Buying Bitcoin can be an intimidating hurdle for people who are entry level buyers that have not done much of the research behind cryptocurrencies. In order to fully understand the cryptocurrency wave, one would have to sit down and read a novel’s worth of information regarding what they are, how they are made, what they are used for, and the best way to invest in them. In simple terms, cryptocurrency is much like the stock market in the way that it functions. People invest in one cryptocurrency and the value of that digital currency goes up. Then when people cash out their investments, the value of that currency goes down. This is all powered by blockchain technology, which is a whole other novel one would have to read in order to fully understand.
The most well known, and therefore the most valuable, is Bitcoin. It is reported on by the media more today than ever before, especially now that it’s value is through the roof. At one point, it was worth more than $17,000, and through a rollercoaster of ups and downs it has settled around at over $8,300 as of the time of this writing. So whether or not it is a worthy investment is not for me to decide (because I have bought some myself and seen a little bit of appreciation so far). However, as it has become more and more popular across the world, the world has began to embrace it with open arms and Bitcoin is now accepted as a form of currency in many markets around the world. Now, before you can get into spending any of your hard earned investments in Bitcoin, you first gotta learn how to purchase and store it, which is not as hard as it might seem to people not familiar with the process.
There a few preliminary steps that you will have to get through before you can make your own purchase, but if you are willing to follow these next few steps then it will not be long before you are mastering the art of crypto investments.
1. Digital Wallet
Now, you might be asking yourself, “what is a digital wallet?”
A digital wallet, crypto wallet, Bitcoin wallet, whatever you want to call it, they are used to store Bitcoins and other cryptocurrencies like Ethereum and Litecoin and what not. A digital wallet will allow you to store your Bitcoin and exchange them for other currency. Since these wallets are digital programs, each one has a different set of features that they offer users, and each one has different platforms that they can be used on, and perhaps the most important aspect, each one offers different security measures to help protect your digital investments. So it is going to be crucial that you pick the one that suits you best before you get ready to make your first Bitcoin purchase.
Here is a list of a couple of different digital wallets that are good options. You can peruse through and check out each one and decide what might work best for you. When you have decided, go ahead and download the program onto whatever you are using, PC, Mac, iOS, Android, whatever it may be. All of these wallets are free to use, but most of them do charge a small fee during currency exchanges when you move your cryptocurrency into another account. That’s just the cost of doing business.
Also, a word of warning. It might be in your best interest to get in contact with you bank and inform them that your account is about to start seeing activity from perhaps sources unknown to the bank. By telling them this in advance and assuring them that the activity the see is not fraudulent, they won’t put your account on hold for suspicious activity. I remember when I made my first purchase, my bank froze my debit card from making purchases until I called to inform them that I was the one who made the transactions and that it was safe to unfreeze my account. So save yourself the extra hassle and go ahead and call them before you try to link your bank account or debit card to a digital wallet.
Here are some of best digital wallets available right now:
This is the one that I have used with the most success and would recommend checking it out first. Coinbase wallet has a user friendly interface that is integrated directly with the market and exchange services that it is designed to be used for. Coinbase wallet makes it simple for users, which is why it has become one of the most popular digital wallets in America. Signing up is free, and when you register, Coinbase wallet offers you a limited level of insurance for the Bitcoin you store in it. The service allows you to go online and check your amounts or make an exchange from any compatible device, which at the moment is pretty much every name brand smartphone, tablet, and computer on the market. You will be able to connect your Coinbase wallet to your bank account or your debit card after going through and completing a few steps to verify your identity and then allowing the digital wallet to initiate two small test deposits to verify the authenticity of the account. After that you will be ready to make purchase, sell your investments, or exchange them on the market place for any number of other cryptocurrency.
While Coinbase is a service that must be connected to the internet at all times in order to function, Exodus is a digital wallet program that can function offline (though you are going to need to be online to make purchases and exchanges). Exodus offers support for numerous cryptocurrencies if you ever want to dabble in purchasing anything other than famed Bitcoin. It is a completely free service to use, which is especially impressive when you consider the bonus features it has to offer, such as the built in graphing tools that help to visualize your portfolio of cryptocurrencies and help you to better understand the market place that you are going to be looking at and investing in, which is incredibly helpful if you are someone like me who does better when there is a visualization of something in front of him instead of only written text. The biggest advantage and disadvantage of using Exodus seem to stem from the same area: security. Because the program can be used offline and solely from your desktop, that means your currency will be safely stored against people trying to hack in and steal it. However, the program does not use a two factor authentication system, which seems to be commonplace nowadays for standard security measures.
This digital wallet is popular because it is one of the only mobile only options when it comes to have a cryptocurrency wallet. It is available on both iOS and on Android, but I can not attest to the effectiveness of the app on Android because I have only used it on an iPhone. However, Mycelium offers some unique features for extra added security that other digital wallets do not offer. For example, Mycelium is compatible with more advanced tech than other digital wallets, so you could link it with other security features to offer yourself maximum protection, and you could access the online market place through Tor, which is an internet browser that offers you total anonymity when online, making it harder to trace the purchases you make through the app directly back to your individual IP address, therefore making it harder for digital thieves to break in and attempt to steal your digital currency.
There are dozens of other popular and well known digital wallet programs that you can research and decide upon, but these three are three of the most popular digital wallets, so I would start off using one of these if you are a beginner at the whole cryptocurrency wave. Then once you become a little more comfortable and familiar with the process, you can switch over to a more complex digital wallet, or even start to use an offline wallet storage program, which will offer maximum protection to your cryptocurrency.
2. Choosing Your Digital Marketplace
When you invest in the stock market, usually you would go through a broker who will help advise you and make purchases and exchanges for you, but using a broker for cryptocurrency is almost non existent, though there are services out there that do provide brokers to use at your disposal. But if you want to handle your digital transactions yourself, you will have to go through an online exchange service, or digital marketplace. There are a whole lot of them out there, and each one offers a varying level of performance and security. There are several ones out there that are less reliable and trustworthy than others, and there are some that are pretty limited in terms of what they allow you to do, so it is absolutely crucial that you pick a good one to start off with or else you run the risk of becoming jaded towards the whole notion of cryptocurrency.
When you are comparing digital marketplaces, you are going to look primarily at two things: the first being how secure that service is, and most are pretty good when it comes to protecting your currency investments; the second thing to look at is what kind of fees are going to be associated with your purchases and exchanges. There are a few digital marketplaces out there that will directly exchange Bitcoin into cash for you, but they do exist, and here are some to look into:
If you selected Coinbase wallet as your digital wallet in these transactions, then using Coinbase as your digital marketplace will go hand in hand and make things more seamless and transparent, just like how people who use iPhones will more than likely use a Mac for their computer for the integrated services and seamless transitions between the two platforms. Besides that, Coinbase is the easiest digital marketplace to use for people first starting out in the cryptocurrency wave. It is what I used and I would recommend it over others because of how simple the interface is and how easy it is to use. Without pushing too high of fees on the users, it is the one digital marketplace that has consistently performed at a high quality level and has taken care of its customers. You can use it on your desktop or on your mobile device, so I would recommend starting here if you are wondering where to begin your journey into cryptocurrencies.
This digital marketplace is as easy to use as Coinbase, and for those that have become familiar with the practice of purchasing and exchanging cryptocurrency, it can become even easier to use than Coinbase. CEX will provide users with immediate exchange rates when looking at the marketplace, and it has very simple buying and selling options that come without any sort of extra hurdles for the user to go through. The biggest drawback for it is that it is a little bit limited when it comes to the available payment options you can use. Whereas on Coinbase you can use link your bank account or your debit card, CEX only offers payment through certain credit card carriers.
Bitcoin Exchange Search
Bitcoin.com has their own digital marketplace and exchange service. Some might feel more comfortable using a digital marketplace that is managed and maintained directly from the source of the Bitcoins that you are going to be purchasing, so this option remains enticing for a lot of people. The service allows you to select which country you are buying or trading and then shows you the available exchange options and rates that apply. They even host a “featured exchange” that varies from time to time that offers the best exchange rate at that given time. Bitcoin’s exchange service offers a whole lot of options for exchanges and purchases, so it will be up to you to look through and determine which option is the best choice for you, and you can do that by checking out the reviews and the history of each exchange option before selecting it, that way you can determine its credibility and see if it is the right option for you.
Peer to Peer Options
There are a lot of options out there for digital marketplaces that basically serve as the broker between your money and your digital crypto purchases. But if you want to skip the middleman entirely, you can opt to use a peer to peer exchange service like BitQuick or LocalBitcoin, where you will be buying and trading directly with another person, instead of going through a third party service. These peer to peer digital marketplaces offer a bevy of payment options compared to other third party digital marketplaces, even offering exchanges in person, but with those extra options comes the sacrifice of the security that they offer users in case an exchanges goes wrong. So tread these waters at your own risk.
3. Payment Method
Once you have set up whatever digital wallet you desire and after you have registered for an account on one of the numerous digital marketplaces out there, you can then select what your preferred payment method will be when making these digital transactions. I have mine linked directly to my bank account, since my bank offers protective services were anything bad to happen, but you are not limited to just that. You can link and use your bank account, or verify your debit or credit cards and use them, some digital exchange services allow users to link their PayPal accounts if you want to go through the extra hoop of using a third party banking service to make your purchases. Whatever you want to use, you just gotta make sure that the digital exchange service you choose will allow it. Coinbase offers almost every payment method imaginable (that is accredited and safe) so it is a very popular option among beginners just getting started in the crypto marketplace.
When you go to link your bank account, debit card, credit card, PayPal, whatever you decide, you will have to go through some authentication hoops in order to make sure the link is secure and that you are who you say you are. These authentication factors are there for your security and to make sure no one is scamming anyone out of their purchases or exchanges. So bear with them and jump through all of the hoops and you will be on your way to making your first Bitcoin purchase.
4. Buy Bitcoin
Here is the fun part. Almost all of the digital exchange services will provide you with current, up to date information on exchange rates for cash into Bitcoin, or if you are not using cash, whatever type of currency you are going to be exchanging in your transaction. It is important to pay attention to these exchange rates and keep an eye on the marketplace, because Bitcoin, despite becoming the monster cryptocurrency that it has, is an extremely volatile investment that has consistently been fluctuating up and down in price since it has hit its peak of over $17,000. So pay attention to these economic trends before making your purchase in order to protect yourself. If you see Bitcoin has been on a decline for the last week or so, maybe you will want to hold off on your purchase until it has steadied out and started rising again, that way you won’t immediately lose money on your investment.
So now that you are ready to make your purchase, go ahead and check out the exchange rate for cash into Bitcoin. You will notice almost immediately that unless you have a huge lump sum of cash ready to invest into Bitcoin, that you will only be able to purchase just a fraction of a Bitcoin, more than likely less than a single tenth of one. That is okay. My first purchase was just $10, which translates into literally 0.0012 of a single Bitcoin. You do not need to fret about this, because this is just how the market is right now. It does not matter if you invest $10, $100, or $1,000, as long as the value of Bitcoin goes up, the value of your investment will go up to. You won’t be getting rich over night or anything like that, but if you are smart with your investments, and with a little bit of luck, you could make enough to cover a mortgage payment or a car payment, or have a little extra to go on vacation with. Any extra money is good money.
So start small with your first exchange. Depending on which digital exchange service you chose, it will be pretty straightforward. Type in the amount you want to spend of your own money, and the exchange service will tell you how much Bitcoin you will receive in return. After you make the purchase the digital exchange service will automatically deposit and store your Bitcoin into a generate account on the service. Now, you are going to want to move that Bitcoin by transferring it to the digital wallet you downloaded earlier. You will probably be charged a small fee in order to complete the transfer, but some services offer the transfer for free with the addendum that it will take a couple of days to process and transfer. Expediting the transfer will pretty much always cost a small fee to do so. Once your Bitcoin is in your digital wallet, you can now spend it however you want, or wait around to see if the value increases and then sell it back on a digital exchange service for a profit.
So there you have it. Getting into the cryptocurrency game might seem a little bit daunting at first, but using this guide will turn you from an amateur into someone who is fairly competent when it comes to making your purchases and exchanges. Just remember, when you are investing in cryptocurrencies like Bitcoin, you are essentially just speculating on the value of it. Just like investing in the stock market, the value of Bitcoin can appreciate or depreciate over night or even in less time than that. I have seen the value of Bitcoin fluctuate back and forth over a thousand dollars in an hour’s time watching the marketplace exchange rates. So be mindful of your purchase, because you never know how much the value of it will be tomorrow, the same way you do not know how much value that investment in the stock market will be tomorrow. It is an unpredictable beast, but it is a fun and hearty way to make some extra money if you invest wisely and pay attention to the various market trends that go on at any one time.