The price of bitcoin continues to rise at a remarkable pace, but despite being interested most people remain oblivious of how and where to buy bitcoin from. Before delving much on the how and where to buy bitcoin it is important that we first understand the concept of bitcoins and the technology that gives bitcoin the features. Bitcoin is essentially a cryptocurrency or digital currency which has been around since 2009. Notably, bitcoin debuted at the same time as the technology underlying it which is known as blockchain technology. As with most new inventions, bitcoin and blockchain were not received with open arms, especially considering that these two technological developments have been designed to disrupt virtually very institution including the governments.
For a long time, the value of bitcoin remained stagnant as many people remained skeptical of the currency and everything related to it. Additionally, the fact that bitcoin and blockchain are decentralized in nature gave people more reason to keep off since there would be no one to complain to incase one lost their monies. However, some braved investing in bitcoin at its early stages in the hope that after learning of its vast advantages, more people would be inclined to invest in bitcoin. Needless to say, this hope has paid seeing that the value of bitcoin is over $14,000 at the moment.
It is a no brainer that both risk taker and risk averse investors prefer going where there is money. Considering the rapid growth in the value of bitcoin in a span of about two years, it is clear that there is money to be made in this digital currency. Unfortunately, investing in bitcoin is not as easy as investing socks or government bonds. For this reason, most people have been left stranded in their wondering whether to give up investing in bitcoin since they do not know how to. Well, they need not look no more since this paper will comprehensively.
The best way to buy bitcoins is through cryptocurrency exchanges. There are a number of reputable exchanges that one can opt to buy bitcoin as such as:
I must, however, mention that listing these exchanges here does not amount to an endorsement. Every investor must perform their due diligence to ensure that they buy bitcoin through their most preferred exchange. Notably, virtually all of the above-listed exchanges allow for bitcoin purchasing but most do not allow for purchasing of many other existing cryptocurrencies. To get started with most of these exchanges one is prompted to sign up through a very simple process. Considering the growing efforts by the governments to try regulating bitcoin trading, exchanges are being forced to comply with KYC policies. Therefore, one may be required to fill in some personal details such as residential location during the sign-up process. The images below illustrate the sign-up process for Coinbase.
The first thing you see when you access Coinbase is this interface displaying the current bitcoin price.
In order to acquire bitcoin you first have to create an account on the Coinbase.
The next move includes a three-step verification. First of all, you’ll need to confirm your email address.
After that, once you choose the country, you’ll need to add a phone number. Don’t add just any random number, as this step is also very important in the verification process.
You’ll receive a text message which contains a 7-digit code. Enter it in the empty field above and complete your verification. Everytime you want to log in you’ll get a code as a 2-step verification.
After registration, you should add a payment method
Maybe you’ll have to prove your identity, at least I had too
If you select the credit/debit card option, you will be required to add card information as illustrated below.
You should then get a confirmation on whether the card has been accepted as shown below.
Finally, you can go ahead and buy bitcoins.
And now, I am one of the bitcoin owners, I mean owner of a small part of it 🙂
Besides the exchanges one can buy and sell bitcoins through LocalBitcoins. Technically, the cryptocurrency exchanges act as an intermediary between the buyer and the seller. Localbitcoins, on the other hand, is a marketplace that allows users to buy bitcoins directly from each other. Essentially, the traders on this platform create an advertisement detailing the amount of bitcoin they want to sell, the price per bitcoin they are offering and their preferred payment method. To some extent, it is much easier to purchase bitcoins through local bitcoins since one can liaise with the seller directly hence the process is less cumbersome. Like with exchanges, one has to register on localBitcoins, but the process is not as comprehensive as that on most exchanges.
The registration process varies from one exchange to another so one might find that the registration process in some of the exchanges is shorter or longer than that of coinbase. choosing the exchange of choice and signing up are some of the crucial steps in buying bitcoin and the next major thing is knowing and deciding whether to store the bitcoins. While bitcoin has been compared to gold as a store of value, it is not tangible that one can store it in a safe.
Where to store bitcoins
Bitcoin storage facilities are broadly categorized as hot and cold storage. The difference between the two is that hot storage refers to storage facilities that are always online while cold storage refers to storage facilities that are offline. If one intends to spend their bitcoin on the recurrent expenditure of for buying various assorted items online, it is advisable to have a small amount of bitcoin stored in hot storage facilities. However, it is also advisable that one transfers the bitcoins they do not need for regular expenditure in cold storages. Hot storage often refers to online wallets that one can open through the exchange they have opted to trade through. They also include mobile wallets and desktop wallets.
Cold storage options include USB ledger, paper wallet or other bitcoin hardware wallets. The reason why it is advisable to store bitcoins in cold storage is because cold storages are less susceptible to cyber-attack in comparison to hot storage by virtue of their being offline.
Sending and receiving bitcoin
The use cases for bitcoin are growing by the day including using bitcoin to purchase land and apartments among other uses. This means that while one may have bitcoin in their wallets, they might be interested in holding it there for too long but opt to exchange it for a tangible asset. When sending fiat currency, one sends from one bank account to another bank account. However, when sending bitcoins, one sends from one bitcoin address to another bitcoin address. It is important to note that bitcoin transactions are irreversible. The owner of the wallet holds keys to the wallet often referred to as a private and public key. The public key is visible to everyone and bitcoin is sent to the public key/address. The private key, on the other hand, is only known by the owner of the wallet thus it gives them exclusive access to the wallet.
Notably, at no one point should you give your private key to anyone. Not even your exchange should know what your private key is.
Virtually every investment has a degree of risk attached to it. However, the level of volatility that has characterized bitcoin over the last few months makes the risk involved in it a rather special case. Ordinarily, bitcoin is yet to receive global recognition by governments as an accepted medium of exchange or store of value or otherwise. This means that there is still a high level of fear, doubt and uncertainty attached to bitcoin. However, most private investors are gradually embracing bitcoin by investing in it or accepting it for various se cases. These are some of the factors that have seen its price growth rapidly. The high volatility involved means that the risk of investing in bitcoin is quite high and one must wary of it.
While most of the available exchanges are legitimate and well insured, some of them are rather dubious in design and operation. Therefore, one must be sure to perform their due diligence before settling for any of these exchanges.