Bitcoin, the world’s first and one of the most known cryptocurrencies has caught the attention of almost everyone around the world. Bitcoin is so well known that people even interchange its name with cryptocurrency in general. If you are interested in buying Bitcoin then this blog is for you. We will walk you through the basics of Bitcoin, explain why people are interested in it and provide a detailed guide on how you can buy Bitcoins as a beginner. We will also tell you about security, storage and important considerations for buying Bitcoins.
What Is Bitcoin?
Before getting started with the process of buying Bitcoins let’s get to know what is Bitcoin.
Bitcoin is a decentralised digital currency that works on a peer-to-peer exchange system where no banks, governments or intermediaries are involved in between. This cryptocurrency was made in the year 2009, by an anonymous person named Satoshi Nakamoto who is not known to this day and it is also said that maybe a group created it. On 3 January 2009, the first block of Bitcoin, Block 0 was mined. It is also known as the genesis block.
It is rewarded to investors who verify transactions and can be purchased on different platforms. All the bitcoin transactions are recorded on a blockchain which is like a public ledger. It ensures transparency and advances security for all. The total supply of Bitcoin is limited to 21 million coins only. The popularity of Bitcoin has inspired many other people to create different types of cryptocurrencies.
Here is a fact about Bitcoin – Bitcoins don’t have any intrinsic value based on cash flows. Therefore, when risks such as stocks are under pressure, Bitcoin’s price may fluctuate immensely.
Why Should You Invest In Bitcoin?
You can invest in Bitcoin for multiple reasons:
- High returns: Bitcoin has shown high performance in its price over the years, allowing people to earn more profits. Although in crypto past does not guarantee the future.
- Hedge against inflation: Bitcoin is available in limited supply which is seen as protection against inflation or devaluation.
- Investment: Some investors invest in Bitcoin to diversify their portfolio beyond other traditional investments.
- Financial inclusion: Bitcoin offers access to financial services for those people who are seen as underserved by other banking systems.
- Tech: Many people invest in this because they are keen to understand more about the blockchain technology behind Bitcoin.
A Step-by-Step Guide To Buying Bitcoin
Here are the simple steps you can follow to buy Bitcoin as a beginner:
1️⃣Research
Before making any decision related to investment do research about Bitcoin. Along with that learn about Blockchain technology and the cryptocurrency market. Get overall knowledge on these topics and be sure of your decision. Understand all the risks involved in investing in digital currency.
2️⃣Choose A Currency Exchange Platform
To buy Bitcoin you will need a cryptocurrency exchange platform to exchange the currencies. Some of the most popular platforms are:
- eToro – allows both crypto trading and traditional investments in stocks.
- Kraken – good security platform.
- Coinbase – easy to use.
- Binance – offers different cryptocurrencies and advanced features.
3️⃣Sign Up For An Account
After you have chosen an exchange platform you need to create an account on it. Here you will have to provide your email address and create a unique and strong password. Then, verify your email address and complete the security procedures like KYC. And then finally secure your account.
4️⃣Secure Your Account
After setting up your account the first thing you need to do is secure it by enabling 2-factor authentication, using a strong password, and choosing a trusted exchange platform to avoid scams and phishing attacks.
5️⃣Add Funds
Add funds to your exchange account through:
- Debit card and Credit card – faster but higher fee
- Bank transfer – has the lowest fee but a long processing time
- Paypal ( only on some platforms )
6️⃣Place Our Bitcoin Order
Once you have funds in your account, you now need to place an order to buy Bitcoin. You can either order through market order which lets you buy Bitcoin at currency market price which is considered a good option for beginners and secondly, you can buy through limited order which allows you to buy Bitcoin at the price which you want.
7️⃣Transfer To Wallet
After your order is complete and you have got your Bitcoins, it is important to store them safely. You can leave your Bitcoins on exchange platforms but this is not advised due to the high risks on the platforms especially if you planning to store them for a long time. Instead, create a digital wallet and better, a hardware wallet and store all your Bitcoins in it safely. Software wallets are available on the internet and are easy for frequent users but can be hacked easily. Whereas hardware wallets are offline and offer complete protection against hacking and theft. So, choose your wallet wisely and store your Bitcoins.
Alternative Ways To buy Bitcoin
Cryptocurrency exchanges are the most common platforms to buy Bitcoins from, but there are many other options you can try too:
- Peer-to-peer platforms ( P2P ): these platforms do not have any middlemen or intermediaries in between. You directly buy Bitcoin from other people. You may also find better rates than the market but make sure to check everything and be cautious.
- Bitcoin ATMs: You can insert cash into machines and buy Bitcoins which will be directly transferred to your wallet. These are like in-person Bitcoin buying stations. You can find these ATMs at many places but they charge a very high fee as compared to other platforms. You will have to pay a purchase fee and convenience fee for buying through an ATM.
- Investment trusts: If you are someone who wants exposure to Bitcoins’s price movements then you can check investment trusts where you can know about Bitcoin prices without owning them.
- Paypal: Paypal allows you to buy, sell and hold Bitcoins in some countries. This is a very convenient option but also comes with transferring limitations.
You can use same platforms from where you bought Bitcoins to sell them as well.
Important Considerations Before Buying Bitcoins
Bitcoin is also a cryptocurrency which means as curious as it seems it also comes with some stepbacks you should consider. Here are some important considerations you should look at before buying Bitcoins:
- Regulations: Regulatory foundations of cryptocurrencies keep on changing affecting cryptocurrencies along the way. So, stay informed about changes in regulations before investing in Bitcoins.
- Market volatility: Bitcoin’s prices can be very volatile because the crypto market is highly volatile with huge dips and peaks in short periods. Be prepared for price changes.
- Security: Cryptocurrency space is very familiar with scams and hacks. So to avoid any loss make sure to double-check website URLs, do not get carried away with some offer messages and never share your wallet information with any website or any person either. Keep everything as private as you can.
- Tax: In many places, cryptocurrencies are treated as property so they are taxable. You will have to pay taxes on the Bitcoin exchange and to avoid any issues keep a record of all the transactions.
- Long-term investment: Note down your investment goals, and consider why you want to invest in Bitcoin. Are you willing to invest long-term or short-term? The answers to these questions will help you in buying and selling Bitcoins.
- Fees: Check the fee structure on different platforms for buying and selling Bitcoins. They will vary from one platform to another.
Tips To Responsibly Invest In Bitcoin
Here are some tips you can follow while investing in Bitcoin:
- Invest small: Start with investing a small amount to understand how the process works and how the can market change with time.
- Invest less regularly: Buy a small amount of Bitcoin regularly rather than buying a huge chunk at once. This way you can be safe from huge price dips.
- Stay informed: Stay informed about the prices of Bitcoin and market trends. It will help you buy and sell your currency at right time.
- Work with patience: Investing in Bitcoins require patience and time. Take time to understand the whole market, how it works, what works for you and what does not.
Overall
Buying Bitcoin as a beginner can be seen as a tough task which requires lots of complex steps but with the right guide, you can easily buy Bitcoin. Follow all the steps given above to buy Bitcoins without any issues. Read all the instructions carefully, buy in small amount at first and research before you invest.
Stay informed about the market changes and consider taking advanice from financial experts so that you make right decisions. Bitcoin comes with new investment opportunities but it also has risks involved.
Choose the exchange platforms and funding sources correctly. By following this guide and being updated about Bitcoins you can invest with confidence. Like any other cryptocurrency, Bitcoin is also highly volatile so invest wisely and do not rush to get high returns. Be patient.
