In less than a dozen years in the space of just a few years, Bitcoin (BTC) has grown from being a pioneer of digital currencies to being the most coveted of all cryptocurrency, boasting the longest-running track record and the highest value. The resultis that investing with bitcoin is never more simple. The Bitcoin era is just starting to look bright.
Investors today have the ability to buy and sell bitcoins with a price of $57,600 per coin at the time of writing on Nov. 23rd, 2021. It is available through a myriad of cryptocurrency exchanges, and thousands of ATMs that are crypto and even through new ETFs.
However, even though bitcoin is the most popular and oldest cryptocurrency, with a market capitalization of $1.1 trillion, it does not mean that investing in bitcoin, or any other cryptocurrency or other crypto, is risk-free. Bitcoin is volatile, and is largely not regulated. So are the majority of bitcoin-related services and products (like cryptocurrency exchanges) customers must utilize in order to exchange bitcoin. If you’re considering trading bitcoin, or even buying and keeping it as an investment for longer-term asset this is the information you should be aware of.
This article:
* Quick Recap Before You Buy Bitcoin* What Kind of Investment Is Bitcoin?
* 5 Steps for Trading Bitcoin
* Alternate Ways to Buy Bitcoin
* How to Start Investing in Bitcoin
Quick Recap Before You Buy Bitcoin
Bitcoin that will turn 13 by the end of January in 2022 is the OG cryptocurrency. The first bitcoin cryptocurrency developed in 2009 and it is the most popular and extensively traded cryptocurrency by far. There were more than 18.86 millions bitcoins available at the time of writing in November 2021 against a number of 21 million.
It is also important for prospective bitcoin investors is Some of the features that made bitcoin the first cryptocurrency were the basis for many cryptocurrency which have come into existence since then.
It’s Decentralised
In contrast to fiat currencies such as the dollar, bitcoin isn’t controlled or issued by a central agency like central banks or government agencies. Instead, it is based on an open network of computers, or nodes which validate transactions through peer-to-peer reviews or consensus. This system of checks and balances, to speak, assists in helping to keep the bitcoin protocol’s foundational principles in place (i.e. the rules that regulate Bitcoin’s platform) and ensures its security.
It’s Digital
As with the majority of types of cryptocurrency bitcoin, it’s a digital-only currency. It is traded through electronic exchanges and is stored inside digital wallets (more on them below.)
There are physical bitcoins that have been created however whether they are legal tender or simply a form of collectible remains a questionable issue (and is a result of changing cryptocurrency rules and regulations).
It’s Based on Blockchain Technology
Blockchain technology is essential to the operation of bitcoin as well as the majority of cryptocurrency. You can’t invest in bitcoin without knowing how they work. Blockchain is a ledger that is transparent which allows blocks of transactions to be verified via the method using encryption along with peer-to peer verification. Every transaction, even investments are permanently recorded to the blockchain. Miners who can verify the transactions get rewarded in the form of more bitcoin. For other forms of cryptocurrency blockchain technology, blockchain technology could be able to support other innovative technologies, such as smart contracts, digital apps and much more.
What Kind of Investment Is Bitcoin?
Is bitcoin a currency, a security, a commodity? These are the questions that prospective investors to consider. Many people view bitcoin as an investment, in general it’s not. Securities and Exchange Commission (SEC) who regulates the markets in the financial sector, has ruled in the year 2019 that bitcoin did not meet the standards as an investment security.
While many people see bitcoin as to be a cryptocurrency, there’s some debate over whether bitcoin truly is a type of money that can be used to purchase goods and services. The commercial use of bitcoin has increased and, in June 2021 El Salvador became the first nation to accept bitcoin as a legal tenderhowever, for the most part bitcoin is still not widely used as a method of payment.
At the moment bitcoin is regarded as to be a commodity according to the Commodity Exchange Act, because it is a store of value, similar to gold.
Other types of crypto, including tokens that can bring investors returns could be classified as Securities according to SEC Chairman Gary Gensler. This could have profound implications for the way that different kinds cryptocurrency assets trade since they will be closely controlled and monitored by SEC.
How to Buy Bitcoin: 5 Things to Know
Although you might feel comfortable investing in stocks and ETFs, investing in and selling cryptocurrencies like bitcoin has its own set of rules. Before you start trading bitcoin Here are five essential things you should be aware of.
1. You Need a Crypto Wallet
You can store dollars and cents in a wallet. However, bitcoin is digital and can only be stored on the blockchain, and needs a digital wallet in the event that you plan to buy or sell it. The crypto wallet isn’t a storage space for your cryptocurrency as such however, it is a form of device or software that safeguards your key private and public keys, allowing you to exchange your bitcoin.
* Software wallets. You can choose an app or mobile wallet or a desktop-based wallet. These kinds of wallets, also known as hot wallets are software-based and require a secure connection to the internet to connect them. They’re easy to use and simplify trading on exchanges however, any third-party software may be vulnerable to cyberattacks.
Certain cryptocurrency exchanges (see below) usually offer hot wallets as component of your accounts. To protect yourself it is possible to have a separate wallet.
* Hardware wallets. A cold wallet utilizes hardware, such as thumb drives for example, to download and protect your crypto’s keys. This type of wallet could be more difficult to use, as you need connect it to an electronic device to conduct transactions. But it’s also more secure and less susceptible to hacker attacks.
The main negative is that you can be able to lose a cold wallet and along with it, the keys that grant users access to their cryptocurrency.
2. Understand Public and Private Keys
Like many types of crypto, bitcoin is within the blockchain a permanent digital ledger that tracks the transactions made by bitcoin. Bitcoin transactions are verified and are added to the Blockchain by an elaborate cryptographic procedure known by the term Proof of Work or PoW.
When you buy Bitcoin, sell, transfer, or receive, you will need the private secret key (essentially a digital address for your bank account). You also require an individual key which grants you access to your bitcoins that you have. In the event that you misplace, lose or forget your private key, you will not be able to get access to bitcoin. And if that private key ends up in someone else’s hands, then your Bitcoin may be taken.
3. Decide Where to Trade
Except for a few new bitcoin-based investments aren’t able to trade cryptocurrency through a traditional exchange such as the NYSE. You must purchase and sell bitcoin using platforms that trade in crypto like an online exchange, or app or traditional brokers that offer crypto-based trading.
There are three major kinds that crypto exchanges can be classified as: decentralised, centralized and hybrid. The majority of crypto exchanges allow trading in crypto to fiat, also known as fiat-to-crypto (meaning that you can use an old-fashioned currency, such as dollars to purchase and sell bitcoin, as well as other cryptocurrency).
* A central crypto exchange can be described as a marketplace that allows cryptos to be bought and sold using an intermediary to carry out these transactions.
* Decentralised exchanges (DEX) enable cryptocurrency users to exchange directly one another without the need for an intermediary.
* Hybrid exchanges seek to combine the advantages of both e.g. that of the convenience and liquidity offered by a central exchange with the security and security of the DEX.
There is also the option of P2P also known as peer-to-peer exchanges. These tend to be more similar to open market that permit users to trade directly with one another. When selecting the best P2P exchange, take into consideration the the ease accessibility, whether funds will be covered as well as the different types of crypto that are offered.
4. Personal Identification
In order to open an account at an brokerage or exchange You’ll need the social security numbers as well as details about your bank for the account’s funding. If the platform is in compliance with the standard KYC (Know Your Customer) regulations, you’ll be required provide a government-issued photo ID.
If ensuring some level in privacy is crucial to you while trading bitcoin, you might think about whether you utilize a broker or crypto exchange, a P2P exchange or any other methods.
5. Fund Your Account
You can fund your account by using your bank account debit or wire transfer, credit card or using different forms of cryptocurrency. It is dependent on where you intend to trade and which kinds of currencies the platform allows to trade with.
While trading bitcoin within the U.S. is legal, certain banks might block or ban deposits to crypto-related websites or exchanges, so make sure to consult your bank prior to making a deposit.
Make sure you research fees associated with different payment methods and exchanges. Credit cards, for instance have a processing charge in addition to transaction fees and can consider bitcoin transactions in the same way as advances on cash. Most exchanges for cryptocurrency have transaction fees too they may charge either as a set rate or some percentage of the trade.
Alternate Ways to Invest in Bitcoin
There are a variety of most common ways to purchase bitcoin, but nothing is in the cryptocurrency world, and every day there are new ways for buyers to think about.
* Crypto ATMs. There are now hundreds of ATMs that are physically located that allow you to purchase bitcoin across the nation. Contrary to traditional ATM however it isn’t possible to take cash out of these ATMs. Instead, they can only make transactions using the blockchain.
* Payment processors. Depending on your state, you might be able to purchase bitcoin via the account of your PayPal or Venmo account. A drawback is that bitcoin you purchase on these platforms cannot be transferred into your personal wallet or to an exchange.
* P2P exchanges. Unlike decentralized exchanges that connect sellers and buyers anonymously through peer-to peer (P2P) services can facilitate a closer connection between users, allowing them to make requests and search for the best terms for trading.
* Bitcoin rewards cards. A relatively new option offering bitcoin rewards cards is similar to credit cards that allow you to accumulate points for purchases or cash back. However, here you can earn fractions of bitcoin.
Start Trading Bitcoin
Once you have your money source linked to the exchange platform you are planning to sell bitcoin, and you are aware of the transaction costs involved you can make an order.
It may be like the options for trading you find on traditional exchanges or in trades in stocks. Today, most cryptocurrency exchanges offer customers the ability to make limits orders and market orders stop-loss order, and other options.
In addition, you can buy bitcoin in fractional amounts by dollar-cost-averaging, i.e., investing small amounts on a recurring schedule over time.
The Takeaway
Although bitcoin is a volatile cryptocurrency and investing in bitcoin carries certain risks, it’s the longest-running and well-established cryptocurrency availabletherefore, purchasing bitcoin is now easier than it’s ever. In only a few steps, you’ll be able to get an account on a crypto wallet, create an account on a cryptocurrency exchange (or an online application such as SoFi Invest(r)) and then begin trading. Of course, the common rules of caution are in place to trading in crypto: Make sure to know the conditions and fees as well as any hidden charges associated with the platform you decide to trade on. As with other cryptocurrencies, you must take an additional requirement to keep your crypto safe.
In SoFi Invest(r) customers can trade cryptocurrency starting at just 10 dollars. The first purchase of more than $50 can earn them a reward that can be as high as $100 bitcoin. Check out the full terms and conditions at sofi.com/crypto . Cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, Litecoin, and Cardano can be traded at any time. Additionally SoFi is a security-conscious company and utilizes a variety of tools to ensure that cryptocurrency assets secure for investors.
