How to Buy Bitcoin (BTC)

Bitcoin has grown tremendously over the last decade, all thanks to its anonymous creator Satoshi Nakamoto. Initially starting as a reward token for miners completing tasks on the blockchain, it has developed to become much more than that.

When the coin was first released in 2008, you could buy a Bitcoin for under a dollar, but it quickly rose in value to over $10 within its first year. The rest, as they say, is history, and now the coin has reached an all-time high of nearly $70,000.

With all this hype surrounding Bitcoin, it is no wonder people are gathering interest concerning investing in Bitcoin and other cryptocurrencies. Let us show you how Bitcoin can be bought and the different options for investing in it.

Buying Bitcoin

Below, the steps to buying Bitcoin have been broken down to provide an easy-to-understand guide. Be aware that you still need to perform due diligence and research based on your current circumstance and financial stature.

Choosing a Cryptocurrencies Trading Service

The initial step of investing in Bitcoin starts with finding the right crypto trading venue or service. There are multiple popular trading platforms where a person can purchase Bitcoin, and these services are known as brokerages, payment services, or cryptocurrency exchanges.

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Out of the above options, cryptocurrency exchanges offer a breadth of features and are one of the most convenient options to select. Most platforms also offer more cryptocurrencies for trading than others, so portfolio diversification becomes easy for those who want to spread risk.

When you sign up for a cryptocurrency exchange, you can hold, sell, and buy Bitcoin. When investing in Bitcoin, finding a company that allows its users to withdraw the asset to their crypto wallet for safekeeping is imperative.

People looking to trade cryptocurrencies and Bitcoin may not require these features because they are opening leveraged positions.

There are various types of cryptocurrency services to choose from, so it’s best to do your research before going ahead and purchasing from a specific company. Bitcoin’s ethos is based around individual sovereignty and decentralization, so some exchanges do not require users to enter personal information.

Typically, these exchanges are decentralized and operate autonomously, which means they do not have a single control point. Although such a system can be used for unscrupulous activities, it can also provide vital services to individuals without a bank account.

People in a particular category, let’s say, refugees living in regions with no banking or government credit infrastructure, can use these exchanges to help attach them to the country’s economy.

However, at the moment, most favored cryptocurrency exchanges follow laws that require users to submit identification documentation and are not decentralized. In the United States, a few businesses operate like this, including Binance US, FTX US, Gemini, Kraken, and Coinbase.

The exchanges mentioned above have grown significantly over the last few years, offering many different features and cryptocurrencies to purchase.

Over the last decade, the crypto industry has proliferated, with many new digital assets competing for investor interests. Except for more prominent coins such as Ethereum and Bitcoin, few new tokens are available to purchase on coin providers.

Each exchange has its own set of regulations to determine whether to exclude or include trading of particular cryptocurrencies. Gemini, Kraken, and Coinbase offer a growing number of altcoins as well as Bitcoin investing. These three providers are probably the easiest way to get started in the crypto industry.

If you are an advanced trader looking for more complex functionality and a better variety of alternative coin choices, then Binance caters for you. On the other hand, FTX offers a limited amount of digital coins to US investors yet is still one of the fastest-growing crypto exchanges in the United States. The company has already garnered a multi-billion-dollar valuation, and it doesn’t seem to be slowing down any time soon. 

It is good to note that investors outside the United States have a more extensive choice of tokens on the FTX platform.

Remember to practice safe internet behavior when creating a cryptocurrency exchange account so that your investment can remain protected. That includes using a unique password and adding two-factor authentication to your account. Using various numbers, special characters, capitalized letters, and lowercase letters in your password is a standard best practice.

Connect the Exchange to a Payment Option

The process of signing up for an exchange is very much the same as setting up a general brokerage account for trading. Once you have selected your platform, it is time to gather personal documents to verify the account. Depending on the exchange, this information may include your social security number, pictures of a driver’s license, information regarding the source of funds, and employment status. The data required primarily depends on the law of the country in which you live.

After your identity has been verified, the exchange requires that a payment option be connected to the service.

Although purchasing crypto with a credit card can be done, it may not be ideal because the volatility of these assets could increase the overall cost of buying a particular coin.

Even though Bitcoin is legal in the United States, banks may stop or question funds sent to crypto-related exchanges or sites. It is imperative to make sure your bank allows funding to your chosen service provider before proceeding.

The fees for deposits via credit/debit card and bank account vary significantly from exchange to exchange. If you are looking for a solid deal for a beginner, Coinbase has a 3.98% fee for credit cards and a 1.48% fee for bank accounts. It is vital to research the expenses of your chosen exchange to find the best option for your investment strategy.

In most cases, exchanges also charge transaction fees for each purchase. This fee can either be a percentage of the trading amount or a flat price; this depends on the cryptocurrency provider. A processing fee is also included for a credit card, which is in addition to other transaction fees.

Place an Order

After choosing an exchange and connecting a payment option, you can now buy Bitcoin or other cryptocurrencies. In this day and age, cryptocurrencies have become more mainstream, growing significantly in features and liquidity.

The operational changes that the cryptocurrency industry has been through have drawn a lot of attention from big players in the financial service sector. People once thought cryptocurrency was a scam with questionable practices, but now it’s proving to be more than that by morphing into a legitimate business model.

Cryptocurrency exchanges are nearly at the same level of features as stock brokerages. Most platforms offer users a vast number of ways to invest in various order types. Almost every crypto provider offers stop-loss, purchase limits, and market orders for people who want options when trading these volatile assets.

Kraken is the exchange that offers the most order types and allows users to set take profit limit orders, stop limits, stop losses, and market limits all from its intuitive dashboard.

Safe Storage

Cryptocurrency and Bitcoin wallets is a place where users can store their digital coins securely. Protecting your crypto outside of the exchange ensures that only you have access to the funds via your key code.

It also assists in storing funds outside of the exchange and protects the cash in case the platform gets hacked or compromised.

Security is not the primary concern of cryptocurrency exchanges, even though most offer wallets to their users. An investor with extensive or long-term cryptocurrency holdings is recommended to use their cold wallet when storing funds.

Some wallets have more features than that others, such as the ability to store numerous altcoins. A few only allow Bitcoin, and others offer the option to swap one digital asset for another.

Hot and Cold Wallets

When it comes to selecting a Bitcoin wallet, there are multiple options out there. First, you need to understand the difference between hot and cold wallets.

Hot wallets are generally used for small amounts of Bitcoin that are actively traded on an exchange. A hot wallet can be compared to a cheque account as only the funds you are willing to invest are stored in it.

On the other hand, a cold wallet is a wallet outside of the exchange’s network and not connected to the internet. These devices are composed of a simple chip the size of a USB stick and are packed with security encryption technology.

Furthermore, the hardware offline wallets come with software that protects the user’s private key while viewing their portfolio. This technology should be used to store long-term investments or large amounts of cryptocurrency equity.

Conclusion

With the emergence of Bitcoin and other cryptocurrencies over the last 10 years, there has never been a better time to invest. There are many ways to buy Bitcoin, but some of the most reliable methods are through cryptocurrency exchanges like Kraken or Gemini.

Remember, your fund’s safety is of the utmost importance, so investing in a cold wallet can help you protect your equity in the event of an exchange being hacked.

What’s the future of Bitcoin (BTC)? Read our article to find out. >> Bitcoin Price Prediction 2022, 2023, 2024, 2025.