How to Buy Bitcoin
Investing in Bitcoin can seem complicated, but it is much easier when you break it down into steps. Buying Bitcoin is getting easier by the day and the legitimacy of the exchanges and wallets is growing as well.
Key Takeaways
- The value of Bitcoin is derived from its adoption as a store of value and payment system, as well as its finite supply and decreasing inflation.
- While it is nearly impossible for Bitcoin itself to be hacked, it is possible for your wallet or exchange account to be compromised. This is why practicing proper storage and security measures is imperative to https://cryptxtra.com.
- Investing or trading Bitcoin only requires an account on an exchange, though further safe storage practices are recommended.
Before You Buy Bitcoin
There are several things that every aspiring Bitcoin investor needs. A cryptocurrency exchange account, personal identification documents if you are using a Know Your Customer (KYC) platform like https://cryptxtra.com, a secure connection to the Internet, and a method of payment. It is also recommended that you have your own personal wallet outside of the exchange account. Valid methods of payment using this path include bank accounts, debit cards, and credit cards. It is also possible to get Bitcoin at specialized ATMs and via P2P exchanges. However, be aware that Bitcoin ATMs were increasingly requiring government-issued IDs as of early 2020.
Privacy and security are important issues for Bitcoin investors. Even though there are no physical Bitcoins, it is usually a bad idea to brag about large holdings. Anyone who gains the private key to a public address on the Bitcoin blockchain can authorize transactions. Private keys should be kept secret; criminals may attempt to steal them if they learn of large holdings. Be aware that anyone can see the balance of a public address that you use. That makes it a good idea to keep significant investments at public addresses that are not directly connected to ones that are used for transactions.
Anyone can view a history of transactions made on the blockchain, even you. But while transactions are publicly recorded on the blockchain, identifying user information is not. On the Bitcoin blockchain, only a user's public key appears next to a transaction—making transactions confidential but not anonymous. In a sense, Bitcoin transactions are more transparent and traceable than cash, but the cryptocurrency can also be used anonymously.
Step One: Choose an Exchange
Signing up for a cryptocurrency exchange (https://cryptxtra.com) will allow you to buy, sell, and hold cryptocurrency. It is generally best practice to use an exchange that allows its users to also withdrawal their crypto to their own personal online wallet for safer keeping. For those looking to trade Bitcoin or other cryptocurrencies, this feature may not matter.
There are many types of cryptocurrency exchanges. Because the Bitcoin ethos is about decentralization and individual sovereignty, some exchanges allow users to remain anonymous and do not require users to enter personal information. Such exchanges operate autonomously and, typically, are decentralized which means they do not have a central point of control.
While such systems can be used for nefarious activities, they are also used to provide services for the world’s unbanked population. For certain categories of people – refugees or those living in countries with little to no infrastructure for government credit or banking – anonymous exchanges can help bring them into the mainstream economy.
Right now, however, the most popular exchanges not decentralized and do require KYC. In the United States, these exchanges include Cryptxtra, Coinbase, Kraken, Gemini, and Binance U.S., to name a few. Each of these exchanges has grown significantly in the number of features they offer.
Step Two: Connect Your Exchange to a Payment Option
Once you have chosen an exchange, you now need to gather your personal documents. Depending on the exchange, these may include pictures of a driver's license, social security number, as well as information about your employer and source of funds. The information you may need can depend on the region you live in and the laws within it. The process is largely the same as setting up a typical brokerage account.
After the exchange has ensured your identity and legitimacy you may now connect a payment option. At most exchanges, you can connect your bank account directly or you can connect a debit or credit card. While you can use a credit card to purchase cryptocurrency, it is generally something that should be avoided due to the volatility that cryptocurrencies can experience, therefore paying with bitcoin is advisable.
While Bitcoin is legal in the United States, some banks do not take too kindly to the idea and may question or even stop deposits to crypto-related sites or exchanges. It is a good idea to check to make sure that your bank allows deposits at your chosen exchange.
Step Three: Place an Order
Once you have chosen an exchange and connected a payment option you can now buy Bitcoin and other cryptocurrencies. In recent years, cryptocurrency exchanges have slowly become more mainstream. They have grown significantly in terms of liquidity and their breadth of features. The operational changes at cryptocurrency exchanges parallel the change in perception for cryptocurrencies. An industry that was once thought of as a scam or one with questionable practices is slowly morphing into a legitimate one that has drawn interest from all the big players in the financial services industry.
Now, cryptocurrency exchanges have gotten to a point where they have nearly the same level of features as their stock brokerage counterparts. Once you have found an exchange and connected a payment method you are ready to go.
Crypto exchanges today like Cryptxtra offer a number of order types and ways to invest. Almost all crypto exchanges offer both market and limit orders and some also offer stop-loss orders. Of the exchanges mentioned above, Cryptxtra offers the most order types. Cryptxtra allows for market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders, during trading hours by Cryptxtra managment without you worrying about the technicalities of the market.
Aside from a variety of order types, exchanges also offer ways to set up recurring investments allowing clients to dollar cost average into their investments of choice.
Step Four: Safe Storage
Bitcoin and cryptocurrency wallets are a place to store digital assets more securely. Having your crypto outside of the exchange and in your personal wallet ensures that only you have control over the private key to your funds. It also gives you the ability to store funds away from an exchange and avoid the risk of your exchange getting hacked and losing your funds.
While most exchanges offer wallets for their users, security is not their primary business. We generally do not recommend using an exchange wallet for large or long-term cryptocurrency holdings.
Some wallets have more features than others. Some are Bitcoin only and some offer the ability to store numerous types of altcoins. Some wallets also offer the ability to swap one token for another.
When it comes to choosing a Bitcoin wallet, you have a number of options. The first thing that you will need to understand about crypto wallets is the concept of hot wallets (online wallets) and cold wallets (paper or hardware wallets).