In-Depth Guide of Buying Bitcoin For Beginners

Buying Bitcoin For BeginnersAt some point, you reach the stage in life where you want to secure your long-term financial goals, and you can’t do that by depending on your savings alone—which is where investing becomes extremely significant.

Unlike letting your money become stale on your savings with barely any growth, investing is a risk with the potential of doubling your money. However, the financial market can be overwhelming if you don’t know what you’re getting yourself into. This is especially true if you want to put your money in something relatively novel like cryptocurrency.

In the following, we’ll be discussing in-depth how to buy Bitcoin for beginners.

Overview: Basics of Bitcoin

Bitcoin is currently the largest cryptocurrency in terms of market capitalization. It’s also the most invested and traded cryptocurrency. Cryptocurrencies like Bitcoin is a digital asset and payment system that can be used as a form of currency. Several businesses are now accepting Bitcoin as a valid mode of payment.

Blockchain is another term you will often hear. Blockchain basics show that it’s a specific type of database used in a decentralized way, which essentially means nobody has control of the system. However, this isn’t what makes Bitcoin unique; it has more to do with the fact that it’s public.

The Bitcoin market is also extremely volatile, which means its value can fluctuate in extremes. The way Bitcoin works is that its value is completely independent or separate from government authorities, such as central banks, so it has control over its availability in the global market. It’s a fixed asset, and as of March 2021, Bitcoin’s price is at $61,683.86.

Additionally, Bitcoin works differently from buying stocks or bonds since it isn’t a corporation. Buying Bitcoin is a way to adapt to a digital asset form of payment.

What Factors Influence Bitcoin’s Price

There are several factors to consider when determining Bitcoin’s price. It’s not set by a person or groups of people; rather, it’s set by the market. Observe Bitcoin’s market and you may notice the charts moving consistently—in an upward, downward, or a somehow consistent direction (otherwise known as consolidation).

It’s a volatile market, and there’s no way of predicting which direction it will go even when you have the knowledge of chart trends and patterns. In the following, we’ll be listing the factors that influence Bitcoin’s price.

  • Supply and demand
  • Expense it takes to produce Bitcoin through mining
  • Other competing cryptocurrencies
  • Internal governance
  • Regulations governing its sale
  • Rewards given to Bitcoin miners for blockchain

Places Accepting Bitcoin

Several companies all over the globe are currently accepting Bitcoin as a valid method of payment. Up until May 2021, Bitcoin can be used to buy cars from Tesla. Several other companies accept this cryptocurrency as a method of payment, whether it’s fast-food chains or big tech.

  • Canada’s KFC branch once accepted Bitcoin as payment for products like the Bitcoin Bucket.
  • Yum Brands, which is behind fast-food chains like Pizza Hut, Taco Bell, The Habit Burger Grill, and KFC, also accepts cryptocurrency. Yum Brands specifically partnered with CryptoBuyer to launch their cryptocurrency mode of payment in their designated branches.
  • PayPal announced last October 2020 that users could buy, sell, and hold cryptocurrencies using their Cash or Cash Plus accounts.
  • Banking companies like JP Morgan also considered adopting Bitcoin.
  • Coca-Cola has approximately 2,000 vending machines in New Zealand and Australia that accept cryptocurrencies as payments.
  •  Asides from these companies, several other multinational leading companies have adopted Bitcoin as a method of payment.

Tips Before Buying Bitcoin

1. Join a Bitcoin Exchange

Take advantage of cryptocurrency exchanges, which are platforms that facilitate trading and investing in cryptocurrencies like Bitcoin. They act as the intermediary between a buyer and seller. You won’t find an official Bitcoin company because, as discussed above, it’s an open-source technology.

Joining a Bitcoin exchange is also beginner-friendly as it is easy to navigate if you have minimal knowledge of cryptocurrencies and the financial market. It’s easy to get verified for an account, as you’ll only be required to submit your proof of identity and address. After you’re verified, you can start buying Bitcoin and connecting your bank account to make things more convenient.

2. Get a Bitcoin wallet

When you purchase any form of cryptocurrency, this is stored in your wallet. There are two types: hot wallets and cold wallets. A hot wallet is operated by a cryptocurrency exchange or provider. This is convenient, especially for beginner investors and buyers of Bitcoin, since they can access their coins through the internet connection and software.

We live in the digital era, which is why hot wallets are also the most common choice between the two. However, the disadvantage is with its safety and security, as it’s not the most secure coin storage. The minute your wallet is hacked, consider your coins gone.

A cold wallet, on the other hand, is the safer form since it’s an offline wallet. You don’t have to worry about being hacked since your coins are stored on an offline platform. It’s an actual piece of hardware to store your coins, which is similar to a flash drive. Hot wallets are ideal for small amounts of crypto, while cold wallets are your best choice for larger amounts since you have more coins at risk.

3. Connect Your Wallet to Your Bank

After you’ve fixed your wallet, the next step is to link it to your bank account so you can purchase and sell coins at your own convenience. Your bank account can also be linked to your chosen cryptocurrency exchange account. If you’re not comfortable with this, you can also choose PayPal as an option.

4. Place a Bitcoin Order

There’s no one-size-fits-all approach when placing a Bitcoin order regarding how much you should invest. You can invest as low as $25 or as high as $500, depending on your preference. Beginner cryptocurrency investors normally start with the minimum amount to test the waters.

You can always put more into your account to invest in Bitcoin. As a beginner, the market can be extremely overwhelming so it’s best to deposit a low amount first. Exchanges also allow you the option of buying just a fraction of a single Bitcoin, so this means you can start with a safe and low order.

5. Manage Your Investments

Before you invest in Bitcoin, you should know that everything comes at high risk. No matter how much you anticipate investing and how glamorous it sounds, you’re risking real money. You won’t always double your money because the market may work against you.

The rule of thumb is to only invest what you can afford to lose; otherwise, you’ll become attached to your investment, and that never ends well. Bitcoin investments are long-term investments, so you can’t keep checking your progress every second. You need to hold your current position in the market based on where you placed an order for a long period with the hopes that its value will increase over time.

Additional Tips When Buying Bitcoin

  • Don’t let your emotions get in the way when you’re investing in a volatile market like Bitcoin because no matter how hard you try, you can’t outsmart or predict the market.
  • Invest time and energy in learning about cryptocurrency before you enter the market because investing is a huge risk alone, but you’re bound to fail when you go in without any prior knowledge.
  • Only risk the money you’re okay losing. 
  • Come up with an investing strategy before you deposit money into your cryptocurrency exchange account.
  • Aside from Bitcoin, try looking into other cryptocurrencies when investing. Bitcoin SV, a “hard fork” of Bitcoin, can be something to look into.

Takeaway

Bitcoin is the living proof of the evolution of money. It’s capable of replacing the existing payment options worldwide, with a reliable level of security, to boot. Several businesses are still accepting cryptocurrencies as a valid method of payment; now’s the perfect opportunity to invest in it.

There will always be a risk when you invest in any market, but it’s the best way to let your money work for you in achieving financial freedom.