How to Purchase Bitcoin
It may appear difficult to invest in bitcoin (BTCUSD), but it’s not. All you need is a secure means to keep your purchases and an account with a cryptocurrency exchange or service.
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A secure internet connection, a payment method, a personal digital wallet separate from the exchange account, identity papers if you’re utilizing a Know Your Client (KYC) platform, and a cryptocurrency exchange account are all requirements for bitcoin investors. Debit cards, credit cards, and bank accounts are all accepted payment options for bitcoin. Peer-to-peer (P2P) exchanges and specialist ATMs are additional places to obtain bitcoin.
Prior to Purchasing Bitcoin
Security and privacy are major concerns in the Bitcoin community. Transactions can be authorized by investors who get the private key to a public address, which is a password-like cryptographic code that enables users to receive cryptocurrency in their accounts on the Bitcoin network. Investors need to be informed that the balance of a public address is accessible, and private keys have to be kept under wraps.
People are able to generate many public addresses and split up their bitcoin holdings among several addresses. Maintaining sizable assets at public addresses that aren’t directly linked to those used for transactions is a smart tactic.
While user identification information is not visible, the blockchain’s transaction history is. Transactions on the Bitcoin blockchain are secret but not anonymous since only the user’s public key is shown next to the transaction.
Due to the fact that Bitcoin transactions are visible to the public and the difficulty of tracking down the people involved in the transaction on the blockchain, they are more traceable than cash transactions. The FBI and academics, however, assert that they are able to follow transactions conducted on the Bitcoin blockchain to individuals’ digital wallets and other internet accounts.
An investor has to present identification when they open an account with Coinbase. It is still possible to link it to the account holder’s identity and the Coinbase purchase even if they transfer it to a different wallet.
How to Purchase Bitcoin
Step 1: Select a Cryptocurrency Trading Platform or Service
Because they have more cryptocurrencies for trade and a wider range of features, exchanges are a practical choice. Additionally, exchanges let consumers move bitcoin to an online wallet for storage and let investors purchase, sell, and store cryptocurrency.
Exchanges for cryptocurrencies come in a variety of forms. Some are decentralized, don’t need users to provide personal information, and let users stay anonymous. Anonymous trades can assist specific groups, such as refugees or those residing in nations with minimal to no banking or government credit infrastructure, in integrating into the mainstream economy.
Popular U.S. exchanges aren’t decentralized and abide by regulations requiring users to provide identity documents. These exchanges, which provide bitcoin and an increasing number of other cryptocurrencies, are Coinbase, Kraken, Gemini, and Binance.
Step 2: Link a Payment Option to Your Exchange
Personal identification may be requested, depending on the trade. This might entail providing a photocopy of your driver’s license or Social Security card along with details about your employment and income source. It’s pretty much the same procedure as opening a regular brokerage account.
You may link your bank account to a debit or credit card at most exchangers, or you can link it directly. While it is possible to buy cryptocurrency using a credit card, the volatility of cryptocurrency prices may increase the total cost of buying a token when paired with the interest charges on a credit card. Although bitcoin is allowed in the US, many banks may refuse to process deposits to websites or exchanges that deal with cryptocurrencies.
Step 3: Make a Purchase
With time, cryptocurrency exchanges have become more like their stockbrokerage equivalents in terms of functionality. Cryptocurrency exchanges provide several order types and investment options. Market and limit orders are available on almost all cryptocurrency exchanges, and some exchanges also provide stop-loss orders.
With market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders, Kraken provides the widest variety of order types.
Additionally, exchanges provide methods for setting up regular investments, enabling users to dollar-cost average into the assets of their choosing. For instance, consumers may schedule recurring purchases on Coinbase for each day, week, or month.
Step Four: Secure Storage
Cryptocurrency wallets and bitcoins are places to keep digital assets more safely. Investors maintain control over the private key to the cash when they store cryptocurrency in a personal wallet rather than on an exchange. While suggested, an exchange wallet is not advised for significant or long-term bitcoin holdings.