Bitcoin is the oldest and most successful cryptocurrency. Although it is fairly simple to acquire Bitcoin through a secure crypto exchange, the process can be overwhelming for some people especially if they are new to the cryptocurrency market.
Aspects that make it difficult to acquire Bitcoin include the complex verification process, variable payment methods, availability of exchanges, and inadequacy of technical knowledge. The market volatility of Bitcoin can also play a role in making the process difficult. If you are interested in buying Bitcoin but do not know a safe way to do it, then this article is for you.
But before getting into the know-how of buying Bitcoin, you should have basic knowledge of what Bitcoin is and the advantages of investing your hard-earned money in it.
What is Bitcoin?
Bitcoin is a nontangible digital asset known as cryptocurrency. It only exists in the virtual world and does not have any tangible value in real life. However, Bitcoin offers several utilities that other traditional currencies cannot offer including better security, privacy, and the ability to use it for international transactions without losing its value.
Bitcoin is made on blockchain technology where the transaction is facilitated through a peer-to-peer network connecting multiple individual machines called nodes. It does not have a centralized control system, meaning that you do not need the involvement of a third-party authority such as banks in your transactions.
Why Buy Bitcoin?
Although Bitcoin has a popularity that can rival any other asset in the world, not many people are still convinced by its potential. It could be because of the high volatility of the cryptocurrency. Many influential financial experts have had polarising opinions about the future of Bitcoin even from its early stages. However, Bitcoin stands tall as the most valuable cryptocurrency after 15 years from its inception.
Here are some of the reasons why investors choose to buy Bitcoin:
Futuristic Technology
While Bitcoin and blockchain technology were introduced back in 2009, experts still believe that the technology is still in its infancy. It is said that the peer-to-peer distributed networking structure of blockchain technology has the potential to transform not just the financial industries, but all other industries that handle data over interconnected computers such as supply chains, healthcare, and more.
By using blockchain technology, industries can remove trusted intermediaries with distributed ledger technology. IBM has already started a blockchain-based food safety and transferability solution, giving investors confidence that Blockchain technology and Bitcoin can stand the test of time.
A Censorship-Resistant Investment
One of the major drawbacks of fiat money is that a government body can dilute its value through inflation, making it a bad long-term store value. In contrast, Bitcoin’s total supply is fixed and it is capped by mathematical supply. The total supply of Bitcoin is limited to 21 million. No one can issue more after mining all the 21 million Bitcoins, making it a potentially good long-term investment.
Shopping or payments
Unlike popular belief, cryptocurrencies including Bitcoin are accepted at some stores and service providers as a means of value. The things you can buy with Bitcoin in 2024 include real estate, cars, games, expensive watches, electronics, and almost all other products you can buy with fiat currency. However, only a few companies accept direct Bitcoin payments. You may also use a Bitcoin debit/credit card as you use any other credit/debit card.
Transactional Speed
Since fiat currency transactions almost always have to go through a centralized financial institution, normal fund transactions from one account to another can take days to complete. For wire transfers, it will take about 24 hours to reflect your transaction. But in Bitcoin, the transactions happen in minutes.
Low Transaction Fee
In the United States, credit card issuers usually charge 1-3% transaction fees for overseas payments. Whereas, Bitcoin transactions can be facilitated free of cost or at a negligible fee. This means that you do not have to pay extra or lose money when doing overseas transactions with Bitcoin.
Potential Profitability
One of the major incentives for investing in Bitcoin is its potential profitability. Bitcoin’s value can fluctuate according to market conditions and many other factors. If you pay close attention to the fluctuations, you can make a profit either by buying or selling Bitcoin.
Better Security
Bitcoin uses cryptography to provide security to the investors. It works by giving the investors two cryptographic codes similar to passwords which are called private and public keys. The keys allow users to accept and sign crypto transactions over the blockchain network.
While the public key is visible to everyone, the user should keep the private key secret to ensure security. Only a person with both keys can access the cryptocurrency.
Where to Buy Bitcoin From?
You can buy Bitcoin from hundreds of venues on the internet. The platforms that offer a place to buy or sell Bitcoin can be listed in the below categories:
Cryptocurrency exchanges
Exchanges are the most popular place for buying and selling Bitcoin and many other cryptocurrencies. Some of the popular examples include Coinbase, Gemini, Binance, and more.
Brokers
Another way of buying Bitcoin is through brokers. While brokers usually allow users to invest in stocks, bonds, mutual funds, and other tangible assets some also offer buying and selling of cryptocurrencies such as Bitcoin. Some of the popular examples of brokers include Robinhood, Interactive Brokers, Webull, etc.
Apps and software
While not being a dedicated platform for cryptocurrencies, some applications allow the user to buy and sell popular cryptocurrencies easily. Apps that most Americans utilize in their daily life such as CashApp, and Venmo are some of the great examples.
How to Buy Bitcoin From Crypto Exchanges?
Crypto exchanges are online platforms that work as brokers giving you the tools you need for buying and selling cryptocurrencies. Let’s learn how you can buy Bitcoin from a crypto exchange:
Step 1: Choose a crypto exchange
There are several crypto exchanges out there both centralized (CEX) and decentralized (DEX). The availability of exchanges can vary according to your jurisdiction. Select one that suits you and set up your account. Depending on the exchange, you may have to verify your personal details.
Step 2: Select a payment method
Usually, crypto exchanges offer a range of payment methods including account transfer, and credit/debit cards. Choose a method that suits you and link it to the platform by entering in the necessary details. Once your payment option is linked, you can start buying cryptocurrency.
Step3: Place an order
Select the cryptocurrency you want to buy, Bitcoin in this case, and place your order. Cryptocurrency exchanges offer different types of orders such as swaps, limit orders, and stop-loss orders. Depending on the exchange you may be also able to set up a recurring investment.
Step 4: Transfer to Your Wallet
The Bitcoin you bought will be available on your exchange. Although you can leave it there, it is best to transfer it to your wallet to ensure better safety and security.
Cryptocurrency Wallets
As we mentioned earlier, you need to have a crypto wallet to store your possession of cryptocurrency safely and securely. Wallets give users complete authority over the cryptocurrency using private keys that only the user would know. A wallet can hold several cryptocurrencies at a time.
Mainly there are two types of crypto wallets. They are:
Hot Wallets
Crypto wallets that exist on the internet are called hot wallets. They are apps or software you can download to computers, mobile phones, or tablets. Usually, exchanges issue hot wallets and they are the custodian of the private keys in your wallet.
This means if the exchange is hacked or goes bankrupt, your crypto investment will be at stake. However, they are best for holding small investments that you are actively using to trade on exchanges.
Cold Wallets
Crypto wallets that cannot be connected to the internet are called cold wallets. This means that the private keys for the cryptocurrency you own are stored in an offline memory location reducing the possibility of hacking and online theft. Cold wallets allow users to check their portfolios without putting their private keys at stake.
Cold wallets can be anything from a white paper that has the public and private keys of the cryptocurrency written in it, or USB-drive devices protected by passwords. If you are trying to store Bitcoin or other cryptocurrencies long-term, cold wallets are the best way to go. Remember not to forget the password to the wallet and the place you have left the wallet.
Is Investing in Bitcoin Worth it?
We have explored some arguments as to why Bitcoin could be a good investment option. However, it also has some downsides.
While many financial experts have a favorable opinion about the potential of cryptocurrency, some disagree. For example, millionaires like Warren Buffet and Bill Gates, and JPMorgan CEO Jamie Dimon, have all expressed their speculation that crypto will come to a bad ending.
However, this kind of risk is also associated with almost all other investment options including oil, gold, other precious metals, and even some of the unicorn companies on the stock market.
Before investing in Bitcoin, you should have a good understanding of the cryptocurrency market. You should only allocate what your financial situation can allocate into cryptocurrency investment. Analyzing the risks and putting strategies to mitigate it can be also beneficial.
Conclusion
Bitcoin is the most valuable cryptocurrency available today. However, many people do not know how they can get a hold of this financial token that has pawed the way to a new financial revolution. In this article, we have seen what Bitcoin is and why you may invest in it.
We have also studied how you can buy Bitcoin from crypto exchanges in detail. Play it safe and find strategies to mitigate any potential risks that may come your way before choosing to invest in Bitcoin.
