A Beginner’s Guide To Buy Bitcoin And Other Cryptocurrencies In 2022
Once you’ve understood the language and have accepted the risk and fulfilled the other financial goals, the next step in investing in crypto is actually buying in.
There are scores of cryptocurrencies, but experts advise caution before you decide to invest in them. Values of crypto fluctuate hourly and this is particularly so for lesser-known currencies as well. Although, more established cryptocurrencies like Ethereum and Bitcoin are not immune to volatility, but they have a higher chance of growing in value in the course of time.
The process for purchasing any cryptocurrency is similar to the procedure for purchasing Bitcoin. However, we’ll use Bitcoin throughout this article since it’s the most sought-after and well-known crypto in the marketplace at present.
How To Buy Cryptocurrency
Below are some steps you need to follow to begin your journey as a brand new crypto investor:
1. Choose An Exchange
Bitcoin isn’t available for purchase through your bank or investment firm at the moment, though some companies are working towards this possibility in the near future. In the meantime, you’ll have to use an exchange platform for cryptocurrency to trade U.S. dollars for Bitcoin or other digital currencies.
There are many cryptocurrency exchanges that you can use to buy cryptocurrency online. Some of the most well-known ones include Coinbase, Gemini, and Kraken. These are online platforms that allow you to purchase and sell cryptocurrency.
Also, there are cryptocurrency trading software to facilitate trading on cryptocurrency exchanges. Bitcoin Era is one such automated cryptocurrency trading software that makes it easy for people to earn passive income
You can narrow your search to find the best platform based on several aspects:
Security
The investments in cryptocurrency are not protected by a central bank like FDIC-insured banks. In the event that your bank account has been compromised or the platform on which you store your money is compromised there is a risk of having to forfeit your investments.
If you are planning to keep your crypto in your exchange account (rather than transfer it to your wallet) be sure to select an exchange that makes use of cold storage that is offline and offers strong security against theft. Certain exchanges also have separate insurance policies to protect users from hacking.
Fees
Exchange fees vary widely and are usually charged as a one-time fee or as a number of your trades. Fees are determined by the volatility of prices and a large portion of them are paid per transaction.
While fees are definitely an issue, experts advise that you receive what you spend, particularly when choosing the larger known exchanges, such as Coinbase. If an exchange offers higher security, greater protection, and other essential features for you, it could be worth a little more in fees.
Certain exchanges charge fees on the spread, or margin, on top of prices on the market. Other exchanges base their fees on a fixed price or percentage of the total purchase. This can differ based on the area of operation, your payment mode, and other variables.
Exchanges that have more active trading options typically employ a fee structure that is based on market price fluctuations also known as maker-taker fees. If you purchase at the current price then you’ll be paid a (usually more expensive) “taker” fee. Also, you can decide on an amount you’d like to purchase and wait for the price to get there. This is known as a limit order and is subject to a “maker” fee.
Be sure to know the costs you’ll have to pay that you can discover on the exchange’s website before you sign up. The fees structure should be clearly mentioned when you purchase your product. It’s a good idea to calculate the cost prior to signing up so that you don’t pay more than you anticipated.
Coins Available
One thing you should know is that there are only a few cryptocurrency exchanges that offer all cryptocurrencies for trading.
Popular coins such as Bitcoin (BTC) as well as Ethereum (ETH) have been readily available on a wide range of crypto exchanges.
However, some niche altcoins might only be available on specific exchanges. Experts recommend sticking to these two main cryptos as well as more popular exchanges like Coinbase. This should not be a problem for new investors.
2. Fund Your Account
Based on the type of exchange you select, you might be required to supply information such as the Social Security number, ID, and source of income at the time you sign up for your account.
For most exchanges, you’ll be able to connect to your bank account or debit card in order to deposit U.S. dollars into your exchange account. There might be various fees depending on the method you choose for funding your account. You should oft for bank transfer as it costs less than card transaction.
Be aware that adding funds to your account isn’t exactly the same as buying cryptocurrency. Similar to traditional investing, it isn’t a good idea to keep money that you haven’t invested in your bank account. When you’ve credited the account you’ll require converting your dollars in exchange for Bitcoin.
3. Place an Order
Once a payment method is in place, you can place your order for Bitcoin. This procedure can vary based on the currency you’re using.
In general, if you’re using a service like Coinbase or PayPal, it is easy to enter the amount in dollars that you would like to exchange for Bitcoin and purchase at the current price (after the accounting of any charges).
If you’re using an exchange that is designed to facilitate more active trading, like Coinbase Pro — you might be able to place market as well as limit orders. Market orders mean that you buy the cryptocurrency in this moment, at the price that is currently in place. A limit order is when you decide on the price you wish in exchange for cryptocurrency. When the cryptocurrency reaches this level, it will automatically be bought.
4. Use Cryptocurrency Wallet
Most exchanges allow you to your bank account. It is a good option for beginners. However, if you’d like to secure those digital investments, you should transfer them into a crypto wallet.
A cryptocurrency wallet is where you keep your digital currency. There are a variety of cryptocurrency wallets that are available at the moment and each one has a different level of security.
The exchange you are using may offer an option to pay with a credit card which allows you to transfer your money from your account at the exchange to a safer wallet. You could also make use of a third-party program or select cold storage with hardware devices that are offline.
Some of the platforms you can use to buy crypto that include PayPal and Venmo, which, however, will not allow you to transfer your crypto onto your personal storage device. You should consider whether this is a feature you’d like to have before buying in order to protect your assets offline, either for the sake of protecting the privacy of your assets or because you might prefer to trade on a different platform in the near future.
Are There Alternative Ways To Buy Bitcoin?
You can also buy crypto using a variety of digital payment platforms you may have accounts with, such as Venmo, PayPal, and Cash App, as well as Robinhood. But these options may not be suitable for all investors.
Paypal and Venmo won’t allow you to transfer your holding to your own cryptocurrency wallet, which means that your private keys will stay on the platform. Robinhood recently announced that it’s launching the first crypto wallet service that allows customers to transfer their money off of platforms. For those who adhere to the popular phrase “not your keys, not your coins,” platforms that do not offer the possibility to take your holding off the platform do not meet the criteria. They may also charge high fees for selling and buying crypto (and generally offer only a handful of coins or just Bitcoin). So, it’s worth considering the fees you’ll pay with more traditional exchanges.
For a beginner, making use of the account of your Venmo as well as Cash App account to buy Bitcoin could be more convenient than using an exchange such as Coinbase or Gemini. Venmo and Cash App allow users to buy in Bitcoin as you are learning more about investing in crypto. However, one thing you should always keep in mind is that in the event where you had a larger crypto position, these apps may restrict you from transferring your holding to another platform.
Follow The Same Steps To Buy Other Cryptocurrencies
Follow the same procedures for buying other cryptocurrencies, just like you would when buying Bitcoin. Keep in mind that experts recommend using the two most popular cryptocurrencies, Bitcoin and Ethereum, for those who want to invest in crypto as long-term investors.
There is a possibility to buy Ethereum on a variety of similar exchanges and platforms you generally buy Bitcoin. If you’re searching for an extremely specific alternative coin (which experts generally don’t recommend investing in) and you’re looking for a specific cryptocurrency then you may need to factor that into the exchange you choose. Although some exchanges offer more than 50 coins, certain platforms offer just a handful in altcoins (on Venmo, for example, it is limited to choosing from four different cryptocurrencies).
If you decide to include Bitcoin or any other altcoin into your portfolio, you must be sure you’re comfortable with the risks of investing in a risky investment in the first place. Don’t invest more than you’re able to lose and do not put your money into something that could result in not achieving your other financial objectives.
Should You Invest In Bitcoin?
Like all investments, it is important to conduct your research first and know what you’re investing in. Be sure that any cryptocurrency investments you make don’t hinder other goals such as paying off your retirement accounts, or the repayment of high-interest debt. Experts suggest that you limit your investments in cryptocurrency to under five percent of your total portfolio.
Bitcoin is a great place for beginners to begin. Being the first digital currency, Bitcoin has the longest history for investors to look at. Since its launch in 2009, Bitcoin is a hugely appreciated asset over the last decade. Many experts compare it to “digital gold” as a permanent store of value.
Although recent price fluctuations highlight the volatility of Bitcoin, experts believe that a small number of cryptocurrencies such as Bitcoin could be a good (if it’s speculative) diversifier to your overall investment plan.
