Cryptocurrency has been getting a lot of attention and Bitcoin is the one that everyone has been talking about. If you are new to bitcoin, you will be wondering how you can get into the currency and buy bitcoin. There are a number of steps that you need to take when you buy bitcoin and they need to be completed correctly to ensure that you buy the currency you want and are safe online.
Before you can look at buying bitcoin, you need to know a bit more about it. You cannot simply go to a currency exchange and ask for bitcoin as you would when changing US Dollars to CDN. This is due to the fact that bitcoin is a decentralized digital currency. To acquire bitcoin, you will need to buy it from a marketplace or exchange.
Bitcoin is created or generated through a mining process which is a digital effort within the blockchain to verify transactions. The blockchain is a public ledger of all bitcoin transactions and involves mathematical problems of varying difficulty to expand.
Buy Or Mine?
At this point, you might be wondering why you will want to buy bitcoin instead of mining. Mining is a very resource heavy process and as the blockchain grows mining becomes harder and harder. It is also important to note that only 6 blocks can be mined every hour so large mining rigs will be able to do this better than you can. Buying bitcoin also speeds up the process of getting the currency and you will not have to worry about having the computer or electrical resources for mining.
Once you have decided that you are going to be buying bitcoin, you need to get a bitcoin wallet. A bitcoin wallet is a digital wallet similar to PayPal where you hold your bitcoin until you are ready to use it. There are many different types of bitcoin wallets and providers so you need to take your time learning about them and seeing what features they have to offer.
There are 4 different types of bitcoin wallets that you can use. The first is a software wallet which is also known as a Hot Wallet. As the name suggests, you will need to download software to use the wallet and the software is generally available for desktop and mobile platforms. It is important to note that some software wallets require you to download the blockchain which is more than 100GB in size. This can be a deal breaker for anyone with limited internet or limited storage space.
There are many software wallets that do not require you to download the blockchain and require very little technical knowledge. While these wallets are considered to be secure, you need to remember that they are only as secure as the computer they are stored on. While it can be hard, it is not impossible for malware to be used to steal your bitcoin wallet information so you need to be careful.
The easiest of the bitcoin wallets to use is an online wallet or web wallet. To create an online wallet, you will need to sign up with a wallet provider in a similar manner to signing up for a PayPal account. You will then be able to access your bitcoin from any device that has a connection to the internet.
The ease of use of these wallets does come with a trade-off. This trade-off is the fact that your private bitcoin keys will be stored on a server which could be vulnerable to hackers. It is recommended that you only use an online wallet for small transactions and hold your bitcoin in a more secure wallet which is offline.
One of the more secure wallet options is a paper wallet. As the name suggests, you will be printing out the public and private keys for your bitcoin. This is considered very secure because you will not be saving this information where people can hack into it, instead, it is stored offline in a physical form.
As with all bitcoin wallets, there is a trade-off that comes with paper wallets. The fact that you are storing everything on paper can lead to issues such as the paper being torn or destroyed. If you are going to use a paper wallet, you need to make multiple copies and store them in a secure location.
The last type of bitcoin wallet is the hardware wallet and it is also one of the most secure. A hardware wallet is a device like a USB which is plugged into your computer while you complete transactions. All of your data will be stored on the device which is secure from online and computer malware while providing offline storage within the device.
Hardware wallets are very convenient and will not require any technical knowledge to use. They also provide backup options so you will never lose access to your funds. You can place additional security on the device by having it password protected.
When choosing a wallet, most people opt for an online wallet to complete their first transaction. However, if you are going to continue buying bitcoin or are going to be storing your bitcoin, an offline wallet is recommended.
Choosing The Right Trader
When buying bitcoin, you can either work with a broker or buy it yourself. Most people will choose to buy bitcoin without a broker because they are not going to be buying the amounts which justify the use of a broker’s services. If you are buying without a broker, the easiest solution is to use a bitcoin exchange.
There are many exchanges out there and they all have their pros and cons. There are varying levels of performance for the exchanges and some are more trustworthy than others. There are also some exchanges that are very limited and you might want to avoid these ones. Picking the right exchange is very important because it can affect your overall buying experience.
It is easy to find a list of exchanges with a simple Google search. It is recommended that you compare these exchanges to find the one that works for you. When comparing, you should look at the fees which will be charged and the payment methods that are offered. You should also look at some reviews to assess the experiences that other people have had with the exchange. You should also consider looking at comparison reviews of the exchanges as they will help you determine which features each has to offer.
There is a more direct route to buying bitcoin for those who do not want to go through an exchange. This is to use a peer to peer service where you buy bitcoin directly from the seller. This will cut out the middleman and generally offers a larger range of payment methods. Of course, this is not as secure as the exchanges and you need to be careful particularly if the seller is going to complete the trade for cash in person.
Choose Your Payment Method
Once you have an idea of where you are going to be buying your bitcoin, you need to consider how you are going to be paying for it. The payment options will vary depending on the exchange you are going to use or the seller you are working with. It is important to note that exchanges will not always use the payment method that you want and you have to consider this when buying.
There are certain payment methods that are not used by any of the exchanges because they have been used by scammers in the past. If your preferred payment method is not accepted, you might want to consider an alternative. Cash and certain types of money transfers are not accepted by exchanges.
Most exchanges will accept credit card transactions as well as bank account transactions. However, there will generally be some form of limitation that you need to know about. Wire transfers are accepted by some exchanges, but not by others. The same is true for transfers via PayPal.
Some beginners question whether they can use the small number of bitcoin ATMs which are located in certain cities to buy bitcoin. This is not something that will help you buy bitcoin as they are generally used to exchange bitcoin into cash. These ATMs allow you to withdraw cash from a compatible wallet, but will not let you turn cash into bitcoin.
Buy And Store
Once you have your wallet, know how you are going to pay for the bitcoin and have chosen an exchange, you can buy your bitcoin. Exchanges will generally have information about how many bitcoin you will be able to buy for a set amount of money. However, you need to be careful as the price of bitcoin is always changing.
Bitcoin is volatile in nature and the cost of a single coin can vary from one minute to the next. This means that you need to watch the price and lock in a transaction at the right time. You should also note that you will generally not be buying a full bitcoin.
Unless you have a lot of money to spend on bitcoin, you will never be buying a full coin. This is not actually a problem because most people are only buying fractions of a coin. These fractions will add up over time and eventually you will have an entire bitcoin.
When you start buying, you should not buy the whole amount that you want. It is recommended that you start small when you complete your first trade. Once the trade has been completed, the bitcoin will be stored in an automatically generated account on the exchange. You will then need to have this transferred to your bitcoin wallet. It is important to note that the exchange could charge for the transfer particularly if you want it to be expedited.
Bitcoin transfers can be sporadic which is one of the reasons why you should start small. When you complete a bitcoin trade, the transaction will need to be recorded and verified on the blockchain. This can take time particularly when you are working in the busiest trading house. It is very common for a trade to take an hour or 2 to be completed.
Using Your Bought Bitcoin
Once the bitcoin has been moved from the exchange to your wallet, you need to consider what you are going to be doing with it. As bitcoin fluctuates in value, you need to know what your end game is going to be early on. Regardless of the end game, you will need to be ready to access and use your bitcoin at a moment’s notice.
If you are going to be selling your bitcoin for a profit, you need to create a sellers account on the exchanges in advance. This way, you will be able to sell your bitcoin easily if there is a need. You will also bypass a rush to create an account should there be a panic and other people gave the same idea as you.
If you are going to be buying something with your bitcoin, you need to ensure that the store accepts bitcoin. You also need to reach the fine print and check reviews for the store before you complete a transaction. There could be something lurking in the fine print that you want to avoid or that could undermine the security of your wallet.
There are many steps that you need to take when you buy bitcoin. The most important is finding a good, secure wallet to store your bitcoin. Offline wallets are the most secure, but online wallets are the most user-friendly. You also need to choose an exchange to work with and be patient. Bitcoin transactions can take a few hours to complete at very busy times because they need to be verified on the blockchain and only 6 blocks can be completed per hour.