If you want to do option #2, go to the section “Manage my blogs” under your avatar on the right side of the screen when you’re logged into WordPress.com. From there, if you hover your mouse over the name of the blog you want to change, it will give you the option to Change Blog address.
For #1, you will need to purchase/register a domain. You can do so by going into the dashboard of that blog and choosing “Domain” under Store. From there you will need to connect the new URL to the blog using Domain Mapping, which you can read about at http://en.support.wordpress.com/domain-mapping/ .
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