The arena of cryptocurrencies is very exciting. If you have decided to be a part of it, many new things will surely await you. Bitcoin is one of the oldest and most established cryptocurrencies. Beginners are often advised to buy this currency out of all others. But purchasing it, especially for the first time, can seem confusing. That is why, in this post, we will tell you the entire process of how do beginners buy Bitcoin.
There are majorly two ways of buying Bitcoin. One is through Bitcoin wallet apps, and the other is through cryptocurrency centralized exchanges. Let us find out more about them below.
The Process to Buy Bitcoin
Here is exactly how to purchase Bitcoin for the first time.
1. Select a Cryptocurrency Wallet
The official Bitcoin website has its own self-custodial Bitcoin.com wallet app. Although you can use a centralized exchange to buy Bitcoin, they can pose a risk to your Bitcoin’s security. The Bitcoin.com wallet app gives you entire control over your cryptocurrency.
- Download the official wallet app of Bitcoin.com.
- Open the app when it downloads and choose ‘Bitcoin (BTC).’
- Hit the ‘Buy’ button.
- Adhere to the pointers on your screen to select your wallet for depositing.
- You have the option to create any number of separate wallets.
- You will need to undergo the process of identity verification if you are buying Bitcoin for the first time.
- Once that is complete, you can proceed with buying Bitcoin.
2. Buy Bitcoin from a Cryptocurrency Exchange
Another way to buy this digital currency is from a cryptocurrency exchange. There are various exchanges that offer Bitcoin along with other currencies. However, all of them charge varying amounts of fees. So, you must research the one from which you plan to purchase Bitcoin thoroughly. It will make you aware of the costs associated with buying Bitcoin.
Here are some of the most popular cryptocurrency exchanges.
3. Use a Peer-to-Peer Trading Platform
There are various platforms through which you can trade in Bitcoin. These platforms let you buy Bitcoin and also provide dispute resolution services. Peer-to-peer exchange platforms do not need you to disclose your identity. So, if you are someone who values privacy, this is a good option for you.
Here is how to use these platforms to buy Bitcoin.
- Explore various peer-to-peer platforms. Get information about their location, credibility, etc.
- Start a trade to lock up your Bitcoin in an escrow account.
- Transfer the appropriate payment to buy Bitcoin via a suitable payment method.
- Wait for the seller to give you a confirmation of the payment receipt.
- Once they confirm the receipt, the Bitcoin will get transferred from the escrow account to your Bitcoin wallet.
- Sometimes, the Bitcoin gets transferred first to the peer-to-peer platform. After that, you can withdraw it to your Bitcoin wallet.
4. Buy Bitcoin with a Credit Card
Certain exchanges let you buy Bitcoin through credit cards. However, this method is only for those who are comfortable with paying processing fees. Processing your credit card can cause you to incur additional charges. So, in all, you will need to pay transaction fees along with processing fees.
Bitcoin purchases are treated as cash advanced by credit card issuers. They charge a good amount of fees and interest rates. Additionally, there is also some risk of fraud. So, choose this method of buying Bitcoin only at your own discretion.
How Much Should You Invest in Bitcoin?
Bitcoin and all other cryptocurrencies work in a similar manner as stocks. There isn’t a limit to how little or more you can invest in stocks. Similar is the case with Bitcoin. There is no defined sum that you can buy.
However, you have the option to choose a small unit of the digital currency and not necessarily the whole cryptocurrency. Financial planners suggest you keep your Bitcoin investment minimal. According to them, an amount of 5% or less of your portfolio is suitable to tie up in cryptocurrency. Some even suggest to invest not more than 1% of your portfolio in cryptocurrency.
Things to Know Before Buying Bitcoin
The world of cryptocurrency, like Bitcoin, is unregulated. This comes with its fair set of risks. Here are some things to know before buying this digital asset.
1. No Legitimate Body Regulates Cryptocurrencies
Bitcoin is not associated with any governmental body or financial institution. It means that whatever amount you invest in Bitcoin is at your own risk. You will not get protection from anywhere if you lose this amount. So, buy Bitcoin only if you are fine with this financial risk. We suggest you buy not only Bitcoin but invest in stocks and other investment mediums. It will help you if the price of Bitcoin goes down.
2. You Will Need to Cash Out Your Bitcoin into Dollars
Bitcoin is stored in a digital wallet. So, you cannot just use them as they are to purchase a commodity. You need to cash them out in a form that’s acceptable by most shops and stores. But this does not apply if you can find a business that accepts Bitcoin as a form of payment. After cashing out your Bitcoin, you can deposit it into your bank account.
3. The Price of Bitcoin Fluctuates Wildly
Bitcoin has grown substantially since the time it was introduced. In late 2017, it witnessed an all-time high. However, soon after a year, it crashed down. So, it is an extremely high-risk investment, more so because it is not regulated by any governmental body. Since the price of Bitcoin fluctuates so much, it is not a good idea to invest your life savings into it. A wise action would be to invest just a small amount you are comfortable with losing.
How do beginners buy Bitcoin from various mediums. Choosing a Bitcoin wallet is the best way to go about it. If you are a beginner, we suggest you carefully research all the options mentioned above. It will help you make an informed decision.