1. Join a Bitcoin Exchange
First, you’ll need to determine where you want to make a Bitcoin purchase. Most Bitcoin investors use cryptocurrency exchanges. There’s no official “Bitcoin” company because it’s an open-source technology, but there are several different exchanges that facilitate Bitcoin transactions. These exchanges are the middlemen of cryptocurrency investing, like a stock brokerage.
If you decide to purchase from an exchange, you’ll have to decide which exchange you want to buy from. Here are a few of the most popular options:
Coinbase: A very popular crypto exchange that insures losses in the event of a security breach or fraudulent transfers
Binance: Founded in 2017, Binance is a crypto exchange with a strong focus on altcoins
Kraken: This San Francisco-based exchange allows you to invest in Bitcoin using various currencies from around the world
Gemini: Launched in 2015 by Cameron and Tyler Winklevoss, Gemini offers services for casual and veteran Bitcoin investors with different user interfaces and fee structures for both
Bitfinex : The longest-running cryptocurrency exchange that’s optimized for advanced traders and lenders (unfortunately, Bitfinex doesn’t currently accept US customers)
As you might have guessed, choosing a Bitcoin exchange is becoming more difficult for investors as more options begin to popularize. Find everything you need to know about Binance vs. Coinbase and start investing, today.
2. Get a Bitcoin Wallet
When you purchase a coin, it’s stored in a “wallet,” which is where all your cryptocurrency is stored. There are two types of wallets you can get: a “hot wallet” or a “cold wallet.”
A hot wallet is a wallet that’s operated by either your cryptocurrency exchange or by a provider. Some exchanges will automatically provide you with a hot wallet when you open your account. In any case, hot wallets are convenient because you’ll be able to access your coins through the internet or a software program.
Some notable hot wallets are:
Electrum: Software that enables you to store your coins on your computer
Mycelium: A mobile-only app for Android and iPhone users
However, hot wallets are not the most secure form of coin storage. If the hot wallet provider is hacked, then your coin information may be at risk.
A cold wallet is the safest storage method for your coins. A cold wallet is an actual piece of hardware that stores your coins, usually, a portable device that’s similar to a flash drive. Most cold wallets cost between $60 to $100. Some popular cold wallets are:
If you’re only going to purchase small amounts of coin, then you might be fine using a hot wallet with an insured crypto exchange. But if you’re going to be trading large amounts of coin, then a cold wallet would be well worth your investment.
Need help deciding which wallet is right for you? Take a look at our picks of the best bitcoin wallets.
3. Connect Your Wallet to a Bank Account
When you’ve obtained your wallet, you’ll need to link it to your bank account. This enables you to purchase coins and sell coins. Alternatively, your bank account may be linked to your cryptocurrency exchange account.
4. Place Your Bitcoin Order
Now you’re ready to purchase Bitcoin. Your cryptocurrency exchange will have everything you need to buy. The big question is, how much Bitcoin should you purchase?
Some coins cost thousands of dollars, but exchanges often allow you to buy fractions of a single coin—your initial investment could be as low as $25.
Investing in Bitcoin is very risky, and it’s important that you carefully determine your risk tolerance and review your investment strategy before you purchase any Bitcoin. We’ll go over this in the next section.
5. Manage Your Bitcoin Investments
After you’ve purchased bitcoin, you can:
Use your coins to make online transactions
Hold your coins for a long period in the hopes it’ll appreciate in value
Perform day trading with your coins—that is, buying and selling coins with other Bitcoin owners, which can be facilitated on the cryptocurrency exchange
Your cryptocurrency exchange will provide you with everything you need to buy and sell coins.
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