How to Buy Bitcoin?
How to Buy Bitcoin
The cryptocurrency landscape has dramatically changed since Bitcoin first came into the picture back in 2008. More people are aware of cryptocurrencies now, a growing number are trading and investing in them, and cryptocurrency exchanges are becoming more accessible to everyone no matter where you are in the world.
If you are totally new to cryptocurrencies and would want to get started by buying your first Bitcoin, it’s actually not as complicated as it sounds.
However, there’s a big disclaimer that you should be aware of when it comes to owning digital assets like cryptocurrencies – the market is highly volatile; thus, while the price of your asset can go immensely high one day, it can also go devastatingly low within a short span of time.
In the case of Bitcoin, it hit an all-time high of $64,800 in April of this year before its value plummeted to almost half in less than a month. As of writing, it’s playing around the $50,000 mark, but that can change in a blink of an eye.
Hence, the timeless investing advice rings true even more true in cryptocurrencies – invest only what you can afford to lose. With all of that said, here’s how you can kickstart your cryptocurrency trading journey and buy your first Bitcoin.
Choose a Cryptocurrency Exchange
A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. While there are a lot of cryptocurrency exchanges out there, as a beginner, you may want to go for one that balances security, accessibility, and ease of use.
- Know Your Customer (KYC) Policy
Decentralization and privacy are big things in cryptocurrencies, but you have to keep in mind that these concepts are not absolute, especially when it comes to cryptocurrency exchanges. Some exchanges are decentralized, which allows users to remain anonymous and do not require them to provide personal information.
However, most of the popular exchanges today like Binance, Gemini, Kraken, and Coinbase are not decentralized and have their respective know-your-customer (KYC) policies in place. KYC simply means that these platforms may require you to provide personal identification documents such as IDs, proof of residence, or even proof of income in some cases before you can proceed with buying or selling cryptocurrencies.
- Payment Channels
Another major consideration when choosing a cryptocurrency exchange is the range of payment channels that they support. This is important because you have to keep in mind that in order to buy Bitcoin or other cryptocurrencies for that matter, you need to have funds in your account. You can only do this by cashing in using any of the payment options of the cryptocurrency exchange where you signed up.
You don’t want to sign up on a platform only to find out later on after you have completed all the KYC requirements, that they don’t cater to your bank or other payment option that’s available to you.
- Observe Safe Internet Practices
Another aspect that should always be first on your mind when it comes to opening and maintaining a cryptocurrency account is security.
Always remember that security is not just a one-way street because no matter how secure a platform is, any account can be compromised if you don’t observe safe internet practices. Enable two-factor authentication (2FA), if available, use strong passwords or passphrases, avoid sharing personal information, and refrain from posting screenshots of much you’re making with your trades are just some of the things you can do to keep your cryptocurrency account secure.
Add Funds to Your Account
Once you have created an account on your cryptocurrency exchange of choice, you need to fund it before you can start buying Bitcoin and other cryptocurrencies.
Depending on the exchange where you’ve signed up, you can add funds to your account via bank transfers, wire transfers, e-wallets, or even via credit or debit card.
Before you choose a payment option, make sure to check first the rates and fees that will be charged once you add funds to your account.
Certain payment options have higher cash-in fees compared to other payment channels; hence you need to take this into consideration as it could reduce how much money you can use to buy Bitcoin.
Generally speaking, it can be cheaper to use electronic transfers from a bank account compared to other methods, while you must be wary of using a credit card to buy cryptocurrencies as this usually counts as a cash advance and is subject to a higher interest rate than regular charges.
At this point, it also helps to check how much is the minimum amount that you can buy on the exchange, as this could vary per platform. Make sure that you cash in funds enough to buy the minimum amount set by your exchange.
Place a Buy Order
Once your account is funded, you need to place a “buy order” to buy Bitcoin. Depending on the exchange that you’re using, this could be as simple as choosing Bitcoin (or its ticker symbol BTC) from the list of cryptocurrencies, placing the amount that you want to buy, and tapping a button.
Once your buy order is executed, your fiat holdings will be converted to the cryptocurrency you bought. This means that you now own a fraction of a Bitcoin, which will be reflected as BTC on your account. In most cases, you will also see the fiat equivalent of the Bitcoin that you have, which will be denominated in the currency of your choice, such as USD.
Here are some other good-to-know things that could help if this is your first time buying Bitcoin:
- There are different kinds of buy and sell orders. If you see different options, you can simply choose “Market (Buy) Order” to buy the cryptocurrency that you want to purchase instantly.
- Check if your exchange has an app. If you’re a beginner, an app is generally more user-friendly compared to looking at charts that you don’t understand on a web-based exchange when buying your first Bitcoin.
And that’s how easy it is to own your first Bitcoin. If you’re keen on buying more cryptocurrencies or want to start trading these assets as part of your investment portfolio, it is imperative that you do your own research first and understand the market before diving deeper. The market is open 24/7, it is highly volatile, and can result in huge losses if you’re not careful.