Bitcoin has created a stir around the globe in the past years with its surprising surge in price. Anyone who had traded bitcoin last year has gained immensely, and people are now curious to know about this new asset.
Bitcoin is virtual money that has no representation in any physical form and is stored electronically. Bitcoins are “mined” by specialized miners who solve complex mathematical problems to get rewards in bitcoins. It is a decentralized cryptocurrency, mined by programmers globally. Now the question arises, how can you get hold of this bitcoin?
Choose the right kind of exchange.
Although there are other marketplaces and methods, it is recommended to buy bitcoins through an exchange for the first time. Different exchanges have their unique features to offer; hence, choosing the right one becomes essential.
The best exchanges that are trustworthy and highly recommended are Coinbase and Binance exchange. If you have an idea about foreign exchange markets, a bitcoin exchange is very similar.
Coinbase is the most effective bitcoin exchange platform in the US currently. The reason why people prefer it is that the signing up process is straightforward. They only need some form of identification. An added advantage of this exchange is that you get both a wallet and exchange in a single platform. This way, it becomes easy to buy and store bitcoins in one place. The platform is safe, configured with two-factor authentication, and accessed through mobile and web apps.
A transaction fee of 1.49% is charged on this platform if you are using Coinbase USD wallet or bank transfer. An additional charge of 3.99% is taken when purchases are made through a debit card or credit card.
Active traders find this platform best for buying and selling bitcoins. It was previously named GDAX. Anyone dealing with higher volumes of bitcoin transactions, find Coinbase Pro safe as you get insurance up to a limit of $250000 in case of any security breach. There are fewer chances of theft as they arrange for most customers’ currencies to be stored offline to prevent hacks. The fees they charge for exchanges can range from 0.04% to 0.50%.
Select a Payment Mode
Exchanges offer you the choice to pay through different payment modes. Make sure to have a background check as there are multiple scam sites. Having a digital wallet allows you to either buy with a credit card or through bank transfer. What payment methods you will be given depends on the exchange you are using and your location.
A bank transfer is convenient as it charges lesser fees than a debit or credit card, but the process might take longer. A credit card doesn’t seem a wise option as it seems pointless to buy an asset while paying higher interest rates. The best option is using a debit card as the fee is low, and the process is faster.
Exchanges have increased their breadth of features to allow various order types. It will provide you with ready information on how much you can buy with a certain amount of money. You need to enter the bitcoin you are willing to purchase and click on the buy button. Some exchanges allow you to purchase at the current best market rate. Alternatively, you can set an order at a specific limit. This way, you are setting a particular price for a particular amount of bitcoin, above which you will not trade. Your trade will only process when the price matches your limit.
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Find a Wallet for Safe Storage
Once you purchase your bitcoins, it is safe to have them outside of the exchange and store them in your wallet. Digital wallets will keep your bitcoin asset safe. Each wallet is locked with a “private key.” It is an alphanumeric password that should only be known to you. It is a long password of 256-bit, selected randomly as soon as you create a wallet.
The digital wallet stores your coins until you buy or sell them or decide to exchange them for another currency. Your wallet is linked to the account you are using to buy or sell monetarily.
There are different kinds of wallets to choose from.
Wallets that store the bitcoins online are called “hot” wallets. Any wallet that operates on internet-connected devices like computers, tablets, or phones is online wallets. As the private keys to your wallets are stored online, they become vulnerable to theft and hacks. People are still inclined towards hot wallets because of the convenience of transactions it allows.
There have been instances where funds are stolen from hot wallets because it did not maintain enough security. Some people have the habit of boasting on public forums like Reddit about how much bitcoin they own. This might seem harmless, but hackers lookout for such opportunities to steal funds from people who are negligent about their security. Some standard precautions, like strong passwords, two-factor authentication, and safe internet surfing, can stop such things from happening.
Mobile, web, desktop, and exchange account custody wallets fall under hot wallets. Exchange wallets are custodial wallets that are provided to you temporarily when you buy bitcoins through an exchange. The problem with such wallets is that the cryptocurrency owner is not the private key holder. Whenever the exchange gets hacked, you will lose your funds. Whoever gets hold of the private key is considered the owner of the coin.
Hot wallets are the most convenient ones if you plan to store only small amounts of bitcoins, which you might be actively trading on an exchange.
Cold wallets are not at all connected to the internet and hence, are lesser exposed to risks. These are offline wallets or a hardware wallet that is portable.
The private key to this wallet is stored on something that has no connection to the internet. The safest way to use a cold wallet is via a paper wallet. For owning a paper wallet, you need to visit individual websites that create keys and QR codes. Users are advised to disconnect their internet while generating a key and erase their browser history once it is generated. The access to the wallet is printed out on paper. This paper is to be stored securely.
Only people who are looking at bitcoins as long-term investments should opt for paper wallets as buying and selling are not comfortable in this method.
Another cold wallet that people highly preferred is a hardware wallet. It would be best to make sure that your private key must be stored in a USB drive device. This is far better than hot wallets as it is safe from virus attacks.
The advantage of hardware wallets is that the private key never comes in contact with online software. Cold wallets are the best way to keep your bitcoins safe.
Alternate ways through which you can buy bitcoin
Traditional exchanges are decentralized, and they introduce buyers and sellers anonymously to facilitate transactions. P2P businesses allow direct connection between the users.
Once you create an account, just like any trading platform, you can post information about your wish to buy or sell bitcoins. The information about payment methods and prices are to be included as well. When other users browse through the listings, they choose their trading partners according to the conditions.
You can transact through bitcoin ATMs in person. In the process, you need to insert cash into the machine and bitcoins of that value are transferred to your digital wallet. This is becoming a popular purchasing method for bitcoins. Bitcoin ATMs are spread worldwide, with 30 different types.
Another way to acquire bitcoin is through bitcoin mining, but most people do not consider this or do not know it. Every transaction that takes place on a bitcoin block needs to be validated. There are no central authorities having control over bitcoins; transactions are broadcasted to a peer-to-peer network. After a transaction takes place, miners are responsible for verifying it, before giving a validation. Once it is confirmed, the trades are broadcasted to a public database, the bitcoin blockchain.
For a smooth operation, mining is a crucial process. Miners are rewarded with bitcoins after each successful task. For mining, equipment with high processing powers are required that can produce more hashes. The one who creates a hash the fastest wins the bitcoins. It is a competition, and it requires high investment. New technologies are being created to make this process faster, you can read about bitcoin revolution robot review.
The continuous rise in bitcoins’ value has captured the attention of investors looking for a quick profit. Although the surge is considered to be a bitcoin bubble, large enterprises are showing interest and investing massive amounts, looking at bitcoin as the future. This might be the correct time to jump into the wave and earn some money.
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