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How To Buy Bitcoin?

purchase bitcoins in four steps


What is Bitcoin?

In 2009, a mysterious developer named Satoshi Nakamoto introduced Bitcoin, the first and most valuable class of assets referred to as cryptocurrency. In essence, Bitcoin is a digital form of currency that does not require any government or central authority to manage it. Instead, Bitcoin uses peer-to-peer networks to facilitate direct transactions amongst users.

Bitcoin dominates the market capitalization leaderboard in value as the most widely traded cryptocurrency. Apart from being the world’s first cryptocurrency, Bitcoin is also the most well-known of the 5,000 crypto assets available today. Although most countries do not accept Bitcoin as a legal tender, its popularity has prompted the creation of thousands of other cryptocurrencies.

 

Bitcoin Price Prediction

Bitcoin has rapidly grown since it was launched in 2009. For example, its value has increased by nearly 30,000% between October 2013 and early June 2021. The exponential growth of Bitcoin’s value does not deter some analysts from predicting that its value will rise even further as cryptocurrency and blockchain technology drive them to become more mainstream and integrated into everyday lives.

Because Bitcoin is still a very volatile investment, financial experts do not recommend investing more than a small percentage of your funds in this cryptocurrency. Having said all of that, if you still wish to become part of the Bitcoin movement, here are the steps you will need to take.

 

How to Buy Bitcoin in 4 Steps?

 

Step 1: Choose a Crypto Exchange

You can buy Bitcoin or other cryptocurrencies at a crypto exchange, where buyers and sellers exchange dollars for crypto. Hundreds of exchanges are available, but as a novice, you should choose an exchange that offers ease of use, low fees, and high security. If your exchange does not have a Bitcoin wallet built-in, you will need to find one.

In addition, you can buy cryptocurrency via a platform such as Robinhood, PayPal, or Venmo. However, this usually means that you cannot withdraw your cryptocurrency and move it to another platform. To move your crypto holdings to another wallet, you will have to sell them and then repurchase them on a different exchange.

Step 2: Determine the Method of Payment

To invest in Bitcoin, you must first fund your account with the exchange. A cryptocurrency exchange may allow you to fund your account through bank transfers from your bank account, PayPal, wire transfers, a cryptocurrency wallet, or even through your credit or debit card.

Nevertheless, it would be wise to keep in mind that platforms may impose higher transaction fees for specific funding options. If you use PayPal, they will charge you 2.5% of the transaction amount and $10 for wire transfers. In contrast, Coinbase does not charge fees for the electronic transfer of funds from a bank account.

Using PayPal or a debit card, a direct purchase of cryptocurrency will be even more expensive. Rather than funding your account and then transferring funds to make your purchase, Coinbase’s fee will be 3.99% of the transaction amount. The fees associated with credit card transactions on other platforms are often at least this high.

As fees decrease the amount of money you invest, transferring funds electronically from a bank account instead of other methods makes more sense. Further, if you use a credit card to buy cryptocurrency, the transaction will generally be treated as a cash advance. You will have to pay a high-interest rate. Keep in mind that taking on debt to purchase volatile investments is unwise and highly risky.

Step 3: Place an Order

Upon funding your account, you can place your first order to buy Bitcoin. After that, you will need to enter the amount you wish to invest. On some platforms, you may be able to purchase Bitcoin simply by tapping a button, while on others, you may need to enter the ticker symbol (BTC).

Purchasing a single Bitcoin requires a substantial initial investment. Upon completing a transaction, you will only own a portion of a Bitcoin. If you invest less, for example, $1,000, you will only receive a small percentage of the Bitcoin. In the case of Bitcoin’s current price of $41,496, you would need to invest that much to buy one.

Step 4: Safe Storage

Cryptocurrency and Bitcoin wallets offer a secure way to store digital assets. The private key to your crypto funds is kept outside of the exchange and within your wallet, ensuring that only you have access to them. You will also be able to store your funds away from an exchange, eliminating the risk of your exchange being hacked and causing a loss of funds.

Security is not the primary concern of most exchanges, even though they offer wallets to their users. Therefore, you should not use exchange wallets for significant or long-term cryptocurrency holdings.

Some wallets offer more features than others. Some online wallets only accept Bitcoin, while others can store various altcoins. Additionally, some wallets allow the exchange of tokens, while others cannot offer the same.

There are several options when it comes to selecting a Bitcoin wallet. To understand crypto wallets, you must first understand the concept of hot wallets (online wallets) and cold wallets (paper or hardware wallets).

 

Final Thoughts:

The purchase of Bitcoin is a little more complex than purchasing equity or stock. It is primarily because of the undeveloped cryptocurrency ecosystem and infrastructure compared to mainstream trading.

When Bitcoin’s price skyrockets, it may be tempting to invest in this popular cryptocurrency. It indeed has the potential to be a profitable investment. However, it would help if you were cautious – It is volatile, and experts do not suggest allocating a large percentage of your capital to crypto investment.

 

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