As the crypto scene has grown exponentially in recent years, many people are now interested in investing. But because there is such high volatility and lack of regulation around cryptocurrency markets, it can be challenging to know how best to get started. Here are a few steps you should take — they’re simple but have big rewards!
Wondering what Bitcoin (BTC) or Ethereum (ETH) is? These two coins were created back when times weren’t so tough for cryptos; BTC was born in 2008, while ETH came into existence in 2015. They both tout advantages over each other: cheaper with lower transaction fees on ETH vs. BTC’s faster transactions at higher prices). However, these days much discussion revolves around newer currencies like Ripple XRP.
After you have learned the language, taken the risk, and met your financial priorities, buying in is the next step in crypto investing.
Experts say there are many cryptocurrencies. However, you should avoid most of them. The value of cryptocurrency can fluctuate hourly, especially for less-known coins. Although more well-known cryptocurrencies are volatile such as Bitcoin and Ethereum, they have an extraordinary track record of increasing their value.
Does Bitcoin Make Sense for You to Invest In?
It is important to research and fully understand the risks involved in any investment. You should ensure that any cryptocurrency investments you make don’t interfere with your other goals, such as funding retirement accounts or paying off high-interest debt. Experts recommend that your cryptocurrency investments should not exceed 5% of your total portfolio.
According to experts, Bitcoin is a great place to begin crypto investing. Bitcoin is the first cryptocurrency and has the best track record. Bitcoin’s value has risen exponentially in the last decade since its inception in 2009. As a long-term value store, many experts refer to it as “digital gold.”
While Bitcoin’s recent massive price swings highlight its volatility, many experts say a smallholding of cryptocurrency like Bitcoin can be a healthy (if speculative) diversifier in your overall investment strategy.
Here’s how to buy Bitcoin once you have decided that Bitcoin is a good investment.
Choose an Exchange
Bitcoin cannot be purchased by your bank or investment company yet, though some organizations are working towards that possibility soon. To exchange U.S. dollars for Bitcoin, or any other digital currency, you will need to use a cryptocurrency trading platform.
There are many cryptocurrency exchanges that you can use to purchase crypto online. However, Coinbase, Gemini, and Kraken are the most popular. These are online platforms that allow you to buy and sell cryptocurrency.
You can narrow down your search for the right platform based on a few factors:
Central institutions like FDIC-insured banks accounts do not support investments in cryptocurrency. Your investment could be lost if your account is compromised or the platform on which you store your coins is hacked.
You should ensure that your crypto is kept on an exchange account rather than being moved into your wallet. Many exchanges have separate insurance policies that protect investors against potential hacking.
Exchange fees may vary widely and can be either a flat fee upfront or a percentage of your trades. Many fees are per transaction and can be based upon price volatility. __S.46__
Although fees are essential to consider, experts agree that you get what you pay for. This is especially true when you stick with the more prominent, established exchanges such as Coinbase. A higher fee may be paid if an exchange offers more security features, protections, or other essential features.
Some exchanges charge fees based on a spread or margin above the market price. Some exchanges charge a flat fee or a percentage of the total purchase. This can vary depending on where you live, how you pay, and many other factors. _
Many exchanges that offer more trading options use a fee structure based on market price fluctuations. These fees are known as maker-taker charges. You will be charged a “taker” fee if you purchase at the current market price. You can also set a price and wait for the markets to reach it. This is known as a limit or order, and it incurs a “maker’ fee.
Before signing up, make sure you are aware of the fees that you will be charged. You can find out more information on the exchange’s site. It is important to state the fee structure when you make your purchase. However, it can be helpful to factor that cost in beforehand so that you don’t pay more than you expect.
Not all exchanges offer every single cryptocurrency out there.
While popular coins such as Bitcoin (BTC), Ethereum (ETH) can be found on most cryptocurrency exchanges, niche altcoins might only be available on a few. Experts recommend that new investors stick with the big two cryptos and popular exchanges such as Coinbase.
Fund Your Account
You may be required to provide certain information depending on which exchange you select when you open your account. This could include your Social Security Number, ID, and source of income.
You can connect your debit or bank card to most exchanges to send U.S. Dollars into your exchange account. You may have to pay different fees depending on the method you use for funding your account. Usually, bank transfers are cheaper than options that can be used with a debit card.
Funding your account is not the same thing as buying crypto. You don’t want any uninvested funds sitting in your account, just like traditional investing. After you have funded your account, you will still need to convert your dollars into Bitcoin.
Place an Order
After you have connected your payment method, you can place your order for Bitcoin. The process will vary depending on which exchange you use.
If you use a platform such as Coinbase or PayPal, you can input the amount in dollars you wish to trade for Bitcoin and then buy at the current rate (after accounting for fees).
You may be able to place limit and market orders if you are using a more active exchange, such as Coinbase Pro. Market orders allow you to purchase cryptocurrency at the current market price. Limit orders allow you to set a fee for the cryptocurrency. The currency will be automatically purchased once it reaches this point.
You will likely buy a fraction of a coin with Bitcoin. In recent months, a single currency traded for around $30,000 to $60,000. The exchange will reflect the percentage of total Bitcoin you have invested. Example: If you invest $1,000 at Bitcoin’s July value of $34,000, it will show that you have a 0.029 Bitcoin span.
Practice Safe Storage
You can leave your investment in your account with many exchanges, which is the easiest way for beginners. If you wish to secure your digital assets further, you can transfer them into cryptocurrency wallets.
A cryptocurrency wallet allows you to store digital currency. There are many types of cryptocurrency wallets, each with different levels of security.
You may be able to transfer coins quickly from your exchange account to your wallet by using a wallet option. Third-party software and cold storage on an offline device are also options.
It’s unnecessary to transfer your cryptocurrency holdings into a separate wallet if you don’t want to.
You can’t move your crypto coins to your storage device on some platforms, such as Venmo and PayPal. It would be best to consider whether this option is available before you purchase for offline security or because you might want to trade on another platform.
Alternative Ways To Buy Bitcoin
It is possible to now also buy crypto using digital payment platforms such as Venmo, PayPal, and Cash App. They might not be suitable for everyone.
You can’t transfer your crypto holdings to PayPal, Venmo, or Robinhood. Your private keys will remain on the platform. These platforms are not suitable for crypto enthusiasts who adhere to the crypto mantra “not your keys, but your coins.” These platforms can charge high fees to buy and sell cryptocurrencies. They also often only offer Bitcoin, so it is worth comparing their prices with more traditional exchanges.
These apps may be an easy way to buy Bitcoin. You can buy Bitcoin using your Venmo and Cash App accounts. This is a more convenient option than Coinbase or Gemini. You also learn more about cryptocurrency investing. However, keep in mind that these apps may limit your ability to transfer cryptocurrency to other platforms if you reach a higher crypto position.
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