How to Buy Your First Bitcoin
Everyone is interested in having a piece of this new digital money and diving into the experience of using Bitcoin. Whether you want to use Bitcoin as a hedge against inflation, as a bank, trade it to make money, or for goods/services purchases, you must first purchase it. Albeit it’s digital money, purchasing it might seem complicated for crypto novices.
Fortunately for our inexperienced readers, buying crypto isn’t as complex as it seems. This guide contains essential tips for buying your first Bitcoin and answers to questions like, “is BlockFi safe? Note that you don’t need to buy one BTC. You can purchase it in fractional amounts. Excited? Let’s get to it.
What to Know Before Buying Your First Bitcoin
To get started, you should do the following.
- Have a crypto wallet
You can’t store Bitcoin in bank accounts like fiat. They are stored in crypto wallets. Now, these technological storage accounts come in various options, but there are two main options that you should be concerned with as a beginner – cold wallet and hot wallet.
A cold wallet is a hardware digital wallet that isn’t linked to the internet. It comes with multiple layers of security that make it less susceptible to security hacks than internet-based crypto wallets. Reliable companies that make cold wallets are Ledger and Trezor. Ledger and Trezor are the biggest names for making cold wallets in the crypto space.
On the other hand, hot wallets are digital software wallets connected to the internet. They often come in the form of an app, created by cryptocurrency exchanges. An example of a hot wallet is Coinbase. Coinbase is notable for being one of the largest crypto exchanges. Its wallet is one of the most secure hot wallets. You can use the wallet independently of the exchange.
If you don’t want any of the above wallets, ensure you choose a solution that is proven, secure, and reliable. Check the ratings and reviews before you make your final decision.
It’s not just about choosing a wallet. You need to set it up so that you will be able to store your cryptocurrency. If you chose a hot wallet, create an account with your password and username and enable 2FA to secure the account. In some cases, you may need to complete KYC if the wallet is linked to an exchange.
For cold wallets, you get a private key phrase – a combination of 24 long generated words. This phrase will be needed each time you want to access the wallet, so ensure you keep it safe. If you lose it, you will be locked out of your wallet. You also need to set up a PIN to access your wallet.
- Choose a crypto exchange
Once you have set up your wallet, it’s time to choose a crypto exchange. Crypto exchanges are where Bitcoin and other digital currencies can be traded. This is where it gets tricky. Not all crypto exchanges have operational licenses in the United States. This is to safeguard the citizens from getting involved in malicious transactions. Therefore, you should look out for reputable and regulated exchanges in the United States. A few exchanges regulated in the United States are; Coinbase, Kraken, Gemini, eToro, and Crypto.com. You can also buy Bitcoin from BlockFi. It is a reliable and safe crypto lending platform and a crypto exchange.
Before you decide, check the measures each exchange takes to keep your funds safe. Do they have a strict KYC policy? Do they insure people’s money? If, yes, how much? Know the answers to these questions before proceeding. More importantly, select the platform that supports your payment method and fund your account with the amount you want to use to purchase your Bitcoin.
Registering for a crypto exchange is similar to setting up a crypto wallet. You will need to provide proof of identification when signing up.
- Buy Your Bitcoin
The process of buying Bitcoin differs from exchange to exchange. On some exchanges, you have the “Buy” and “Sell” tabs where you can specify the amount of currency you want to purchase. Others allow you to buy using a market order, stop order, and limit order.
In Market Order, the buyer sets an order to purchase an amount of BTC at the current price. This method is quick and best if you want to buy Bitcoin immediately.
In Stop Order, you are allowed to set a price at which you want to purchase your BTC so that when the value reaches the set price, the exchange executes the order. It takes more time than a Market Order.
A limit order tells the exchange to buy Bitcoin at a particular price. This method is good if you want to buy Bitcoin at a more affordable price. Again, it takes longer than Stop Order and Market Order.
There are also P2P and Bitcoin exchanges. However, they are more technical and risky than the above methods of buying Bitcoin. We recommend you avoid P2P trading until you are more conversant with crypto trading.
- Plan your investment
If your goal is to make money from Bitcoin investments as a beginner, you need a strategy to achieve your objective. Spending on your first crypto can excite you and force you into making rash decisions. Changes in prices can terrify you and pump your adrenaline. Bitcoin has repeatedly suffered from volatility in the past and will continue to experience it going into the future. However, it came back stronger. This is why you need to plan your investment.
The most common strategy is to buy and HODL in the hopes of an increase in valuation. You can also use the DCA or dollar-cost-average, where you purchase a small amount of BTC every week or month. The idea is to accumulate so much BTC over time without bothering about the money. This way, you build your investment at a slow and steady pace. You can also lend crypto to borrowers to earn interest. Find out interesting facts about cryptocurrency lending here.
Buying your first Bitcoin is straightforward, but you need to be cautious. Several crypto scams disguise themselves as cold wallets and exchanges. Use any of the wallets and exchanges recommended here for the enhanced safety of your funds.
- How much Bitcoin should a beginner buy?
If you want to buy to HODL, the recommended amount to get started with is $10. Buying small amounts will help you to gain a better understanding of how to manage funds and invest.
- How do I buy Bitcoin as a beginner?
First, choose a crypto exchange. Register and verify your account. Browse through the available deposit methods and choose the one that’s acceptable in your country. Place your order and choose the storage method.