Bitcoin is a digital currency, just like other cryptocurrencies that have a value. Bitcoins are used as a medium of exchange from peer-to-peer, and no banks or central government is involved. Bitcoin system work on blockchain technology that makes sure the user’s bitcoins are safe from fraud. The numbers of bitcoins that are in circulation at present are 21 million. The bitcoin system was created by an individual or a group of individuals named Satoshi Nakamoto in 2009. The main idea of making the bitcoin was to eliminate the need for middlemen t complete the transactions; middlemen are “banks.”
The market of cryptocurrencies is highly unpredictable. The first time when a transaction was done was to pay for pizzas in exchange for 10,000 bitcoins. At that time, bitcoin’s value was negligible, but in today’s time, it is attaining a peak. Even the experts can’t predict the price of it. The cost of bitcoin depends on various factors, but the most important one is investors’ trust.
There are numerous things that a new bitcoin investor must know, and those things include personal identification documents, digital wallet, secure internet connection, bank account for cryptocurrency exchange, and more.
Here in this article, we will understand the steps that are included in investing in bitcoins. This is especially for first-time investors or beginners:
Get a bitcoin wallet.
The first step towards investing in bitcoin is to get a bitcoin wallet. A bitcoin wallet is a digital wallet that virtually stores the bitcoin and keeps track of all the transactions. There are many different types of bitcoin wallets, and the user can choose anyone according to their needs.
The two main types of bitcoin wallets are hardware and software wallets. Software wallets are similar to mobile applications that get connected to the bank account of the user. Coinbase is one of the best-known software wallets. Hardware wallets are similar to traditional wallets but are known to be safer and secure as they are offline. The best types of hardware wallets are Ledger and Trezor.
Connect wallet with a bank account
The user needs to connect their wallet to a debit card/credit card and a bank account to purchase bitcoin. These methods for making the payments perform similar functions. The transactions that are made using the bank account usually take over four days for the new investors. But once the user links their bank account to the bitcoin wallet, the user can easily buy or sell the bitcoins.
When we talk about debit/credit cards, these allow buying the bitcoins instantly. The main drawback of using debit/credit cards is that these are used to buy bitcoins and not allow selling the bitcoins and depositing money into the bank accounts.
Link a bitcoin exchange Bitcoin exchange is an online place to trade the bitcoins to exchange traditional currencies like exchanging bitcoins for dollars. When a user buys bitcoin online, they are offered two options. No two bitcoin exchanges are the same, and they offer different services as well. Different bitcoin exchanges vary in reliability, processing fees, cryptocurrencies available, exchange rates, reputation, and security for trading. The user must do proper research before fixing a bitcoin exchange for exchange.
Place the order
All the setup is completed, and the user can now start to buy and sell the bitcoins. The first time buyers must keep in mind that no doubt, a bitcoin’s value is around a thousand dollars, but still, they can get divided up to decimal points. The analysts fixed the smallest unit of bitcoin as Satoshi. The bitcoin is the market is very volatile, but if the prices reach the sky, you can still buy a tiny fraction called Satoshi.
The steps mentioned above are for the beginner’s who are entering into the world of cryptocurrencies and wanting to invest in bitcoins. It is good to know every fact and step involved in investing in bitcoins. Also, bitcoin investing involves some security and technical issues; therefore, for investors, it is better to know about every detail before they start investing in bitcoins.
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Be Ready for a Wild Ride!
Bitcoin has had a lot of ups and downs over the years. This chart from CoinDesk shows the price performance of Bitcoin from 2013 to the present. (Click on “all” at the top of the chart.) At the beginning of the chart back in 2013, Bitcoin was trading below $130.00. But it skyrocketed to $17,060.55 on December 11, 2017, before crashing again a few months later. In 2021, it started to jump again, getting close to $50,000 on February 16, 2021.
No matter where or how you decide to buy, sell and store your cryptocurrency, be prepared for instability. Cryptocurrencies are far less predictable than traditional investments. And with any investment, it’s key to remember that what goes up can come down again.
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