Currently, Bitcoin is the most valuable and commonly-held cryptocurrency on the market. Just like other altcoins like Ethereum, the process of buying Bitcoin is the same.
Notably, one of the common ways to buy Bitcoin is to purchase it from cryptocurrency exchanges. These exchanges are online crypto-related platforms that allow people to buy and sell Bitcoin.
You can read the article about crypto tax-related matters to get an idea about cryptocurrency taxation.
Also, if you’re planning to buy Bitcoin, consider implementing the steps below to help you get started.
Step 1: Select A Crypto Exchange
The first step in buying Bitcoin involves selecting a cryptocurrency exchange. Many people view crypto exchanges as the most convenient option among well-known trading services and venues for buying cryptocurrencies. It’s because crypto exchanges provide several qualities and more cryptocurrencies for trading.
Some examples of these popular crypto exchanges include Coinbase, Binance, Gemini, and Kraken. These crypto exchanges are online platforms that let you buy, sell, and store cryptocurrencies. Moreover, when choosing a suitable crypto exchange, you can nail down your search based on several factors, such as security and fees.
Note that no central institutions support cryptocurrency investments regarding security matters. If the online platform where you store your coins gets hacked, you’re at risk of losing all your crypto investments. For that reason, if you don’t plan to move your crypto into your crypto wallet, you should choose a crypto exchange platform that utilizes offline cold storage and has robust protection against theft.
Furthermore, some cryptocurrency exchanges charge exchange fees based on a spread or margin above the market price. Thus, make sure you know what fees these crypto exchanges charge you before funding your account.
Step 2: Connect Your Crypto Exchange To A Payment Option
Before anything else, it’s worth noting that while Bitcoin is legal in the United States, some banks may still doubt or stop deposits to exchanges or online platforms related to cryptocurrency. Thus, it’d be best to check first whether your bank permits deposits at your chosen crypto exchange.
Furthermore, regardless of the crypto exchange you choose, you’ll have to gather your identification documents to verify your identity when signing up for an exchange account and registering a payment option. Depending on the exchange, these personal records may include social security number, a driver’s license, a passport, and your source of income. The personal information you may need can also depend on your location and the laws within your place.
In addition, once the crypto exchange has confirmed your identity, it’ll require you to link your bank account, credit card, or debit card. But remember, even though you can use a credit card to buy Bitcoin, it isn’t an excellent idea as crypto price volatility may inflate the total cost of buying a coin.
Step 3: Place Your Bitcoin Order
After verifying and funding your account, you can start purchasing Bitcoin. Note that this buying process varies depending on the crypto exchange you choose. Several crypto exchanges provide a simple buying or selling process by having an easy-to-click Buy button. Then after clicking the button, you’ll have to specify the amount of Bitcoin you want to purchase. But generally, most crypto exchanges provide at least three types of orders. These include the market order, limit order, and stop-loss order.
When it comes to marker order, it’s the option you should consider if you simply seek to purchase Bitcoin and its current market price. Moreover, regarding limit order, it’s an order that directs the exchange to accomplish a buy or sell order at a definite price. Furthermore, regarding stop order, it’s an order where you set the price that you’ll buy or sell Bitcoin. Depending on how fast the market moves, a stop-loss order is an order type that may take a while to execute.
Step 4: Get A Bitcoin Wallet
Although well-known crypto exchanges are getting increasingly better and safer, hacking and fraud remain significant problems for the crypto industry. That’s why it’s highly advisable to consider transferring your Bitcoin from the crypto exchange you use to your cryptocurrency wallet. Notably, there are two kinds of digital or cryptocurrency wallets: cold wallets and hot wallets.
With that in mind, cold wallets are also called hardware wallets. These are little devices that store your crypto address’ private key. Since they don’t connect to the internet, expert crypto traders consider them safer than software or online-based options.
That said, hot wallets are software wallets that you can use through your computer, phone, and web browser. While they also store your crypto address’s private key, they connect to the internet, making it less secure than hardware wallets.
Overall, Bitcoin is suitable for newbie cryptocurrency investors to get started. However, note that Bitcoin is a highly volatile investment prone to enormous and quick swings in value. It shows an opportunity for high returns, yet it also presents a substantial risk. That’s why it’s essential to do your research first and get a clear picture of the proper ways to invest in Bitcoin.