Bitcoin is gaining popularity in the trading world and is one of the largest virtual currencies. Many companies have intentions to invest in bitcoin in the future. Undoubtedly, bitcoin is certainly gaining momentum.
Although there has been debate regarding bitcoins and other cryptocurrencies being highly volatile and being speculative, they are still supported by billionaires like Elon Musk and Jack Dorsey.
Now, have you made up your mind to invest in bitcoin? Here’s a guide for you.
An Easy Step-by-step Guide For How To Invest In Bitcoin
Signing up on a bitcoin exchange
To invest in bitcoin, you need to decide on a platform where you can buy the coins. The platforms for purchasing and selling cryptocurrencies are called cryptocurrency exchanges. Bitcoin is an open-source technology but exchanges aid in bitcoin transactions. If you’re sure about purchasing from an exchange, you will have to decide which exchange to buy from. Some might charge a percentage of the purchase price.
Here are a few options:
Coinbase is a popular crypto exchange that not just allows you to buy and sell different cryptocurrencies in addition to bitcoin but also allows you to trade between various cryptos.
Kraken allows you to buy and sell bitcoin using money. It also allows you to trade different cryptos.
Binance.US is the US arm of the parent company Binance. It allows lower trading fees. Although it does offer to trade between different cryptocurrencies as compared to other exchanges but not as much as its parent company.
Having a wallet to store bitcoin
In order to invest in bitcoin, you would need a way to store the virtual currency. Just like how you keep your real money in your wallets, the virtual currency can also be stored in “wallets”. There are two types of wallets:
- Hot wallets
These wallets are most common because of their easy setup and usage. Hot wallets can only be accessed through the internet.
The cryptocurrency exchange you are using may give you an option of a hot wallet when you sign up. If you do not want to have a hot wallet on it, you can always download a mobile hot wallet or desktop software on your computer.
The only disadvantage of a hot wallet is that they are easy to hack. If you are thinking to invest a significant amount of money in bitcoins, having a hot wallet may prove to be very risky.
- Cold wallets
Cold wallets are considered safe and secure as they have no connection to the internet, making it hard for hackers to reach them. A cold wallet is a device similar to a flash drive. You store your coins in it and whenever you want access to them, you can connect the device to your computer.
The problem that people face who use cold wallets to store their currency is that it is a physical device that can be lost or broken. If such a problem arises, then the coins you have stored cannot be accessed anymore.
Linking your bank account to your wallet
To invest in bitcoin, you would need funds. To do that you can link your crypto account to your bank account or another way around. This enables you to buy and sell coins.
Placing an order to buy bitcoin
Ready to become an owner of Bitcoin? You can place an order for it on the exchange platform you are using. By providing the symbol for bitcoin and the number of coins, you can order bitcoin for yourself.
Now, you must already know that bitcoins are expensive, and some coins even cost around thousands of dollars. How can you buy bitcoin if you do not have enough funds to invest in bitcoin?
Well, many cryptocurrency exchanges provide an opportunity to purchase a tiny fraction of a coin. This means you can still buy a bitcoin, albeit a fraction of it, with little money.
Managing the investments
After you invest in bitcoin, you must be wondering what to do with the coins you have purchased. You can keep the coins in your wallet if you want to see if there will be an increase in their value. Moreover, you can also use the coins to buy stuff for yourself by making online transactions.
Also, you can trade your coins the same day you purchased them. This is called day trading. Day trading can be done on the cryptocurrency exchange with other people who also own Bitcoin.
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Bitcoin is one of the best-known virtual currency and it utilizes a large chain of interconnected computers to store and protect your virtual money. Now that you’re aware of how to invest in bitcoin, you must keep in mind that it’s still true speculation and never invest more than you can afford to lose.