Your practical guide to buying Bitcoin for the first time
If you are one of those who decided to invest in cryptocurrencies for the first time, after weighing the pros and cons of investing in Bitcoin; There are a few things the author recommends Andrew Nickel, through the site “Invest Wallet(InvestedWallet), where the steps below provide a guide to buying bitcoin and also provide a starting point for further research:
Decide where to buy bitcoins
The writer states that, initially, you have to choose a cryptocurrency exchange or platform to make the purchase; It provides the possibility to buy and sell Bitcoin and many other alternative currencies; Each exchange has different consumer fees and services than other exchanges.
The writer points out that in cryptocurrency exchanges, bitcoin investments are not secured by the Securities Investor Protection Corporation; However, dealings are made based on the reputation, regulation and security procedures that take place in the various exchanges, which are considered essential factors in choosing the appropriate platform.
He continues, for example; Exchanges such as Coinbase provide insurance against loss, but with certain conditions, which means that you choose carefully and carefully the platform on which you will buy and sell bitcoin, and the writer gave examples of some of these exchanges, namely:
- CoinbaseIt is one of the largest and first stock exchanges to have publicly traded shares, famous for its ease of use, but its fees are high.
- “Binance” (Binance): It is a platform that is not easily accessible to beginners, but it offers low transaction costs and many cryptocurrency options.
- Crypto.com (Crypto.com): It is a platform that has fewer features than some of the larger exchanges, but it does offer unique features like a crypto rewards debit card.
- Gemini Like Coinbase, it provides an easy-to-use interface for beginners and is available in all US states, a feature not found on many other platforms.
- “كراكن” (Crack): Founded in 2011, it is one of the oldest cryptocurrency exchanges, with high-level cybersecurity options.
Choose a Bitcoin wallet
After buying bitcoins, they must be stored in a wallet, the author asserts; As there are two types of wallets; ‘Hot wallet’ and ‘cold wallet’ The hotspots offered by most cryptocurrency exchanges allow you to access your coins online and facilitate transactions, but they are not the most secure because they are vulnerable to hacking.
The writer points out that cold wallets are a safer option for long-term storage of your coins, because they are portable devices such as a flash drive that allows you to store your bitcoins offline for more security, and these wallets include Ledger Nano and Trezor.
Connect your bank account
The writer explains that to buy and sell bitcoin you will need to link a bank account to a cryptocurrency exchange or your wallet; The process is similar to linking a bank account to a traditional investment account and allows you to exchange dollars for cryptocurrencies.
The writer explains that once you set up your account and link your bank account, you are ready for the easiest step, which is to submit your application; Most exchanges offer multiple ways to place orders, such as market orders, limit losses and stop orders.
You can also choose to set up recurring purchases, which allows you to update the average dollar cost of bitcoin by buying a set amount each month, week, or even day; For example, if you have a side income of $1,000 per month that you automatically want to invest in, you can choose to place a permanent order to buy $1,000 worth of Bitcoin at the end of each month.
Manage your investments
In this step – according to the author – you define your investment goals, and when your coins are safely in your wallet, you can manage them in multiple ways, including:
“Hodl”: known colloquially as “hold on to dear life”; Where you can keep your coins in the hope of further appreciation in the future.
Commerce: If you are an active trader and want to take advantage of the volatility of Bitcoin; You can choose to buy and sell them from your wallet.
the purchase: There is a growing range of crypto-denominated products and investments that you can choose to purchase, such as non-fungible tokens and digital real estate.
How much should I invest in bitcoin?
The writer stresses that despite the increasing acceptance of bitcoin in mainstream investment circles, it is still a relatively newcomer; That is why the investor in it must know the history of its extreme fluctuations and the ever-changing process of regulation in the cryptocurrency markets, before determining the amount of investment in it, because there are many unknown and changing things in this market, which makes the future always high risks and high earning opportunities in it. also.
For this – as the writer says – experts advise investing with money that can be lost, as they consider that the appropriate percentage of investing in digital currencies ranges from 2 to 5% of the net wealth of investors.
Can I earn passive income with Bitcoin?
The writer says that the cryptocurrency market is still witnessing many projects that are working to establish an infrastructure for it, which sometimes requires shareholders to contribute indirectly in time or capital, which brings them compensation as a reward, which is known as passive income, explaining that There are several ways to do this such as:
- Earn interest on your Bitcoin: Platforms like BlockFi have become crypto banks of sorts, taking deposits and lending them to others who need access to crypto capital, and to secure deposits these service providers will pay you to keep your cryptocurrency with them in the form of interest payments.
- Cultivation yield: The liquidity needed in transfers comes from holders of cryptocurrency due to its decentralized nature, so in exchange for mortgaging your coins to provide liquidity, you can earn a fee on each transaction.
- Mining: Once you set up your bitcoins, bitcoin mining is a passive process that does not require your time. If you have the ability to mine bitcoins and have the computing power to do so and your account is used for mining; You will be compensated with new bitcoins.