternative to traditional fiat currencies. It gained mainstream popularity in late 2017 after reaching a new all time high price of around $20,000. While the hype has since mellowed in comparison, the technology continues to be actively developed and used by individuals around the world.
For the most part, buying Bitcoin in Japan is not nearly as difficult as it can be in some other countries. This is mostly due to the Japanese government allowing and encouraging cryptocurrency related innovation in an attempt to boost the national economy. After Japan declared that Bitcoin would be recognized as legal tender, the country has even been heralded as a global leader in the segment.
Besides using Bitcoin at the thousands of online and retail locations around the world that accept it as a payment method, its use as an investment vehicle has surged in popularity of late. Other than that, it can also be used to trade a number of other alternative cryptocurrencies (altcoins) such as Ethereum and Ripple.
Before all of that though, the first order of business for any new user should be to understand how buying Bitcoin works.
A note on Bitcoin storage
Before purchasing Bitcoin from any of the methods listed below, it is necessary to create a cryptocurrency wallet. While the exact process will vary from wallet to wallet, the overall principle remains the same. Install the wallet application on your computer or mobile phone and follow the instructions displayed. If the app asks you to write down a list of words in a specific order, follow its instruction carefully. Throughout the history of Bitcoin, several users have ignored this specific piece of advice and have, as a result, lost millions in the process. An extensive and trustworthy list of wallets can be found on the official Bitcoin website.
Once you purchase the required amount of Bitcoin using any of the methods listed below, be sure to transfer it to the wallet you just set up. While leaving it on an exchange may seem like the most convenient option, it is also by far the least secure. While taking charge of your own cryptocurrency may entail a lot of responsibility, it is the only way to protect your holdings from hackers and other malicious actors.
The easiest and most convenient way to buy Bitcoin is to use an online exchange. These exchanges allow users to directly purchase cryptocurrency in exchange for fiat currency, while also charging some amount of fee in the process. Despite some of these platforms boasting a range of payment methods, including credit cards and cash deposits, the least expensive way is almost always a simple wire transfer.
Before you can buy Bitcoin though, most exchanges will require you to verify your identity with them. This requirement is enforced by the government to prevent illegal acts such as money laundering. The process is quite similar to the KYC procedure involved while opening a bank account. Once registered, the exchange will prompt you to submit a few documents, typically a copy of your passport or driving license.
BitFlyer is the most popular and widely used Bitcoin exchange in Japan. The website defaults to a simplified exchange interface aimed at beginners. Experienced traders can also use the platform for spot trading and other advanced features with the Lightning exchange. Other exchanges that can be used to buy Bitcoin are BTCBOX and Huobi.
As their name suggests, these are the Bitcoin equivalent of ATMs set up by a bank or other financial organization. From the exterior, these installations appear the same as any ordinary ATM. However, unlike the latter that require you to own a debit or credit card, Bitcoin ATMs use your phone number to identify you. Once you verify your identity, enter your wallet address and the amount of Bitcoin you want to buy, the machine will prompt you to deposit cash. The wallet in question will then be credited within the next hour.
Bitcoin ATMs can be found at a number of locations and are often installed by businesses completely unrelated to the cryptocurrency industry. Coffee shops and cafes are a few such examples. If one is concerned about their privacy while purchasing Bitcoin, ATMs are the best option as there is no need to complete a formal background check in order to use them.
There are some downsides to buying Bitcoin at a vending machine though. For one, Bitcoin ATMs are still nowhere near as commonplace in Japan as they are in countries like the United States and Spain. Most installations in the country are located in Tokyo, with a handful of them scattered across cities like Hiroshima, Osaka and Fukuoka. Nevertheless, a full list of Bitcoin ATMs in Japan is publicly viewable on Coin ATM Radar.
Secondly, ATM providers are known to markup the price of Bitcoin to recoup some of the infrastructure costs. Furthermore, during times of extreme volatility, ATMs charge a significant premium over global prevailing prices, presumably to err on the side of caution.
Buying from another individual
Bitcoin is a peer-to-peer network, which means that all transactions can take place between two parties without the need for an intermediary. In both of the methods listed above, a third party acts as a broker and sells you Bitcoin for a fixed price. In contrast, any individual owning cryptocurrency can send you some directly, similar to an exchange involving cash. After all, Bitcoin was always meant to be used as an ‘electronic cash system’.
While decentralized exchanges are the perfect application for such peer-to-peer transactions, they are a relatively new concept.
LocalBitcoins, on the other hand, is a popular service that connects buyers and sellers looking to trade Bitcoin. As such, several payment methods are available on the platform but none of them are provided by the company directly. It is up to either party to do their due diligence and verify the opposite party’s authenticity. To minimize the chances of fraud, one must follow the official guide published by LocalBitcoins and make sure to only trade with accounts that are in good standing.