How to buy Bitcoin
Many novice investors begin their journey into the cryptocurrency world by buying bitcoin. For those who are used to traditional financial products, the digital currency is often a complex and little-understood space. Therefore, we want to shed light on some basic aspects when buying bitcoin for anyone who is also interested in investing.
How to buy bitcoin in 4 steps
1. Decide where to buy bitcoin
There are many convenient ways to buy, sell and store cryptocurrency with a variety of options.
Before choosing a cryptocurrency exchange, carefully review the information about the fees and consumer protections it offers. Bitcoin can be purchased on exchanges such as Gemini, Kraken, Coinbase, and Crypto.com.
Robinhood was the first mainstream investment broker to offer bitcoin. One of its advantages is that it does not charge commissions for bitcoin transactions. Other online brokers that offer access to bitcoin are SoFi Active Investing, WeBull, TradeStation, and Firstrade.
Other ways to buy or invest in bitcoin
Bitcoin ATMs. These operate similar to regular ATMs, but use bitcoin as the currency offered for buying and selling.
Trusts or exchange-traded funds. The financial firm ProShares invests in bitcoin futures contracts. Grayscale Investments can offer its bitcoin trust funds, which are publicly traded, meaning you can buy the currency through many brokers at discounts.
Peer-to-peer money transfer apps. PayPal, Venmo, or Cash App allow their users to purchase bitcoins using an app.
2. Decide how to store bitcoin
Bitcoin storage uses hot wallets, which help make transactions faster, and cold wallets, which make the process take longer but include extra security measures.
Online wallets, also known as hot wallets, are wallets that are used on computers, phones or tablets. They are best for small amounts or cryptocurrency that is actively traded on an exchange and used as a current account.
Every exchange offers a free hot wallet to store your purchases, but be aware that Bitcoin hot wallets are an attractive target for hackers and still provide little insurance or security.
Cold wallets are standalone or hardware wallets that store a user's private key on something that is not connected to the Internet and come with software that allows investors to view their portfolio without putting their private key at risk. A hardware wallet is usually a USB drive that securely stores the user's private keys offline.
3. Make your purchase
As the last step you will have to decide how many bitcoins you want to buy. The price of one bitcoin reaches several thousand dollars, but the cryptocurrency (trading symbol BTC or XBT) can be bought and sold in fractional shares for a couple dozen dollars.
4. Manage your investments
You can engage in day trading, which involves buying bitcoin at a low price and selling it in time as soon as the value rises. Or buy and hold the digital currency for an extended period of time if you are confident about bitcoin's future. Whichever strategy you choose, remember that investing is an energy-consuming process that takes time.