Investing In Bitcoin
Bitcoin, the pioneer of cryptocurrency, has recuperated from previous setbacks, but its value remains under its worth back in 2017-where it reached an all-time high. As it started as purely academic, it is experimental and is susceptible to volatility compared to other guaranteed investments, including bonds, stocks, and mutual funds. Thus, it is commonly suggested that when investing in bitcoin, allot only 10% of your total profile as it is a risky asset.
A set of requirements must be met to begin investing in bitcoin. This includes where to purchase a bitcoin, wherein an individual is given various choices to pick from- bitcoin exchanges, traditional brokerages, Bitcoin ATMs, peer-to-peer bitcoin owners, bitcoin futures, and grayscale funds. After deciding, one needs to assess how to store the acquired bitcoin. One can choose between saving it in a hot wallet or cold wallet. The last step only requires a decision as to how much bitcoin do you want to purchase.
Deciding Where To Purchase Bitcoin
The initial step if one wants to invest in bitcoin is where to buy such. There are various ways of purchasing bitcoin and other cryptocurrencies, whereas the most popular is through exchanges.
This is a kind of virtual platform and marketplace that provides an opportunity for investors to purchase or sell bitcoins with fiat currencies. This serves as the middleman connecting and matching buyers and sellers of bitcoin.
Should this be the preferred method of buying bitcoin, there must be steps that need to be accomplished, including information and identity verification. Once all the necessary information is validated and verified, an account ready for fund transfer before purchasing bitcoins or other types of cryptocurrency.
Inline, there exist other several types of exchanges in the crypto market that specifically cater to the demand of every investor. Below are some of the different ways to buy or invest in bitcoin.
- Centralized exchanges
- Decentralized exchanges
- P2P marketplaces
- Crypto-to-crypto exchanges
- Fiat-to crypto on-ramps
As there are vast choices to pick from. An in-depth analysis of how each of these types of work is imperative.
Exchanges For Investing In Bitcoin
You can buy or sell bitcoins from numerous exchanges with many market sellers charging percentage depending on how much bitcoin one will purchase or invest. Some of the credible exchanges are:
- COINBASE- This has built its name when it comes to bitcoin investment as it offers an efficient way of linking a bank account to wallets without any hassle. Inline, this exchange also provides a wide array of cryptocurrencies such as litecoin and ethereum.
- BINANCE- This tallies the most significant cryptocurrency volume of exchange with a very investor-friendly charge of 0.1% and withdrawal fee available for all cryptocurrency traders. Moreover, purchases are made with the use of cryptocurrency, but Binance updated its service by allowing users to pay using a credit card with extra charge.
- GEMINI- This marketplace offers vast choices as it gives users exchange trades ranging from ether, bitcoin, bitcoin cash, zcash, and litecoin. A transaction charge of $0.99 to $1.49% is willingly given to traders for order placement, which is purely dependent on buying or selling volume.
- COINMAMA- Long is the list of cryptocurrencies that this exchange offers, including bitcoin. This exchange only asks for a minimum of $60 purchase as it charges a 5.9% transaction fee.
Payment methods vary depending on the exchange. These methods are used to execute bank wires fund deposits, bank transfers, credit or debit cards, bank drafts, and money orders. Should a trader opt to withdraw funds from the account, provided means of withdrawal by the chosen exchange will allow such.
After deciding where to buy bitcoin or another cryptocurrency of choice, the next move to make is where to store the purchased bitcoin. There are two available options, each of which has distinct characteristics and functions. The first one is called hot wallet where quicker transactions are guaranteed and the other, cold wallet with security functions keeping your cryptocurrency safe and secured.
This type of wallet directed the invested bitcoin or any other cryptocurrency to an online or cloud account and is accessible through application and browser. The majority of bitcoin and cryptocurrency exchanges provide a free hot wallet ready to be filled with purchased bitcoin. However, many users subscribe to third-party wallet providers, also free to download.
Some of the popularly known wallet providers offering unique wallet types are Coinbase, Electrum, Blockchain, and Mycelium.
What makes a cold wallet different from a hot wallet is its higher level of security and granted access to users even if not online. This type of wallet, which costs around $100, is a portable gadget that has functions allowing users to download bitcoin or another cryptocurrency. Some of the renowned cold waller providers are Trezor and Ledger Nano.
Once all is set complete with requirements, it is now time to make your very first purchase. After tying bitcoin wallet and bitcoin exchange together, all things are ready, and the next step will ask you how much bitcoin you are willing to purchase.
The majority of investors prefer buying bitcoin or another cryptocurrency to hold it in the long run as they view the long term will eventually lead to bitcoin’s higher value. However, there are some investors in need of more urgent return as they purchase only to sell it at the end of the price session.
Managing Your Bitcoin Investment
If one likes the idea of day trading, perhaps he or she might want to consider buying bitcoin only to send it when its price increase at a desirable price. However, if you view bitcoin as a new method of payment and will eventually replace the traditional currency system, consider buying bitcoin and keeping it in the long run.
It is imperative to know that bitcoin is a volatile and a tad asset to secure that your investment will meet little to no risk. Its popularity came only in the latter part of 2014, which means that everything is still new and experimental. However, the very best move than one can make is to invest a small piece of your investment portfolio have you decided to start your bitcoin investment venture.