How to Get Started with Buying Bitcoin

Bitcoin, Cryptocurrency, Digital, Money, Electronic

Since its inception in 2009, Bitcoin has been setting trends and disrupting financial markets on a regular basis. At its peak earlier this year, a single Bitcoin was worth almost $60,000 (£43,300), which is not bad going for a currency that was essentially worthless a decade ago. Unsurprisingly, many savvy investors are now hoping to cash in on this lucrative new market.

If you count yourself among those budding hopefuls – but aren’t sure where to start when it comes to jumping on the Bitcoin bandwagon – you probably have a few questions. Indeed, cryptocurrencies in general are such a burgeoning new sector that learning how to buy Bitcoin for the first time can seem like a daunting prospect. But you needn’t worry, since this handy guide will help to break the process down into more easily manageable steps for you. Read on to find out more.

  • Choose your method of purchase

Bitcoins (and other forms of cryptocurrency) are most commonly bought on cryptocurrency exchanges. These decentralised platforms essentiallywork like their forex trading counterparts, matching up buyers and sellers anonymously and facilitating the trade at a price set by the platform. They are certainly the easiest and most widely available method of purchasing Bitcoin, with Coinbase, Kraken and Gemini some of the biggest names in the industry.

However, exchanges like these are not the only method of buying Bitcoin. If you prefer to set the price of your trades yourself, you could opt for a peer-to-peer (P2P) platform. Here, you’ll be connected directly with the other party in the trade and can negotiate your terms – but what you gain in control, you lose in anonymity and potentially in security as well.

  • Set up an e-wallet

As well as sourcing a place to buy Bitcoin, you’ll also need somewhere to store your wealth. Almost all cryptocurrency exchanges offer e-wallets attached to their site, but it might not be the best idea to store sizable assets in these locations. That’s because security is generally not a paramount concern for the sites in question and if the exchange becomes hacked, you run the risk of losing your money.

Instead, it’s a good idea to set up an external wallet which you control the keys to. This could take the form of either a hot wallet or a cold wallet. While there are many differences between the two, the most significant ones are that the former is an online location, while the latter is not connected to the internet (and therefore more secure, if a little less convenient). One simple way to regard these two options is to view a hot wallet as similar to a checking account, where you might keep small sums for day-to-day use, whereas a cold wallet is more like a savings account where you will store larger deposits.

  • Make the purchase

The last stage of the process is the easiest – and the most exciting. With your purchase method decided and your e-wallet in place, you can now go ahead and sanction the transaction. There are a number of ways you can go about this, as well, including bank transfer, debit card, credit card or payment portal. The first two options are the most common and the most straightforward, since they involve minimal risk or restrictions.

Credit cards are another avenue via which you can buy Bitcoin, though the high volatility of the asset means that it’s generally not the most recommended course of action. Payment portals such as PayPal are another option, but these are not offered by many cryptocurrency exchanges, so it’s a good idea to check what is available to you. And hey presto! The Bitcoin is yours.

Confused about acquiring Bitcoin for the first time? Simplifying the process into easily achievable steps is key to understanding and overcoming the challenges within it.

Back to top button