As you may or may not have heard, you no longer need to be rolling in the Benjamins in order to buy Bitcoin. In other words, you don’t have to be a millionaire to make this type of investment in today’s day and age.
The news is out that Bitcoin has become one of the easiest and most profitable cryptocurrencies to invest in. What you do need to be prepared for is the volatility of the cryptocurrency market and having realistic expectations about the returns on your investment.
As the most ubiquitous cryptocurrency on the market today, buying Bitcoin has never been easier. Here are the first important steps to take.
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1. Choose an Appropriate Crypto Exchange
A cryptocurrency exchange is, essentially, a platform on which you can buy, sell, and hold Bitcoin (and many other cryptocurrencies). You can also transfer your investment from the exchange platform to your chosen wallet for safe storage.
Today, there are numerous exchanges to choose from. Some offer different features, such as the ability to remain completely anonymous on the platform — meaning you don’t need to offer any personal information. If you’re wary of online scamming, this might be a good option for you.
However, some of the most popular and trusted exchanges are not decentralized, meaning they require you to submit identity documents before you can begin buying Bitcoin. Some of these include Coinbase, Binance, Kraken, and Gemini.
2. Select Your Preferred Payment Option
Once you’ve chosen your exchange platform and shared all the relevant information it requires, it’s time to choose how you’d like to receive payments. Setting up an exchange account is much like setting up a bank or investment brokerage account.
Once that’s established, you can choose to link your bank account, debit card, credit card, or even a PayPal account directly to an exchange.
Before you buy Bitcoin and choose to withdraw funds, you might incur extra charges if you choose a credit card option due to credit card interest rates. While some banks charge additional fees for deposits into accounts and debit cards. Most exchanges also charge a transaction fee every time you transfer funds.
3. Set Your Order Type
Your order type relates to how you invest in Bitcoin on your chosen exchange platform. In many ways, this is the same as setting up an order type on a stock brokerage account (if you’re already an investor).
Depending on the exchange you choose, there are a number of order types to choose from, which means you have plenty of different ways of investing. But today, most exchange platforms offer market and limit orders, as well as stop-loss orders.
If you’re looking for more variation, Kraken is a good option as they offer a great range of order types. If you’re new to investing, it’s important to understand the different order types and how they impact your investment before you begin buying crypto.
4. Choose a Safe Storage Method
This is probably one of the most important steps when establishing your crypto investing journey. A wallet is exactly what it sounds like — a safe place to store your Bitcoins. It’s vital that you keep your crypto outside of the exchange platform as this allows you full control over your investment and its safety.
Two of the most popular storage options include:
- Hot wallets: also called online wallets, you can transfer your Bitcoin from an exchange to an app on your computer, phone, or tablet. A hot wallet app generates a private key for each Bitcoin which connects to all internet devices
- Cold wallets: this is a storage option that’s not connected to the internet, making it a safer option. Known as an offline wallet, it stores all your private keys on designated software, without a connection to the internet. You can view and access your portfolio via this software at any time
Both storage options come with their own set of pros and cons. But generally, a cold wallet is the safer option as you can avoid online hacking and the risk of compromising your investment.
Buying Bitcoin With PayPal
There are various methods of actually purchasing Bitcoin. One of the most popular today is via PayPal. Basically, you can do this in two ways. You can either connect your bank account/debit card to your PayPal account and purchase Bitcoin from a third-party provider (exchange platform).
Alternatively, you can also purchase Bitcoin directly through PayPal using any credit you have in the account. This only applies to four specific types of cryptocurrencies though: Bitcoin, Ethereum, Litecoin, and Bitcoin cash.
You can also send Bitcoin from your PayPal account into your chosen storage wallet.
Buying Bitcoin With a Credit Card
Purchasing Bitcoin with a credit card is basically the same as using a debit card to purchase just about anything. But it’s important to keep in mind that not all exchange platforms allow you to buy Bitcoin this way due to the risk of fraud and processing fees.
In short, most credit card companies treat Bitcoin purchases as cash advances. This means you’re charged substantial fees and interest rates on these transactions. Some other options when buying Bitcoin include:
- Bitcoin ATMs: this works much like an in-person exchange. You can insert cash into the ATM and buy your Bitcoin right there, then transfer it to your chosen wallet for storage
- Peer-to-peer exchanges: this allows for a direct connection between Bitcoin buyers and sellers. You get the chance to shop around for the best deal and buy Bitcoin directly from other sellers
Then there are also mainstream brokerage firms that offer crypto trading opportunities. While this option is not as popular as those mentioned above, the idea is slowly gaining traction.
Buying Bitcoin is Easier Than You Think
While buying Bitcoin might seem like a fascinating investment venture, it’s important to remember that it’s a volatile market and there is no guarantee on what type of returns you’ll make. However, it’s never been simpler to invest in Bitcoin than it is today.
If you’re interested in learning more about investing in cryptocurrency, check out the rest of this site.
