What You Need to Know About Buying Bitcoin
The world of bitcoin and cryptocurrency seems intimidating, doesn’t it? With so many technical terms being thrown around and the risk of losing your money, why would you ever want to get involved?
Don’t let the news and media create fear in your sphere. When you learn about Bitcoin, it is a fun and exciting technology that is here to stay. El Salvador has become the first country in the world to adopt bitcoin as legal tender!
If you are a newbie in the space, you’ll want to first learn the process of buying bitcoin. Read our guide as we break everything down for you in “digestible bytes”.
Before you start learning how to buy bitcoin, there are a few key pointers to discuss. When you have these down, buying bitcoin will feel like a breeze.
What are you buying bitcoin with? You can choose from a bank transfer, credit card, apps, or fiat (USD).
There is a bit of a give and take with what you choose. Some will provide more convenience but you may give up some privacy in the end. Not to mention, you’ll want to pay attention to the fees attached as well.
Where will you be purchasing bitcoin? You may find the ability to buy bitcoin straight in your bitcoin wallet. Most often, you will be using some sort of bitcoin exchange. Do your research on the differences between centralized and decentralized exchanges.
Popular exchanges include Coinbase, Binance, and Kraken. As a word of caution, you never want to keep your bitcoin on any exchanges. There are countless stories of bitcoin being hacked—so it is not to be taken lightly.
You will find that many centralized exchanges (CEX) will follow Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) practices.
Other options include OTC (over-the-counter) desks, p2p (peer-to-peer), and popular apps (Cash App, PayPal, Venmo).
Many of these choices make it super simple now. For example, in Cash App, it’s as easy as heading over to the “Stocks/Bitcoin” tab and tapping “Buy Bitcoin”. From there you’ll be able to choose the amount and if this is a one-time order or recurring.
Recurring orders allow you to take advantage of dollar-cost averaging (DCA) bitcoin.
You can also use cash if you’re buying bitcoin face-to-face.
The bitcoin you purchased needs to go somewhere, right? You need a bitcoin wallet! This is where you store or hold (HODL or “hold on for deal life“) your bitcoin.
Your public address is what you’ll use when wanting to receive bitcoin. This can be when you send the bitcoin you bought or when a friend gifts you some.
Hodl With a Bitcoin Wallet
You have a few options here—non-custodial, custodial, hot, cold.
A non-custodial wallet is where you have full control over your bitcoin. A popular mantra in the crypto space is not your keys, not your crypto.
The keys refer to your private keys. Whoever has access to these private keys has access to your bitcoin. This is why you must follow best practices such as writing down the 12 words and storing them in a safe place.
In comparison, a custodial bitcoin wallet will be operated by a third party. Much like a bank, you are putting your trust in another party’s hands.
Download a hot bitcoin wallet to your smartphone or computer. What makes them hot is that they are connected to the internet. This makes them more vulnerable and susceptible to hackers.
A cold bitcoin wallet is a hardware wallet where you store your precious bitcoin. They aren’t connected to the internet, so they are more secure than hot wallets. Whenever you wish to make a transaction, you connect to your computer/internet much like a USB stick.
What you give up for convenience, you make up for in keeping your funds safe.
Stack Sats to the Moon
As you can see buying bitcoin and storing it properly isn’t complicated at all. Once you have mastered how to buy bitcoin, you can stack sats and add to your bitcoin investment.
For more financial tidbits and how-tos, read our blog today!