How to buy Bitcoin – the beginners Guide [Tutorial]
Bitcoin, the world’s most popular cryptocurrency was once trading at only $0.10. It started in February 2011 when the digital currency exceeded $1 which a historic milestone until that time. Moreover, the once cryptocurrency trading at crumbs has reached impressive highs hitting $19,000 in December 2017. If you are an investor, you know what it means. The growth of bitcoin price at that moment suggests that you would have earned $19 Million in 2017 if you invested $1,000 the year 2011. That was undeniably a huge amount, isn’t it?
The very moment you made a choice to dive into the world of Bitcoin, you will definitely get lost if you don’t know the way to take and the place best to start. But don’t worry because here, we are going to show you the things you have to know and bring you some tips you might consider before joining in the lucrative cryptoasset market. Prior to that, here are the basics of Bitcoins you need to know.
- 1 How to buy Bitcoin – the beginners Guide [Tutorial]
- 1.1 What is Bitcoin?
- 1.2 Quick Facts About Bitcoin
- 1.3 What is Blockchain?
- 1.4 What Makes Bitcoin Valuable and How it Works Like Money
- 1.5 Where to Find Bitcoin?
- 1.6 Cold Storage Wallet: Why Do I Need It?
- 1.7 Investing in Bitcoin: Buy, Sell, and Secure
- 1.8 Buy Bitcoin on Coinbase
- 1.9 Exchanges you shouldnt miss when you want to trade crypto
- 1.10 How to Sell Bitcoins?
- 1.11 Best Bitcoin Exchanges
- 1.12 Storing Bitcoin in a Cryptographically Secure Wallet
- 1.13 When is the Best Time to Invest in Bitcoin?
- 1.14 Bitcoin and Its Worth
- 1.15 Investing Bitcoins in 01K or IRA
- 1.16 Things You Need to Know before Investing in Bitcoin
- 1.17 What Comes After Bitcoin
- 1.18 Conclusion
- 1.19 Bitcoin News
What is Bitcoin?
Basically, Bitcoin is the very first fully decentralized cryptocurrency in the world that has a worldwide payment system enabling parties to make a transaction without involving a third party. The said digital currency was founded by Satoshi Nakamoto the year 2009 which was the first decentralized digital currency that works even without an administrator or a central bank.
The peer-to-peer transactions of Bitcoin are based and direct on blockchain technology. So, when someone initiated a transaction, it is announced on the network of blockchain before being stored on a public ledger. This ensures the transparency and integrity of the cryptocurrency. As a long term asset, Bitcoin comprises both utility value as well as great speculative value.
If you are wondering how Bitcoin generate new coins, we’ll take the answer on fiat currency. A government decides about the printing and distribution of the traditional paper currency. Now, since Bitcoin is not managed by any central bank or government, new coins are generally created through mining. It is basically the process of validating transactions or blocks in a network. Miners, on the other hand, utilizes their computer power to solve complex algorithms to get a Bitcoin as a reward.
Bitcoin mining involves expensive hardware and the use of electricity which makes it costly. In the early days of bitcoin, a miner could use a PC or even a Laptop to mine. However, the mining process becomes harder and it requires a lot of resources and energy to be rewarded. Considering all of these, people gradually lose interest in mining bitcoin. But not for those who mine on a large scale, located in a place with low-cost electricity, or those have a huge fund to buy and set up a bitcoin farm.
What is Blockchain?
Blockchain makes sure that all transactions in a digital ledger are verified cryptographically. Bitcoin Blockchain involves a mining algorithm commonly called as proof-of-work which has a cryptographic, distributed, and immutable database.
In general, the private sector of the financial sector industries allows Blockchain to advance the current IT architecture we have today. More so, anyone can connect to a public Blockchain network like Bitcoin as long as they have the right software and hardware. Smart Bitcoin Investments focuses on public Blockchains and crytoassets, the native assets of Blockchains.
What Makes Bitcoin Valuable and How it Works Like Money
Bitcoin is cryptographically supported by Blockchain and it is the first ever digital currency in the world. Its major purpose is to introduce the world with Blockchain technology and store value. Because of this, numerous people dive into the world of bitcoin opting for its functionality as money at the same time. It is also utilized as a store of value for long term investments depending on Bitcoin’s current price.
Every 4 years, block size decreases which makes it harder for miners to keep up with the advancement of Bitcoin mining. Miners also verify new Bitcoin cryptographically and append it to Blockchain. Their value also escalates over time along with the maturity of Bitcoin and increase of transaction fees. Moreover, the community of legitimate miners of Bitcoin across the globe optimizes the trust, value, and ownership of Bitcoin as individual transaction cryptographically verified by computers.
Where to Find Bitcoin?
There are three completely different ways you can utilize to acquire Bitcoin. The first methods are through Mining. It is basically earning BTC as a reward for completing mathematical formulas in Bitcoin blockchain. The next method of acquiring bitcoin is by Purchasing. You can purchase this digital currency from legitimate Bitcoin exchange. Nowadays, finding the right bitcoin exchange where you can buy this digital currency is easier since there is a whole spectrum of reliable bitcoin exchange online that you can choose from. Lastly, you can use the method of Trading to acquire this cryptocurrency. You can do this with the help of trusted Bitcoin buy and sell near you.
You will learn more about how to buy bitcoin and trading Bitcoin throughout this guide and learn how to securely store it in a cold storage wallet. It is your advantage if you know about these important things before plunging into the world of this digital currency.
Cold Storage Wallet: Why Do I Need It?
A cold storage wallet helps to avoid the risk of theft or loss of Bitcoins. This is applicable when situations like Internet outage, environmental disaster, electrical meltdown, or hacking takes place. There are instances in the past where particular exchanges are hacked which caused Millions of cyrptoassets to be stolen like the case of Mt. Gox year 2014.
For this reason, we highly recommend the use of cold storage wallet to store Bitcoins as well as other digital currency. Up to date, there are different types of cold storage wallets you can choose from and each of them is unique making them suitable for different needs. This includes cloud, paper, hardware wallets, and among others.
In line with this, you can imagine using a hardware wallet as a vault that protects your cryptoassets. This is the reason why we strongly emphasize the importance of this tool in order to keep your Bitcoins strictly protected against existing threats surrounding it. For more information about this, you can take a look at our list of best bitcoin wallets here to see which may help you out with your needs.
On the other hand, IRA is another way to keep your Bitcoin investments secure at a higher level. You can see more about how to invest Bitcoin in 401k or IRA in here.
Investing in Bitcoin: Buy, Sell, and Secure
For beginners, it is very important to get an easy to use bitcoin wallet first. Digital currency exchanges mostly work as a wallet where you can buy and sell bitcoins as well as other types of cryptocurrencies. Despite the fact that Coinbase is insured by FDIC backed with a venture, it is still not recommended to keep your Bitcoin on such places for a long time. Because if it does, you are only risking your hard work and money in a possible loss that may be caused by hackers, malware, viruses, and more. Learn the way to find a cold storage wallet that can secure your bitcoin as you continue to read on this article.
Coinbase, for example, is a multifunctional wallet that provides every investor the ability to create alerts, track prices, as well as to add different cryptocurrencies they allow. They enable users to create and name their wallets in which you can learn in a more detailed and clear explanation here.
How to Sell Bitcoins?
If Bitcoin price increases and you gain profit in your initial investment, you may cash out by converting them to fiat currency using your Coinbase account. There are two methods to sell:
Online Marketplace like Coinbase
You can sell bitcoins in Coinbase instantly while following the simple process as buying. Just select “Sell page”, select the number of bitcoins you wish to sell, the wallet, and select the account where the converted money goes, confirm. Coinbase allows buying and selling of cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, as well as Litecoin. Read more about Coinbase with our full review.
Person to Person
There are existing platforms that help to connect with potential buyers so you can sell your bitcoins through payment methods you prefer. Localbitcoins is one of the most popular sites you may use. Choose whether to advertise as bitcoin seller, go for people who are willing to buy, or wait for interested parties to reach you out. We recommend setting up Localbitcoins account first to utilize their escrow services for your transactions. Aside from that, general safety rules apply as well in every transaction you make on the internet.
Best Bitcoin Exchanges
Finding the best bitcoin and cryptocurrency exchanges with fast bitcoins and altcoins purchasing process is not that easy. But to help you out, we have a list of exchanges involving our top choices where you can start.
Storing Bitcoin in a Cryptographically Secure Wallet
Exchanges are ideal places to buy and exchange bitcoins for other cryptoassets but are not as ideal as storage. Previously, cryptocurrency exchanges are hacked and the most recent is Coincheck where hackers took more than $400 Million worth of cryptocurrencies. To avoid these situations, it is best if you set up a bitcoin wallet and transfer everything after purchase.
There are two types of wallet: a hot wallet (online) cold storage wallet (offline). Each has its own advantage and disadvantage so your choice relies on whether you prefer having regular quick access to your cryptoassets and the number of bitcoins you want to store.
Cold Wallet vs Hot Wallet
A hot wallet is like a checking account that works like liquid. People mostly store a small number of cryptoassets for purchasing transactions.
On the other hand, a cold wallet is like a savings account stored in vault security. Investors having a huge amount of cryptoassets commonly utilize it to store most of their assets. Hackers are not able to steal digital assets in a cold wallet.
Online Wallets/Hot Wallet
Online wallets commonly arrive with user-friendly interfaces and they offer faster access to your bitcoins. But since they work online, these wallets are prone to hackers so make sure not to store huge amounts of your cryptoassets on them.
If you are a beginner in using bitcoin and you wish to start with a small amount, an offline wallet is not your option. Begin with web-based wallets like Coinbase or blockchain.info. if you choose Coinbase, it must have a multi-signature wallet o Coinbase vault for stronger security.
You may also use desktop wallets. Download them online and you’re ready to store your bitcoins offline. They are incredibly easy to use but offers limited access since you can only use them through the laptop or computer where the software is installed. Some of the best desktop wallets are Armory and Exodus.
Mobile wallets are also available, which are online based. These come with tons of features to boost usability and security and they allow you to access your cryptoassets anytime and anywhere with your mobile device. Make sure to use 2FA to secure your digital assets every time you open the wallets. What’s dangerous about mobile wallets is that your assets have the possibility to be at risk the moment you lose your device, attached by keyloggers, malware, or viruses. Some of the good mobile wallets today include BRB Wallet, Jaxx, and Mycelium.
Offline Wallets/Cold Storage Wallet
Offline wallets are undeniably the most secure and ideal for people wish to store a vast number of bitcoins for a long time. Storing your cryptoassets offline means hackers won’t be able to access them as well as being compromised by malware and the likes.
A hardware wallet is another example of offline cold storage wallet known to be the most secure method to keep an enormous number of bitcoins. Here’s how it works: purchase an external device for intended for storing bitcoins then plug it to your computer. Afterward, transfer your bitcoins to the device. Some hardware wallets come with tiny screen making the operation easier. Although new users might find them cumbersome and these are hard to find because they are mostly sold out. Purchase one immediately if you have the chance.
Try Cryptopay prepaid card or the Wirex VISA payment card if you think that a hardware wallet is not for you. These works as both cold storage hardware wallets and payment cards, in fact, they could be even more convenient especially if you intend to use your bitcoins on your vacation or at the supermarket.
A paper wallet is another offline wallet having the same security of its hardware equivalent. Basically, it is a document comprising information about the private keys of your bitcoin which is completely safe from hackers, viruses, phishing attacks, and more. Get one from BitAddress.org.
Note: Make sure to secure your private key whatever option you choose. Imagine it as your banking pin and never disclose it to anyone online or offline. Private keys are targeted by most phishing attacks so thieves can have to access to your wallet.
When is the Best Time to Invest in Bitcoin?
Knowing the right time to invest in bitcoin is tricky. It is especially that the market of cryptocurrency can be volatile, and the prices keep constantly changing every single day. More so, there is nothing like the best time to invest. However, just like any other cryptocurrency market, the best time to buy bitcoin is when dip exists. Snowball, a cryptocurrency investing application can help you schedule your movements. But consider that bitcoin value might be expected to increase yet prices completely depends on speculation. So, if your goal in investing is set to long-term, think about investing earlier and learn how to buy bitcoin even more earlier.
Bitcoin and Its Worth
Bitcoin is a complex asset. Since it is digital, it could easily be converted to dollars, ethereum, gold, stocks, and a whole spectrum of other commodities you prefer. Moreover, its data is unchangeable and you can think of it as a borderless currency. As a blockchain application, bitcoin has shown extreme potential as a store of value that works like money since its 10 years of existence. Up to date, several services, as well as companies, are using the blockchain or bitcoin in across their business practices.
What makes bitcoin worth investing depends on its existing rate while built services and applications are increasing. Fresh blockchain applications need time and skill for programmers and executives to design, test, as well as implement ideas. Most likely, businesses will support bitcoin as a method of transaction which means the potential outlook of applications backed by blockchain and bitcoin are incredibly possible.
Investing Bitcoins in 01K or IRA
IRS or Internal Revenue Services implements a law that digital currencies including bitcoin have a corresponding value in fiat currencies. This is so they can be utilized for purchasing goods or acquiring services. Now the question is, “can you use bitcoins to fund your IRA or 401K”?
IRS hasn’t announced any rules yet in terms of bitcoin requirement plans. However, since it imposed a law that cryptocurrencies must have an equal value unreal currencies, having an IRA or 401K investment is safe.
The value of bitcoin has a huge chance to continue maturing if it consistently earns greater acceptance worldwide. More so, it is ideal to fund your IRA or 401K given that owning a bitcoin IRA or 401K implies that you invested in assets that are non-collateral.
Just like in other investments, prediction of exact future bitcoin value is impossible, in fact, it is completely speculative. But in our situation today, your investment in 401K or IRA bitcoin has the possibility to become very profitable after a long time. It is especially with factoring in tax savings.
How Does it Work?
Traditional IRAs has great similarity with bitcoin IRA or 401K. What you have to do is to take care of your securities and utilize the investments to purchase bitcoins. There are two options you can have in this kind of investment. First, you can choose Roth IRA along with after-taxed assets which are applicable if you are below 70 ½ years. The other one is to select a traditional IRA along with pre-taxed assets.
Bitcoin IRAs are managed using certain custodians which is similar to 401Ks or IRAs in terms of precious metals and collectibles. The choice is yours in terms of selecting the investment vehicle that works best for you. However, make sure to only choose accredited providers who could make your investment dreams come true. Know more about using Roth 401K or IRA retirement account to invest in bitcoin with our definitive guide.
We recommend choosing IRA custodian capable of providing you both cryptocurrency IRA services and precious metals to perfectly match the portfolio. This build up a portfolio that could help you protect yourself against all kinds of financial situations. One of the best examples is the Regal IRA coming from Regal Assets.
Things You Need to Know before Investing in Bitcoin
Investing in Bitcoin can be a profitable venture, but it comes with risks that you must also consider. Before investing your money to cryptocurrency, here are some things you need to know.
1. Invest with your own measure
Earlier, I mentioned that the prices of bitcoin completely depends on speculation. More so, it is a wise way to invest what you can only afford to lose. Given that investing in bitcoin is risky, you must not invest all of your life savings thinking that you can earn a great amount in a given period of time. Develop a clear investment strategy and allocate some percentage of your income to it. There is a possibility everything will work according to your plan but if it’s not the case, at least you won’t end up broke.
2. Think About Long-Term Investment
You must have a strong motivation to invest in bitcoin. There are chances when its prices are about $1,000 today but turn $700 the next day. There are many happenings similar to this before. More so, if you see bitcoin as an investment utility, better think about it as a long-term investment. There is a great possibility that your long-term investment yields better than simply cashing out when bitcoin price increases.
3. Utilize dollar-cost-averaging when buying bitcoins
Let’s say that you are planning to invest in the long-term. More so, don’t purchase an enormous number of bitcoins in a single trade. Just like what I mentioned a while ago, this digital currency has varying prices. Therefore, it is helpful to schedule your purchases at different times. If something goes wrong, at least you will not lose your entire investment. Read here how to read chards as well as analyze prices in order to know the right time to purchase bitcoin. Our live real-time Bitcoin price chart is here so better to check it out.
4. Avoid Seller Scams
Bitcoin is surrounded by scams since it involves QR codes in transactions and the fact that users are anonymous. Malicious entities are more than ready to take advantage of these factors and targets unsuspecting investors. For this reason, do not ever purchase your bitcoins in random places and utilize legitimate exchange instead. This includes Coinbase, Paxful, CRX.IO, Coinmama, Changelly, Localbitcoins and along with other exchanges available today!
What Comes After Bitcoin
Bitcoin has an optimistic outlook despite the fact of whether bitcoin is bearish or bullish to you. Over 10 years ago, blockchain has paved the way for bitcoin to become the first ever digital currency in the world. Today, bitcoin is being utilized by educational institutions, financial institutions, governments, and more have the ability to secure data with transparency and immutability inside of private blockchains. As a result, the technology of blockchain is on its way to disrupt many industries while bitcoin leads as a public crypto asset. Furthermore, the value of this digital currency, as well as the number of those who utilize it, will surely grow as tons of apps and services develops on top of Bitcoin.
Since Bitcoin was introduced, many investors show great interest in digital cryptocurrency. It was once just a newly found concept in the year 2009 which rewarded those who took the chance to commit their time and some money to it in a generous way. It is expected that the price of bitcoin will mature over time especially that it is currently receiving mainstream attention.
This is an important factor that could increase the price of this cryptocurrency. Once you decide to join the pool and finally invest in the digital currency, dive in, it is never too late for you to experience incredibly profit. But as a beginner, you have to be careful since the market of bitcoin is greatly volatile.
When the cryptocurrency no longer provides profit and selling need you to study everything about how to buy bitcoin including its ins and outs, that’s the moment you have to utilize the right secure wallet for you if you still decide to purchase digital currency.
This will help you gain once bitcoin prices go up. More so, think about it as a long-term investment that will allow you to earn a great amount in the future. Also, use only legitimate platforms for your transactions. Take a chance, investing in bitcoin today might bring you good fortune tomorrow!
P.S. If you are looking for more resources that could help you start investing in Bitcoin, see more of our helpful information on our resources page.