A Beginner's Guide: Investing In Bitcoin In Saudi Arabia

Bitcoin is a decentralised digital currency that operates on a blockchain network. Introduced in 2009, it has since gained popularity in Saudi Arabia, with several exchanges available for buying, selling, and storing Bitcoin. While consumers can legally trade Bitcoin in Saudi Arabia, it is important to note that there are no financial protections for any losses related to cryptocurrency. In this paragraph, we will explore the various ways to invest in Bitcoin in Saudi Arabia, including the use of cryptocurrency exchanges, peer-to-peer marketplaces, and crypto ATMs.

Choosing a Bitcoin exchange

There are several factors to consider when choosing a Bitcoin exchange in Saudi Arabia. Firstly, it is important to select an exchange that is secure and efficient, offering swift and safe transactions. The exchange should employ robust security protocols and advanced security features such as two-factor authentication and biometric identification to protect your transactions and assets.

Secondly, consider the transaction fees, withdrawal limits, and payment methods offered by the exchange. Different exchanges will have different fees, with some charging higher fees for credit and debit card transactions, while others may offer lower fees for bank transfers. It is also essential to ensure that the exchange supports your preferred payment method, such as credit/debit cards, bank transfers, or e-wallets like Apple Pay or Google Pay.

Thirdly, examine the verification and Know Your Customer (KYC) processes of the exchange. Compliance with KYC regulations is mandatory in Saudi Arabia, so be prepared to provide personal details and proof of identity. Some exchanges may have more stringent verification processes than others, which can impact the speed of setting up your account.

Lastly, consider the range of cryptocurrencies offered by the exchange. If you are solely interested in Bitcoin, ensure that the exchange facilitates the buying and selling of this cryptocurrency. However, if you intend to diversify your crypto portfolio, look for exchanges that offer a wide variety of cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and more.

Some popular Bitcoin exchanges in Saudi Arabia include Rain, Binance, Kraken, BitOasis, and Changelly. Each exchange will have its own unique features, fees, and security protocols, so be sure to research and compare multiple options before making your choice.

Payment methods

There are several ways to pay for your Bitcoin investment in Saudi Arabia. The most popular exchanges, such as Crypto.com, Rain, and Binance, all accept card payments. Crypto.com, for example, allows you to pay with Visa or Mastercard, with a fee of 2.99% for every $100 worth of Bitcoin purchased.

Rain, the most popular Bitcoin exchange in Saudi Arabia, accepts SWIFT, FAWRI, FAWRI+, Debit Card, Credit Card, MADA, KNET, and BENEFIT. It is also the first cryptocurrency exchange to earn a regulatory license in the Middle East.

Binance, which also operates in Saudi Arabia, allows you to buy and sell Bitcoin with four forms of payment. These include credit and debit cards, Google Pay, and Apple Pay.

If you are looking for a more diverse range of payment methods, Paxful offers nearly 450 ways to buy Bitcoin, including bank transfers, PayPal, and even gift cards.

For those looking to make larger purchases, a bank transfer is a secure option. This method can take a little longer and fees may vary.

It is worth noting that if you are using a credit or debit card to purchase Bitcoin, you will likely need to complete a Know Your Customer (KYC) process, which may include providing a form of ID and proof of address.

Other payment methods available include prepaid cards, cash, and even face-to-face trading, where you meet sellers in person to buy Bitcoins with cash.

When choosing a payment method, it is important to consider the associated fees, processing times, security, and convenience. Each method has its own advantages and disadvantages, so be sure to research and select the one that best suits your needs.

Bitcoin wallets

A Bitcoin wallet is an application that functions as a wallet for your cryptocurrency. It is called a wallet because it is used similarly to a physical wallet, but instead of holding cash and cards, it stores the passkeys you use to sign in to your cryptocurrency transactions and provides the interface that lets you access your crypto.

There are several different types of Bitcoin wallets, each with its own features and levels of security. The main types are "hot" wallets and "cold" wallets. Hot wallets are connected to the internet, while cold wallets function primarily offline.

Hot wallets are generally easy to use and are excellent for convenience, but that makes them more vulnerable to hackers. Cold wallets, on the other hand, are highly secure and virtually impossible to hack. However, they tend to require a bit more technical know-how, so they are typically suited for more experienced users or those with large amounts of assets.

Custodial crypto wallets require you to safeguard your own private keys, while self-custody wallets (aka non-custodial) entrust that security to a third party, usually a crypto exchange.

There are multiple forms of Bitcoin wallets, including web, desktop, hardware, and even paper. The right choice for you will depend on your crypto goals and usage habits. It is advantageous to use multiple wallets for different purposes, such as a hardware wallet for saving and a mobile wallet for regular spending.

• Hardware wallets are the most popular type of wallet because you can store your private keys and remove them from your device. These devices might resemble a USB drive, and modern hardware wallets have several features. Ledger and Trezor are both well-known hardware wallets. Hardware wallets are generally considered cold wallets because they don't have an active connection until they are plugged in.
• Software wallets include applications for desktops and mobile devices. These wallets are installed on a desktop or laptop computer and can access your cryptocurrency, make transactions, display your balance, and much more. Some software wallets also include additional functionality, such as exchange integration if you're using a wallet designed by a cryptocurrency exchange. Trezor, Electrum, and Mycelium are examples of software wallets. Software wallets are generally hot wallets.
• Web wallets are wallets provided by a third party, typically a crypto exchange, which offer seamless access to a user’s holdings using a web browser. They are easy to use and are generally favoured by most newcomers to crypto. Coinbase, Metamask, and Guarda are recommended web wallets.
• Mobile wallets allow users to quickly and securely spend or receive cryptocurrency anywhere they have their phone and an active internet connection. BitPay, Edge, Trust, Electrum, and Blockchain.com are recommended mobile wallets.
• Paper wallets are an offline wallet solution where private keys are written down or printed and securely stored. Paper wallets are completely offline, making them impossible to hack, and no third party has control of your private keys. However, paper can be easily lost, stolen, or destroyed, so many crypto owners do not use them anymore.

After buying Bitcoin from an exchange, it is important to withdraw it to your own non-custodial wallet for security, privacy, and to have full control over your Bitcoin.

Bitcoin legality in Saudi Arabia

The Saudi government has placed an outright ban on banks processing transactions involving cryptocurrencies and has declared cryptocurrency trading illegal in the country. However, the government has not outlined any penalties for people who continue to engage in this trade. There are also a few cryptocurrency exchanges, such as BitOasis, that continue to operate in Saudi Arabia without issue. While the government has not given permission to major exchanges like Coinbase to operate in the country, citizens can still access Bitcoin through these Middle East-specific exchanges.

Despite the government's ban, Bitcoin has a quasi-legal status in Saudi Arabia, with four out of ten people investing in crypto. The lack of clear penalties and the continued operation of cryptocurrency exchanges contribute to this ambiguous situation. Additionally, Saudi Arabia may be considering developing its own digital currency, following in the footsteps of Bahrain and the UAE. The country's central bank has already started working on a digital Riyal that citizens can link to their bank accounts, with plans to introduce it jointly with the UAE.

In summary, while Bitcoin is illegal in Saudi Arabia, the reality is more nuanced, with ongoing crypto trading and the potential development of a state-backed digital currency. The popularity of crypto investing among Saudi citizens also adds to the complexity of the situation.

Cashing out Bitcoin

Using a Third-Party Exchange:

This is the most common method, where you deposit your Bitcoin into an exchange like Binance, Rain, or Kraken, and then request a fiat currency withdrawal. You will need to withdraw to the same bank account that you used for deposits. The process usually takes 1-5 days, and the fees and cash-out times depend on the country your bank is located in. For example, a SWIFT transfer for selling Bitcoin for USD costs $15.

Peer-to-Peer (P2P) Exchanges:

P2P exchanges like LocalBitcoins allow you to sell your Bitcoin directly to another person. You can choose the payment method, such as cash deposit, bank transfer, or meeting in person for cash. P2P exchanges offer more anonymity and the ability to set your price, but you need to be cautious of fraudsters. LocalBitcoins provides an escrow service to keep your Bitcoins locked until you confirm the payment.

Crypto Debit Cards:

Crypto debit cards, such as the BitPay Card, allow you to convert Bitcoin into cash by pulling funds from a crypto wallet. This method is quick, easy, and does not require a bank account. However, it is only applicable for US residents and standard ATM fees apply.

Bitcoin ATMs:

Bitcoin ATMs are specialized machines that allow you to sell your crypto for cash. They are widely available, but the fees can be high, and rural areas may have limited access.

Centralized Exchanges:

You can sell your Bitcoin on centralized exchanges like Coinbase, Binance, Gemini, or Kraken. This method is easy if you already have a custodial wallet on these platforms. However, additional service fees are associated with transactions on these exchanges.

When deciding on a method, consider factors such as ease of use, cost, speed, and anonymity. Additionally, remember that converting crypto into fiat currency is a taxable event, so consult a tax professional for guidance.

Frequently asked questions