How to invest in bitcoin?
Bitcoin is a well-known cryptocurrency that offers tech enthusiasts an alternative form of money. Cryptocurrencies such as Bitcoin offer a relatively new method of tracking and verifying asset ownership, which enables the Bitcoin network to operate. In addition to functioning as a mode of payment , many people buy and hold Bitcoin as an investment, although it’s important to note that Bitcoin investments are extremely risky.
If you want to join the ranks of Bitcoin investors, you have several options to buy the world’s biggest and most popular cryptocurrency. Here’s a detailed look at the required steps to buy Bitcoin.
How to Invest in Bitcoin in 4 Steps?
The easiest way for most people to buy Bitcoin is through a brokerage account or cryptocurrency . You can buy Bitcoin using most digital wallets as well, but in this section we will focus on the easiest way to buy:
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Choose the Right Bitcoin Exchange or Brokerage
Start your Bitcoin purchase by choosing the best place to buy and store your digital currency. Popular places to buy Bitcoin include Coinbase, Robinhood, eToro, FTX, Gemini, and BlockFi, among many others. Take note of fees and the reputation of the exchange when picking where to buy Bitcoin. Also, if you plan to transfer your Bitcoin out of the brokerage account, make sure that feature is supported, as not all brokerages give you that option.
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Open an Account With Bitcoin Support
Once you’ve picked your ideal account, it’s time to open your brokerage or cryptocurrency account. For those in the United States, plan on sharing your basic contact information and valid identification to meet the exchange’s know your customer (KYC) requirements.
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Fund Your Account With Fiat (Government-Backed) Currency
Once your account is open, it’s time to add funds. The fastest and cheapest way is typically with an online funds transfer from a connected bank account. Depending on your exchange, you may also be able to use payment apps like PayPal. Some cryptocurrency exchanges give you instant access to trade, while others may require you to wait for funds to clear before buying. If you can buy cryptocurrency immediately, you may have to wait until the deposit clears before you can withdraw funds from the account.
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Enter a Purchase Order
When you think the moment is right, click the buy button to enter an order. The exchange will turn your dollars into Bitcoin, stored in the same cryptocurrency account, similar to holding stocks in a brokerage account. Once your trade executes, you are officially a Bitcoin owner.
What do you need to know before you invest in bitcoin?
Bitcoin is an exciting digital currency that began an online currency and digital asset revolution. Bitcoin uses a triple-entry bookkeeping system that powers a decentralized system run by many participating computers around the world, known as miners. Bitcoin was first created in 2009 and reached a peak value of more than $60,000 per coin in early 2021. However, the price is highly volatile compared to other assets, such as stocks and diverse ETF.
If you move forward and make a Bitcoin purchase, you can choose between storing your Bitcoin in the same exchange account you used to buy the currency or external software, hardware, or paper cryptocurrency. Offline storage with a hardware wallet, known as cold storage, is considered the safest and most secure place to keep your bitcoin.
As mentioned, Bitcoin is a relatively new and risky asset. While it’s possible that Bitcoin could double, triple, or even 10x in value over a short period of time, it could also drop to zero. Bitcoin is also susceptible to government actions and could be made illegal or severely limited, as recently happened in China.1 With Bitcoin or any other cryptocurrency, only invest what you can afford to lose.
