Step-by-Step Guide to Buying Bitcoin
Developed by the mysterious Satoshi Nakamoto, Bitcoin has grown into a cryptocurrency that is gaining mainstream acceptance and is even considered a viable alternative to gold. If you are looking to invest in this crypto, the two primary things you need to know about buying Bitcoin are that you will need a place to buy it and a place to store it.
That said, here are simple steps to help you buy Bitcoin.
Step One: Get a Bitcoin Wallet
A bitcoin wallet is the first requirement if you want to purchase bitcoin. The wallet stores the public and private keys that allow you to buy and validate transactions. A bitcoin wallet can be a hardware or online wallet that holds your digital currency.
Bitcoin wallets come in a variety of formats including:
Hot Storage Wallets
These wallets are directly connected to the internet through a phone app or desktop software or an online provider. Desktop wallets are applications that run on your computer and store your digital currency on your desktop.
With desktop wallets, you have total control of your funds, and thus are protected from risks that come with storing your currency with a third-party. However, when using a desktop wallet, you must take safety precautions such as using a strong password and antivirus software, to protect your currency. Some good examples of desktop wallets include Bitcoin Core, BitPay, Atomic Wallet, and Exodus.
Similar to desktop wallets, mobile wallets are applications that run on your smartphone. Like desktop wallets, you are responsible for protecting your digital cash. Bitcoin Wallet, Mycelium, and GreenAddress are a few examples of mobile bitcoin wallets.
Web wallets are browser-based wallets that you can access via desktop or mobile. These wallets do not offer as much control as desktop and mobile wallets and their security depend on the security measures the online wallet provider offers. You can find web-based wallets through some exchanges and brokerages. Coinbase is the most commonly used hot bitcoin wallet that also allows you to trade bitcoin on the platform. Coinbase is considered a very beginner-friendly hot wallet.
Cold Storage Wallets
Cold storage bitcoin wallets are small, encrypted, and portable devices that allow you to download and carry your bitcoin. Cold wallets store your bitcoin offline and are considered more secure compared to hot storage bitcoin wallets although they are costlier. Trezor and Ledger are good examples of cold wallet providers.
You can set up both cold and hard wallets to take advantage of the benefits each has to offer. For example, you can put a small part of your crypto holdings in a hot wallet for trading and purchases and use a cold storage wallet for Bitcoin you intend to hold for the long term.
When you create your wallet, take security measures such as setting a strong password and using two-factor authentication to enhance the security of your wallet.
Step Two: Choose Where to Buy Bitcoin
Once you get a bitcoin wallet, you can proceed to choose a platform where you can purchase bitcoin. These platforms include cryptocurrency exchanges and traditional stockbrokers.
The most reputable bitcoin exchanges include Binance, Coinbase, CEX.io, Gemini, and Coinmama. The best exchange to choose depends on several factors but the main considerations are the location of the exchange and the exchange fees.
Using an exchange within your country is more economical compared to overseas accounts, which might charge additional fees for currency conversion or foreign transactions.
The exchange fees also matter as they determine the cost of buying bitcoin. For example, if you want to buy bitcoin using a credit card, you will most likely pay a cash advance fee, which can result in higher interest. Even when buying bitcoin using a debit card, the costs are likely to be higher.
Another important consideration you should never overlook is the security of the platform. The value of bitcoin is a factor that has attracted investors as well as criminals. Therefore, you must choose a platform with strong protections against theft and hacking for bitcoin security.
Once you find a platform that suits your needs, the next step is to register and complete the security checks required. Each exchange has a different process but you can expect to provide your email and create a strong password to secure your exchange account.
Once you complete the registration process, you must complete additional steps such as:
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- Setting up two-factor authentication
- Uploading a government-issued ID
- Adding a payment method
- Depositing funds to your exchange account
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Step Three: Buy Bitcoin
Once you set up your account and link a payment method, you can now decide the amount of bitcoin to buy. The amount of money you need to buy bitcoin will depend on the amount you want to invest (and can afford to lose), which can be as low as $1.
Experts recommend keeping your crypto investments at less than 5% of your portfolio.
If you are buying bitcoin using a crypto exchange, you will see a list of all the cryptocurrencies the platform supports. Alternatively, you can search bitcoin by its ticker symbol (BTC) on the platform.
Alternative Ways to Buy Bitcoin
Having gone through the basics of buying bitcoin, let’s now explore alternatives you can use to purchase bitcoin.
Buy Bitcoin Using PayPal
PayPal allows US residents (except residents of Hawaii) to purchase Bitcoin directly from their PayPal accounts.
To buy crypto through PayPal, you need to set up a crypto account. You must provide your name, physical address, date of birth, and tax identification number to set up the account. You can fund the crypto account from your PayPal balance, the bank account linked to your PayPal account, or a debit card linked to the PayPal account.
The other way you can purchase bitcoin using PayPal is to buy bitcoin from a third-party provider, which supports payment via PayPal.
Buy Bitcoin Using a Credit Card
You’ll be pleased to learn that you can buy Bitcoin Using a Credit Card if you are accustomed to paying for everything using your credit card.
You’ll need to create an account with a reliable cryptocurrency exchange platform that has strong cybersecurity practices.
Once you create your account, you will select the amount you wish to spend on buying Bitcoin and provide your card details to process the transaction.
Once the transaction is complete, you will receive your Bitcoin in your digital account.
Buy Bitcoin on Robinhood
Robinhood is a brokerage platform that allows you to buy Bitcoin fast. You can access Robinhood on the web or through the Robinhood app (Android and iOS).
Robinhood offers an easy-to-use platform with a user-friendly interface, which makes it ideal for beginners. Here are the steps you should follow to buy Bitcoin on Robinhood instantly:
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- Create a Robinhood account and link your bank account
- Fund your Robinhood account
- Search for BTC on the search tab
- Purchase Bitcoin for the amount you want
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Robinhood also allows you to sell BTC and withdraw Fiat currency to your bank account.
Buy Bitcoin at an ATM
Bitcoin ATMs are another way to buy bitcoin. You can buy bitcoin from an ATM by inserting cash into a bitcoin ATM. The bitcoin you purchase will be transferred to a secure digital wallet. You can track the nearest bitcoin ATM using Coin ATM Radar.
Final Thoughts
If you have done your research on Bitcoin and are ready to start investing, the steps in this guide will help you buy bitcoin fast. Investing in digital assets does come with one major buyer beware, though: cryptocurrencies are extremely volatile. While they can experience massive highs, they can also nose-dive to devastating lows.
Featured Image: Twenty20
