Investing in Bitcoin (BTC) may appear difficult at first. But, it becomes much simpler once you break it down into parts. Bitcoin investment and trading just requires a service or an exchange account. Additional secure storage methods are advisable. Let’s talk more about Bitcoin and how you can purchase BTC.
What is Bitcoin?
Bitcoin is decentralized digital money that was first introduced in January of 2009. It is based on ideas presented in a white paper by the mysterious and pseudonymous Satoshi Nakamoto. The identity of the person or persons who devised the technology remains unknown.
This type of cryptocurrency promises reduced transaction fees than existing online payment methods. Also, it is run by a decentralized authority, unlike government-issued currencies.
Bitcoin is classified as a cryptocurrency since it is protected by encryption. There are no real bitcoins; instead, balances are recorded on a public ledger that anyone can see although each record is enciphered. A large amount of computational power is used to verify all Bitcoin transactions, a process known as Mining.
4 Steps on How To Buy Bitcoin
Step 1: Select a Crypto Trading Service or Platform
Choosing a crypto trading provider or venue is the first step in purchasing bitcoin. Bitcoin and an increasing number of altcoins are available through Coinbase, Kraken, and Gemini. These three are perhaps the most straightforward crypto entry points in the entire industry.
Binance caters to the more experienced trader, with more serious trading features and a larger selection of cryptocurrency options. FTX, a fast-growing crypto exchange with a multibillion-dollar valuation, only sells a limited amount of altcoins to US investors. However, traders from other countries have a larger selection of tokens on its platform.
Step 2: Integrate Your Exchange with a Payment Method
You’ll need to assemble your paperwork once you’ve decided on an exchange. These may include images of your driver’s license or Social Security number. Moreover, you have to add details about your employer and source of finances, depending on the exchange.
The information you’ll need is likely to be determined by the place you live in and the regulations that govern it. The procedure is similar to that of opening a traditional brokerage account.
You will be asked to connect a payment option after the exchange has validated your identity. Most exchanges allow you to connect your bank account or a debit or credit card directly. Although you can buy cryptocurrency with a credit card, this is not a good idea because cryptocurrency price fluctuation might inflate the entire cost of buying a coin.
Step 3: Make a Purchase
After selecting an exchange and linking a payment method, you can purchase bitcoin (or other cryptocurrencies). Cryptocurrency exchanges have gradually become more common in recent years and have now progressed to the point where they offer practically the same services as their stock brokerage counterparts.
Today’s crypto exchanges provide a variety of order types and investment options. Almost every cryptocurrency exchange accepts market and limit orders, with some also accepting stop-loss orders. Kraken has the most order types among the exchanges discussed above. Market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders are all available on Kraken.
Step 4: Proper Storage
Wallets for bitcoin and other cryptocurrencies offer a secure way to store digital assets. Keeping your crypto in your wallet rather than being on an exchange ensures that only you have access to the private key to your funds. It also allows you to store funds outside of an exchange, reducing the chance of your assets being stolen if your exchange is hacked.
Several wallets have a greater number of features than others. Some are Bitcoin-only, while others allow you to store a variety of cryptocurrencies. Some wallets also allow you to exchange one token for another.
The procedure for purchasing bitcoin is slightly more complex than that for purchasing a traditional share or stock. This is primarily because the bitcoin ecosystem and infrastructure are not as developed as those of traditional trade. If you find this article helpful, leave us a comment below.