Bitcoin has been the king of the crypto space, reigning among several cryptocurrencies worldwide. Its spikes and sinks are probably the favorite subjects of every crypto enthusiast. If you are looking for a short-term profit, trading Bitcoin could be a great investment as it has high liquidity. You can comfortably trade Bitcoin for assets or cash with low fees.
Although investing in a cryptocurrency like Bitcoin may seem complicated, the best way you could clearly understand how it works is by simply buying and trying them out in a trade. Buying Bitcoin is becoming less complex day by day, and the legitimacy of wallets and exchanges is expanding as well.
If you are completely new to Bitcoin, here are the four easy steps to buy Bitcoin:
Step 1: Get a Wallet
There are few things that an investor needs before buying a Bitcoin, and one of these is a wallet. Just like how people need bags and storage to place their belongings, investors need a wallet to hold their Bitcoin.
Bitcoin wallets authorize users to send and receive Bitcoin. A wallet generates a Bitcoin address, which serves as the Bitcoin address of the user.
You might also be interested in Beginner’s Guide to Bitcoin
You can use any trusted software wallet if you’re only buying small amounts of Bitcoin. It could be a mobile or a desktop wallet. On the other hand, if you are purchasing a large amount of Bitcoin, it would be better to use hard wallets or paper wallets.
These are wallets that are not connected to the internet, making you safe from online criminal activities that may cause great damage to your finances. Hard wallets eliminate the possibility of fraud unless someone else is holding your wallet.
Step 2: Find Your Bitcoin Address
After creating a Bitcoin wallet, find your Bitcoin address and copy it.
Once you do, think about the amount you plan to invest in Bitcoin. Investing in Bitcoin is risky, so you need to think twice if you’re planning to invest a large amount of money. When it comes to risky assets, invest only the amount you can lose. If you’re planning to buy Bitcoin for the first time, choose an amount that would not affect you financially if Bitcoin were to drop to zero.
Often, investors tend to be overly optimistic to the point that they set aside the downsides, thinking only about the gains they can acquire through investing. You must have already heard this somewhere: Never invest more than 5% of your total wealth.
One Bitcoin can be divided up to eight decimal points, which means you can purchase half a bitcoin, a quarter of bitcoin, or even a hundred of bitcoin. You don’t need to buy 1 Bitcoin, as you can buy less than that.
After thinking thoroughly about how much you want to invest, the next thing you need to do is to choose an exchange.
Step 3: Choose an Exchange
Choosing an exchange is quite a hard task as various aspects need consideration.
The first thing you need to consider is the availability of the exchange in your country. Not all exchanges accept users from all parts of the world, and you need to check if the exchange you have your eyes on welcomes users from your country.
It is also important to take note is the payment method accepted in the exchange. Some exchanges offer a variety of payment methods, while others only accept wire payments. There are payment methods that will allow buyers to request their money back.
However, this will be accompanied by higher service or transaction fees because the seller is taking the risk that you will cancel the payment right after you get the coins. On the other hand, wire transfers, which cannot be reserved, are usually cheaper.
The third thing you need to check is the fees you need to pay for every transaction. There are three kinds of fees — transaction fees, deposit fees, and withdrawal fees. These fees can greatly affect the total amount of money you will receive in the end.
Next, be mindful of the exchange rate. Some exchanges offer low fees, yet their exchange rates are higher relative to the competition. This only means that the “fees” are hiding within the exchange rate.
The fifth thing you need to check is the buying limit. This will depend on your payment method and identity verification level. Some exchanges will not allow you to buy a big amount of Bitcoin due to their low buying limit.
Lastly, check the exchange’s reputation. Do your research on how well known it is in the community and its support on the chances of getting lost along the process. Be mindful of the reviews. Check if there are complaints against the exchange.
Every exchange out there has a different set of rules, payment methods, buying limits, and fees. Make thorough research and pick the one that suits you best.
You might also be interested in the Top 5 Investments That Can Make You Rich in 2021
Trading Platform vs. Brokers
Trading platforms are websites that automatically connect buyers to sellers. This means you can buy from anyone who has placed sell orders on the platform without direct communication. Trading platforms usually ask for small fees for the service.
To get Bitcoin in the cheapest way possible, you could make your trades on platforms like Kraken or Bitstamp. However, these platforms are not very user-friendly because of some options they offer that may confuse inexperienced users.
Moreover, due to the lack of sellers at the price you want to buy, your order might not get processed immediately. If you don’t want that kind of hassle, you can go to a broker.
Brokers are websites that simplify the process by permitting users to buy coins at a predetermined price. When you choose to buy Bitcoin at broker sites, the process will be much simpler compared to buying at trading platforms. The downside here is the fees, which are more expensive compared to the latter.
It’s up to you which one you prefer in buying a Bitcoin, but before choosing your best fit, make sure that the company is reliable. There are times that it’s better to spend a bit more money to have a less complicated process.
Bitcoin ATMs
Another option you could use to buy a Bitcoin (BTC) is through Bitcoin ATMs. These ATMs are machines that accept cash, going by the name fiat money, and send you Bitcoin (BTC) in return.
There are ATMs that will allow you to buy Bitcoin, and there are some that will allow you to sell as well, giving you cash in return.
A lot of people love to use ATMs because of the anonymity it offers during the purchasing process. There is no need for you to wait too long for the identification process, as you can get your coins instantly.
Bitcoin ATMs charges service fees. Hence, you should be aware of the amount, so you won’t be surprised in the end.
Buy from Individuals
Another option to buy a Bitcoin is through buying from other people. This is quite risky because you cannot be sure of people you just met online, but you can gamble on it if the other person can verify his identity.
If you are buying from other people, you could try to use an Escrow service that will hold your money until the person you have a transaction with sends you the coins.
Wire transfers, which are irreversible, should not be used. This will not give you protection again scammers on the chance you are dealing with one. If any of these options are not available, stick to cash, and meet face to face.
Buying Bitcoin from another individual usually involves a huge risk. Sometimes, it’s not worth the few bucks you’ll save in the process.
