We assume that until the time you have already known about what Bitcoin is, its value, how it works, what its actual worth is, and is it making any difference in the world? Yes, we agree that one should ask these legitimate questions before putting his hard-earned money to buy the cryptocurrency.
So if you have figured out the questions mentioned above and hold good information and knowledge about Bitcoin, you can proceed with the following description of ‘How you can buy Bitcoin ?’
This article provides you with a base format on how the buying procedure of Bitcoin follows. Although let it be clarified not to consider it as persuading to buy Bitcoin or any other cryptocurrency or promoting any cryptocurrency exchange. The further information should be treated as a piece of information quenching your thirst to know about buying bitcoin. If that’s very, very clear to you, let’s get started.
How can anyone buy bitcoin?
In layman’s terms, buying is just an exchange of what you have for what you want. Here you like Bitcoin, for which you have to give what you already have, for instance, your fiat currency such as USD and in between a platform to conduct the exchange.
To buy bitcoin, you need an account on a reliable cryptocurrency exchange, your documents for identification in case of using a KYC platform, a personal crypto wallet to store your digital asset, Internet for obvious reasons and a suitable payment method using bank accounts, credit or debit cards.
Although buying any cryptocurrency is intended for two reasons: investment or trading. The difference between them is that investment is meant for long-term holding, and trading is for short-term profit-making. Crypto-like bitcoin also can be traded or invested, and it’s totally up to you how you should treat it.
Start with a suitable Exchange platform
So it’s evident that you need an exchange account to buy bitcoin but which one to choose from hundreds of platforms available. Binance, Coinbase, Geminin, Kraken and many more provide the facility to purchase bitcoin and choosing one from them can be a confusing and tedious process. Consider the following factors to select the best suitable and compatible exchange platform for yourself.
Security measures in exchanges
First of all, make sure the exchange you choose should be adequately secured. It becomes crucial considering no central institution backing cryptocurrency investments. Lack of security on your exchange platform can compromise your account and, eventually, your investment.
It would be suggested to choose an exchange platform that has proper security measures for your data and your digital assets. You can opt-out for an outer wallet other than exchange for extra safety measures, or else let the exchange wallet handle it for you; it’s up to you. Just make sure the exchange uses offline cold storage and has strong theft protection. Some exchanges provide independent insurance policies to protect their investors from potential hacking.
Fees charged by exchanges
Another important factor to consider before choosing an exchange is the transaction or trading Fees. Different businesses charge fees in other manners, as some charge flat fees upfront, and some charge a percentage of your trades. It depends upon various factors like location, method of payment, etc.
Some exchanges put a margin on top of market price, while some charge fees based on the spread. There are also terms like maker-taker fees which are direct fees when you buy some digital assets, and another is the fee when you reserve them for a definite price.
All in all, you should know about the fees charged by your exchange platform. Although experts say, it’s obvious that you get what you pay for. More prominent and established exchanges provide you security, better protection, and a good customer experience to charge slightly higher fees for its services.
Availability of other Cryptocurrencies on exchange
An investor should keep in mind before jumping on exchange to know how many other coins are available on the platform. It’s not important that all the exchanges offer every single available cryptocurrency.
Bitcoin and Ethereum, like popular cryptocurrencies mostly available on crypto exchanges, but some not so popular altcoins may only be limited to specific exchanges.
Adding funds to your exchange account
After choosing preferred exchange and providing information regarding identity like social security number, ID, maybe some pictures and source of income while creating your account.
You will be able to connect your bank account, debit or credit card to transfer fiat currencies like US dollars into your exchange account. Again fees may also depend on the method you are choosing, either direct bank transfer or card options.
Transferring an amount into your exchange account does not end the purchasing of bitcoin. Once you have funded your account, you will still need to exchange your dollars by yourself for bitcoin. It’s similar to traditional trading or any purchasing in general, where you never leave your money uninvested sitting in your account.
Order to get your Bitcoin
After setting up your bank account with an exchange account, you are all set to buy your bitcoin, although the process here may also differ depending upon different exchanges.
Some crypto exchanges provide active trading like Coinbase or BitFinex, where you just put the number of dollars you want to invest, and it will tell you how much bitcoin you can buy with the amount. Another type of trading is also used, which is more active trading.
In such active trading, it has the general marker order method, but you can also place your limit order. A limit order is when you set a price for a cryptocurrency you want to pay. After placing an order, you don’t need to keep an eye on the price or see the process as it automatically buys the crypto when it reaches your desired price.
Finally, you own Bitcoins
Following all the processes mentioned above, you will get bitcoins in your exchange account. Although many exchange platforms facilitate an internal wallet to keep your bitcoin or cryptocurrencies, still, if you want to keep them, you can transfer those bitcoins into a crypto wallet.
A cryptocurrency wallet is nothing but a place to store your digital currencies. Like numerous exchanges, there are so many crypto wallets out there that you can choose according to your preference.
Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.