With fluctuations in cryptocurrency and speculations about the potential rise of Bitcoin, a lot of people are looking to diversify their investment portfolios. For the most part, investing in Bitcoin may seem quite tricky or challenging; however, with an in-depth understanding of the way it works, you can simplify the process.
Once you begin trading, you may realize that it’s quite easy and only requires an account at an exchange. If you want to know how to buy Bitcoin, there are a few key factors to consider before making the investment.
1. Trading Account Requirements
There are several things that a potential Bitcoin investor should focus on from the beginning. This includes setting up an exchange account for cryptocurrency, payment method, a stable and secure Internet connection, and personal identification papers as verification, which have become more common.
Moreover, when you think about how to buy Bitcoin, consider setting up a digital wallet on an external Canada crypto exchange platform. As for the payment methods, credit cards, debit cards, and bank accounts are suitable.
2. Secure Places to Buy
People may find various ways of buying Bitcoin, such as brokers and exchanges. With a cryptocurrency exchange, you can purchase the digital asset easily. There are some specific exchanges where traders can make transactions and invest in cryptocurrencies by simply registering their accounts. However, every platform has different fees and privacy or security regulations, so it’s best to do your research.
Bitcoin exchanges have become more significant when it comes down to liquidity and offers an extensive range of features, almost like the stock brokerages. For instance, some platforms can provide multiple investment methods and types of orders. These may vary from market orders to stop-loss orders and limit orders. Furthermore, a few exchanges provide a platform to set up recurring investments, so you can have a dollar-cost average on your investment.
As for the traditional brokers, they are hard to find, especially when Bitcoin is involved as it’s risky and expensive. You can look for additional ways to buy Bitcoin, which include:
3. Bitcoin ATMs
They work as conventional ATMs but are only used for purchasing and selling cryptocurrency. You can insert cash into the ATM and use it to purchase Bitcoin and it will be transferred to the digital wallet of the user. These have become quite popular for purchasing cryptocurrencies but there are multiple charges associated with them. For instance, there is a purchase fee and a conversion fee to transform fiat currency into cryptocurrency.
4. Peer-to-Peer Owners
You can buy Bitcoin directly from another coin holder. However, it is important to be vigilant and do background research while purchasing from someone.
When you find a suitable way of buying Bitcoin, it’s better to avoid using a credit card and always use an encrypted Internet connection.
5. Storage Methods
The cryptocurrency wallets are the best method of storing Bitcoin, especially when security is your primary concern. Having the Bitcoin stored in your wallet will provide better control over the funds. In addition, it eliminates the chances of Bitcoin being stolen if the exchange is hacked. The exchanges offer storage but they rarely focus on security, which is why they are not recommended for long-term holding. Having said that, wallets are the most suitable choice.
There are two types of wallets, a cold wallet and a hot wallet. The cold wallet incorporates multiple security sets that ensure the safest transactions but it increases the time needed to transfer the funds. On the other hand, a hot wallet is faster since there are only a few security measures. With a hot wallet, the Bitcoin is stored in the cloud by the exchange and is accessed through the Internet.
The cryptocurrency exchange often offers a free hot wallet where the purchases are stored. On the other hand, a cold wallet is a portable device with cutting-edge encryption that allows the users to carry Bitcoin and/or download it. It’s important to add that a cold wallet may cost up to $150 but it’s more secure, so make a wise choice.
6. Minimum Amount
Once you are certain about making the investment, the next step is to purchase cryptocurrency. With this step, you need to select how much Bitcoin you need to purchase. A full coin can cost tens of thousands of dollars, but you can buy or sell some part of the Bitcoin so you can start with as little as $30.
7. Trading Strategy
If you are open to trading (day trading), you can purchase the Bitcoin when the market is in dip and sell when the prices go up to gain better profits. However, if you are a believer that Bitcoin will become the ultimate digital currency, you can purchase it as an investment and hold it for years to come.
To summarize, buying Bitcoin is a bit challenging as compared to purchasing stocks or equity because the infrastructure and ecosystem is still developing or evolving by the day.