How to Buy Bitcoin (BTC). Purchasing Bitcoin is frequently an investor’s first step into the realm of cryptocurrencies, and more investors could be considering doing so at this time: Bitcoin saw a long decline in value, but it finished 2023 up around 160%.
Purchasing a cryptocurrency, particularly one as popular as Bitcoin, might be strange for someone accustomed to conventional financial goods. The good news is that there are several methods to purchase Bitcoin and other cryptocurrencies, including through stockbrokers, specialized exchanges, and in-app purchases in some applications related to cryptocurrencies.
Ways to buy Bitcoin
Centralized cryptocurrency exchanges and Bitcoin wallets are two of the most popular methods for purchasing Bitcoin. However, a few money transfer applications and certain conventional internet brokers also allow you to buy Bitcoin. Determine how much Bitcoin you wish to purchase first. Although a single Bitcoin might cost tens of thousands of dollars, you can purchase and sell fractional shares of the cryptocurrency for as little as $25.
An overview of purchasing Bitcoin is provided here:
Exchanges for cryptocurrencies
Exchanges that deal in cryptocurrencies provide bitcoin for sale. Some just provide Bitcoin and a few other cryptocurrencies, while several offer hundreds or even thousands. Make careful research before selecting since they come with a range of various costs and consumer safeguards.
Cryptocurrency exchanges where you can purchase bitcoin include Gemini, Kraken, Coinbase and Crypto.com.
Traditional stockbrokers
There are currently few options among conventional brokers that allow users to purchase and sell Bitcoin; the first was Robinhood, a well-known financial broker that offered Bitcoin (Robinhood Crypto is available in most, but not all, U.S. states). For Bitcoin trades, Robinhood does not impose any fees, much like its stock trading platform. Webull, TradeStation, and Fidelity are a few more online brokers that provide access to Bitcoin and other cryptocurrency trading.
Bitcoin ATMs
Except that you may buy and sell Bitcoin using them, these operate similarly to standard ATMs. They are frequently positioned in establishments like convenience shops where standard ATMs may be found. Make sure you check the costs associated with the transaction before proceeding, and arrange where you will send the Bitcoin when you purchase it.
Trusts or exchange-traded funds.
Spot Bitcoin ETFs, which monitor the price of the cryptocurrency and trade on major exchanges, were available on January 10, 2024, according to the Securities and Exchange Commission. This permission, which has been anticipated for a while, is anticipated to facilitate traditional investors’ access to Bitcoin even further. Trading for the spot Bitcoin ETFs began on January 11, 2024.
But prior to the SEC’s most recent clearance, there were other Bitcoin funds. October 2021 saw the introduction of the first Bitcoin-linked ETF by the financial company ProShares. The fund (ticker: BITO) makes investments in Bitcoin futures contracts rather than actual Bitcoin investments.
Other exchange-traded funds (ETFs) that hold Bitcoin futures contracts or the shares of firms that have substantial Bitcoin or cryptocurrency holdings (or ties to those industries) are also available.
Peer-to-peer money transfer apps
Users of cash transfer services such as PayPal, Venmo, or Cash App can buy Bitcoin with these apps. In case you’re accustomed to their interfaces, it’s helpful that you may buy, store, transmit, and sell Bitcoin directly through the applications.
Wallet software
Certain cryptocurrency applications, including games, wallets, or other blockchain-based web services, enable users purchase and trade digital assets right within the app.
If you use cash in any of these applications, you could find yourself having to complete your order through a third-party service like MoonPay. Although these services might be slightly more expensive than standard exchanges, they have several benefits, such speedy and generally easy transactions.
How to store the Bitcoin you buy
You’ll need a location to store Bitcoin if you decide to buy it.
A hot wallet or a cold wallet are the two types of digital wallets that may hold bitcoin. While a cold wallet frequently includes additional security measures that serve to keep your funds safe but also cause transactions to take longer, transactions using a hot wallet are typically faster.
Hot wallet
With a hot wallet, Bitcoin is kept in the cloud by a reputable exchange or supplier and is accessible online via an app or web browser. Your purchases will be immediately kept in a free Bitcoin hot wallet that you can sign up for with any trading exchange. However, a lot of customers would rather utilize a third-party hot wallet provider, which is usually free to download and use, to transfer and keep their Bitcoin.
Why pick a provider’s wallet instead than an exchange’s? Although proponents assert that Bitcoin’s blockchain technology makes it even more secure than conventional electronic money transfers, hackers are drawn to Bitcoin hot wallets. As to the warning from Bitcoin.org, “In general, these services still do not provide enough insurance and security to be used to store money like a bank. Many exchanges and online wallets suffered from security breaches in the past.”
Cold wallet
With a cold wallet, you may download and carry your Bitcoin on a tiny, portable, encrypted device. Compared to hot wallets, cold wallets are thought to be far more secure and may be purchased for less than $100.
Use two-factor authentication and a secure password while setting up accounts for your digital wallets and currency exchange.
What to do with the Bitcoin you buy
Bitcoin may be used as a means of commerce or as an investment. Therefore, you have three options: spend, trade, or hold. There are a few stores and online services that accept Bitcoin as payment if you’re spending it there.
When investing, it’s a good idea to consider your ideal investor profile. The goal of day trading, a hazardous investing method that entails frequent buying and selling, is for investors to purchase Bitcoin at a discount and sell it if and when its value increases.
However, if you think Bitcoin will survive as a digital currency, your best course of action could be to purchase and hold onto it for the long term.
