Bitcoin may have been around for over a decade, but for many people, there is still an air of mystery surrounding cryptocurrencies. Cryptocurrencies turn everything we know about currency and financial transactions on its head. This is because Bitcoin and the other cryptocurrencies are independent of traditional financial institutions, and not controlled by one person. Instead, cryptocurrencies are generated by networks of computers across the world, making them entirely de-centralized.
Unlike traditional currencies, such as the dollar, Bitcoin is a finite currency; just 21 million Bitcoins will be produced. Limiting the number of Bitcoins available means that Bitcoin production is continually dwindling and will stop being produced completely once 21 million Bitcoins have been created. The limited production of Bitcoin makes it particularly exciting and fuels many people’s desire to own Bitcoin.
If you are intrigued by the world of cryptocurrency and how it will be used in the future, you are probably keen to start investing in cryptocurrency yourself. If you are wondering How to Buy Bitcoin and Other Digital Currencies, you have come to the right place! Read on to find out how to begin buying cryptocurrency.
Choose Your Wallet
Before you begin buying Bitcoin or any other cryptocurrency, you will need to set yourself up with a wallet. The wallet is, of course, not a wallet in the traditional sense. Your wallet is the interface that you will use to store your cryptocurrency, and you will use it when buying and selling crypto. Choosing a crypto wallet or Bitcoin wallet is a personal choice; there is no one-size-fits-all option here. You will need to review the different wallets available and pick one that best suits your needs.
Your wallet will feature private keys which you will use to access your Bitcoins or other cryptos when you want to buy or sell coins. The private keys help to keep your wallet secure and ensure that no one else can access it.
When choosing your wallet, you will need to choose between a hardware wallet and a software wallet. A hardware wallet is the most secure option for storing your crypto and making transactions. The hardware wallet is an electronic device that you connect to your computer. Using a hardware wallet means that your private keys are securely stored offline.
A software wallet is a free wallet that can be used on internet-connected devices such as computers, phones, or tablets. Software wallets are less secure than hardware wallets as the private keys are generated through the internet, making them more vulnerable to hackers.
Buying Methods
Bitcoin and other cryptocurrencies can be bought in many ways. You can choose to buy directly with cash, but many people prefer to use a cryptocurrency exchange that carries out transactions on your behalf.
Select a Cryptocurrency Exchange
A cryptocurrency exchange will handle your Bitcoin transactions on your behalf. Before you leap in and choose the first cryptocurrency exchange that you come across, you will need to research your options. Just as with Bitcoin and crypto wallets, there are also many different cryptocurrency exchanges to choose from. Some cryptocurrency exchanges come and go very quickly; others are more secure than others, so doing your research to select the best one for your needs is vital. Here are some factors to consider when choosing a cryptocurrency exchange:
Reputation – Does the exchange have a positive reputation, or does it attract lots of negative feedback from its users? Researching a cryptocurrency exchange’s reputation is vital to make sure that they are legitimate.
Exchange Rates – Compare the price on exchanges that you are interested in with the average price of Bitcoin. Making this comparison should give you an indication of whether the exchange is the best option for you.
Fees – No one wants to pay more than they need to for a service, and the same applies to a cryptocurrency exchange. Comparing fees across a range of exchanges will tell you whether you are getting a good deal.
Privacy and Security – Unfortunately, cryptocurrency is extremely attractive to hackers. To prevent yourself from falling victim to a scam and losing all your cryptos, it is vital to choose an exchange that offers high levels of privacy and security to protect your Bitcoin.
Payment – Different exchanges accept different forms of payment. This is a particularly important fact to keep in mind when searching for an exchange. If your preferred choice of payment isn’t accepted, you will have hit your first significant problem. Before joining an exchange check that it allows at least one of your preferred payment methods.
Limitations – Some exchanges place limits on the amount of cryptocurrency that you can buy and sell. For many people, the restrictions won’t be an issue, but if you are planning to make big purchases, this is something that you will need to investigate.
Weighing up all your options is essential when choosing an exchange, consider all the above factors before you sign up for the first cryptocurrency exchange that you come across.
Setting up an Account
Once you have decided on an exchange, you will need to set up an account. Once your account is set up, you should be able to start depositing money for Bitcoins to be purchased on your behalf. The verification process for setting up an account varies between exchanges, so you may need to wait a little while before you can start depositing money into the account.
When your account has been set up, and you have made your deposit, the exchange will purchase Bitcoins on your behalf and deposit them into a wallet. To keep your coins secure, it is wise to move them from this wallet into one that you have set up yourself.
As you can see, buying cryptocurrency safely and securely requires some research before you get started. Familiarizing yourself with the unique qualities of cryptocurrency is all part of the fun. Remember to always play it safe with your investments, as cryptocurrencies can fluctuate wildly.