How To Invest In Bitcoin In Easy Steps
Like any other investment, Bitcoin can be tricky. It doesn’t have intrinsic value and is neither issued nor regulated by governments or financial institutions. In the absence of a centralized regulator, there is no guarantee its value will stay stable. Besides, unlike stocks or shares, Bitcoin’s value has no connection with profits or performance of any corporation. Its value depends on market speculation. When more investors buy it, its value automatically goes up. To make profits through Bitcoin investments you need to “time the market” right.
Easy Steps To Start Investing In Bitcoins:
Critics continue to argue that Bitcoin investments are risky. However, if you plan on testing the waters, here’s how you should go about it. Consider its latest movements; prices have gone up considerably surpassing traditional gains through stocks. As more and more businesses and celebrities like Elon Musk start to endorse the Bitcoin, its values keep skyrocketing. Fintech giants like PayPal and Square have declared their intent to introduce cryptos as payment method.
- To invest in Bitcoins, you need personal ID documents, bank account details, a secure web connection, etc. When you plan to buy cryptos through your existing stockbroker, all this data is not needed as they will already have your details on record.
- You must look for a reputed cryptoexchange that lets you buy, store, and sell Bitcoins. There is no official business selling Bitcoins because it is open-source technology. But there are multiple exchanges offering Bitcoin transactions; they work like middlemen in crypto trading, just like stock brokerage firms. Some of the most popular cryptoexchanges you can consider are Coinbase, which is user-friendly for beginners and advanced users alike, Kraken, Bitfinex, Binance, etc.
- Once you have decided on an exchange and created an account here by providing all necessary details, you need to download a wallet. Coins are stored in “wallets” which can be “cold” or “hot”. Hot wallets are riskier as these are online making them prone to hacks and thefts. They are either run by providers or cryptoexchanges. Examples of hot wallets are Mycelium (for iPhone and Android users) and Electrum (for storing on computers). Cold wallets are more secure as these store coins on hardware, like portable devices. Examples are Ledger Nano and Trevor. For buying a small number of coins, hot wallets are more convenient provided the cryptoexchange is secure. For trading larger volumes, it is best to opt for a cold wallet.
- With a wallet in place, you need to connect this to the bank account for buying or selling Bitcoins. Alternately, your cryptoexchange account can be connected with the bank account for fund transfers.
- Now, you can start buying Bitcoins. All you must do is log onto your cryptoexchange account to get all the information you need. The buying process is straightforward and simple; you need to choose how much you wish to buy to place an order. Before buying, you must always assess your risk appetite and review the investment strategy.
- Once you have purchased Bitcoins, you may hold onto these for rates to climb up in the future. You can also use your Bitcoins to make online transfers. For those keen to dabble in crypto trading, day trading can be a good option.
These are the basic steps to start investing in Bitcoins. no investment is “bad” or “good”; it always depends on your investment plan, financial goals, and risk tolerance level.