How To Buy Bitcoin: 4 Simple Steps
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Cryptocurrency has introduced people to a fresh kind of investing that can be very lucrative. While it ’ s a bad venture, it can earn a tenfold return on your initial investment in some cases .
Bitcoin holds the title for being the beginning cryptocurrency – and most popular for that count – in the earth. It rose dramatically from $ 3,237 at the end of 2018 to hitting an all time high of $ 65,000 in 2021.
Reading: How To Buy Bitcoin: 4 Simple Steps
Although it ’ south more volatile than bonds and stocks, it ’ s possible to make a reasonable summarize if you know how to invest in Bitcoin. For example, most experts suggest you do not invest more than 3 % of your investment portfolio in cryptocurrency .
What else do you need to know when you decide to buy Bitcoin ? here ’ s an overview .
How To Buy Bitcoin
Like any early cryptocurrency, there are four steps you need to take to buy Bitcoin .
4 Steps To Follow
- Find a way to buy Bitcoin. You need to buy Bitcoin from a cryptocurrency exchange, such as Coinbase. You can also purchase cryptocurrency from traditional brokers, such as Robinhood.
- Figure out how to store Bitcoin. You have to decide if you want to store your Bitcoin in a cold or hot wallet.
- Purchase your Bitcoin. Buy the number of bitcoins you want using what you’ve found during the first step.
- Manage your Bitcoin. Manage this financial asset by making a long-term plan for it.
now, here ’ s a breakdown of all these steps in detail .
1. Where To Buy Bitcoin
First off, you need to determine how to buy Bitcoin. fortunately, there are a few different ways to do this .
Cryptocurrency exchanges facilitate cryptocurrency trade for respective kinds of assets, including decree currencies and digital currencies .
such a platform would act as an mediator between seller and buyer, making money through transaction fees and commissions .
typically, there are two types of cryptocurrency exchanges :
- Centralized: These cryptocurrency exchanges are third parties between sellers and buyers. They are more reliable since there’s a company involved. Some examples include GDAX, Kraken and Coinbase. These exchanges are very user-friendly as they allow users to view their accounts and make transactions via convenient websites and applications.
- Decentralized: Meanwhile, decentralized cryptocurrency exchanges facilitate peer-to-peer cryptocurrency transactions without an intermediary. Some examples include Blocknet and AirSwap. These exchanges are at a lower risk of being hacked since users do not have to transfer their cryptocurrency or other assets to an intermediary.
Cryptocurrency stockbrokers are a firm or agent that handles a client ’ mho assets and deal .
The first mainstream cryptocurrency broke was Robinhood, offering spare Bitcoin trades. eToro, a social trade platform, is another big cryptocurrency agent .
Alternative Ways To Buy Bitcoin
here are some early ways to buy Bitcoin :
- Bitcoin ATMs: These are just like regular ATMs but can be used to sell or purchase Bitcoins. According to Coin ATM Radar, there are over 42,000 ATMs of this sort in the U.S.
- Bitcoin Futures: This option is for pros and is offered by firms like TradeStation. It lets you trade Bitcoin futures.
- Peer-to-Peer Sales: You can purchase Bitcoins from another owner directly, sort of like buying something off Etsy. Some tools for this include Bitquick and Bisq. However, you should be careful when purchasing cryptocurrency directly from someone without the involvement of a third-party intermediary.
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2. Figure Out How To Store Bitcoin
You can store Bitcoin in a hot or cold wallet. Hot wallet transactions are quick, while those in cold wallets have excess steps to maintain security. The latter takes longer but is more secure .
Storing your cryptocurrency in a hot wallet means the assets are stored by a supplier or entrust substitute in the cloud. You can access your Bitcoins through a calculator browser or an app .
All trading exchanges come with complimentary hot wallets where all your Bitcoins are automatically stored. If you want to store your Bitcoin in a third-party hot wallet, you can download a release app and use it to keep your assets safe .
Some hot wallet providers include Coinbase, Blockchain, Electrum, and Mycelium .
Some pros of a hot wallet include :
- Quick to access
- Easy to use
- Usually free
however, hot wallets are connected to the Internet, making them susceptible to hacking and presenting other, more technical foul vulnerabilities .
A cold wallet is an offline encryptable device where Bitcoins can be downloaded. You can carry the device about. It ’ randomness considered safer than a hot wallet and costs around $ 100.
For model, two cold wallet providers are :
- Ledger: Their cold wallets cost $60 to $120
- Trezor: Their cold wallets range from $80 to $170
When you ’ ra creating digital wallet accounts, make surely the passwords are solid. here are some pros of cold wallets :
- More secure than hot wallets
- Completely offline
On the flip side, coldness wallets are expensive and require you to carry the device with you if you want to make regular transactions .
3. Purchase Your Bitcoin
once you have linked your wallet to the exchange, you must select the number of Bitcoins you want to purchase. One Bitcoin costs about $ 40,000, making it unmanageable for everyone to purchase a round-number sum .
You can buy the cryptocurrency in fractions, allowing you to purchase precisely the measure you want .
4. Manage Your Bitcoin
The simplest room to manage your cryptocurrency investing is to keep an eye on the cryptocurrency market and sell your Bitcoin when it goes up in value. however, if you think the currentness will face a significant spike in the coming years, hold on to your Bitcoin for a long time .
Do You Know How To Invest in Bitcoin Safely?
If you ’ re new to cryptocurrency investments, you should be pretty careful since the market is very volatile, and you can end up losing your money promptly. here are some tips to be on the safe side :
- Research: Make sure you learn all you need to know about cryptocurrency exchanges before you select one. You can also talk to experienced investors through online forums, especially those on Reddit.
- Diversify: Investing in Bitcoin seems like a lucrative move since the currency has spiked exponentially in the past few years. Still, you should not put all your money in one cryptocurrency. Instead, diversify your investments so that your money is more durable to shifts in the market.
How Much Does Bitcoin Cost?
It may seem surprising that Bitcoin has reached a five-figure measure. One bitcoin costs about $ 40,000 as of Mar. 7, 2022 .
however, the measure of Bitcoin varies from fourth dimension to clock. This happens due to respective factors that affect the rate of Bitcoin .
What Affects the Price of Bitcoin?
here are some of the factors that influence the sky-rocketing price of Bitcoin .
Supply and Demand
The supply and requirement theory combined with Bitcoin ’ s popularity made many individuals invest in Bitcoin. This sudden demand led to a rise in Bitcoin value .
low demand for Bitcoin results in a decrease in value. however, in holocene years, many individuals, companies, governments and multinational corporations have invested in Bitcoin, driving up its rate which reached a modern high .
This demand is continuously rising. Therefore, the price of Bitcoin keeps going up. furthermore, the portrayal of Bitcoin in the media plays a significant function in driving up the cost of Bitcoin. For exercise, earlier in 2021, the Bitcoin prices crashed due to the negative media coverage regarding Bitcoin regulation in some countries .
mining is a process that validates transactions and adds them to the blockchain. With Bitcoin gaining popularity, many mining pools became dedicated to mining it. Anyone could mine Bitcoin with the help of proper hardware and mining pools. But, the more miners there are, the more unmanageable it is for you to mine to keep production continuing systematically. naturally, this increases the price of Bitcoin .
With new miners and hardware becoming a region of the bitcoin network, the hash rate increased, which resulted in a higher Bitcoin measure .
Good To Know
Remember that cryptocurrency, due to its volatility, can take a price on your pocket and mental wellbeing. indeed, you should alone dabble in Bitcoin investment if you ’ re not besides bothered by the dramatic highs and lows in Bitcoin prices .
data is accurate as of Mar. 7, 2022.
About the Author
Scott Jeffries is a seasoned technology professional based in Florida. He writes on the topics of business, technology, digital marketing and personal finance.
After earning his bachelor’s in Management Information Systems with a minor in Business, Scott spent 15 years working in technology. He’s helped startups to Fortune 100 companies bring software products to life. When he’s not writing or building software, Scott can be found reading or spending time outside with his kids.